The RBI has only allowed the circulation of Indian currency notes of Rs 100 and less in Nepal and provides exchange facilities for bills of these denomination. After the demonetisation of Rs 500 and Rs 1,000 Indian currency notes, circulation of new bank notes of denominations Rs 200, Rs 500 and Rs 2,000 was started by the Indian government. Also the NRB, in the same letter, has asked the Indian central bank to provide exchange facility to Nepalis holding the banned Indian currency in the country. But the actual stock of banned Indian bank notes is expected to be much more because Nepalis were previously allowed to carry Rs 500 and Rs 1,000 Indian bank notes worth up to Rs 25,000. Also, those residing in areas bordering India usually stash Indian notes of larger denominations as they have to go to Indian markets frequently to buy goods.

Source: Mint January 06, 2019 11:03 UTC