Nepal Paves the Way for Stronger Cross-Border Travel and Tourism Growth by Easing Currency Restrictions and Permitting Higher Indian Denominations

Published on December 11, 2025

Nepal has taken a significant step to boost its cross-border travel and tourism industry by easing currency restrictions, now allowing higher Indian denominations to circulate. This change comes after nearly a decade of stringent currency regulations, which had hindered smooth financial transactions between Nepal and India. With India’s approval, Nepali migrant workers, tourists, students, and pilgrims traveling between the two nations will benefit from the increased flexibility, making it easier to carry and exchange Indian currency. The move is expected to not only support the day-to-day needs of travelers but also enhance the tourism sector, particularly for businesses in border towns, by encouraging larger transactions and smoother economic exchanges.

Nepal is on the verge of easing currency restrictions that have long impacted cross-border trade and tourism, particularly between Nepal and India. Following India’s official approval, Nepal will now allow the circulation of Indian currency notes in denominations higher than INR100, a significant policy shift almost a decade after these high-denomination notes were banned in the country.

The move, which follows India’s amendments to its Foreign Exchange Management Regulations on November 28, 2025, is expected to provide much-needed relief to Nepali migrant workers traveling to India, as well as students, pilgrims, medical visitors, and tourists. The change, which was officially published in India’s Gazette on December 2, now permits Indian currency notes of up to INR25,000 to be carried across the border, with notes exceeding INR100 allowed in both directions.

For years, Nepali migrant workers had faced the challenge of bringing home their earnings in smaller denominations of Indian currency, such as INR100 or less. This limitation made them vulnerable to theft and other security risks during travel. Many Nepali nationals were arrested in the past for carrying INR500 and INR1,000 notes, which were previously banned under Nepal’s currency regulations. By allowing the circulation of higher-denomination notes, this new policy is expected to alleviate these risks and provide greater flexibility for cross-border transactions.

The tourism sector in Nepal has also been heavily impacted by these currency restrictions, especially businesses that cater to Indian visitors. Popular tourist destinations, such as casinos and hotels in border towns, have seen a decline in revenue due to the inability of Indian tourists to make substantial purchases. This has been particularly challenging for border towns like Nepalgunj, which experiences a significant surge in visitors during events such as the Kailash Mansarovar Yatra.

Despite the positive impact the new policy is expected to have, tourism entrepreneurs in Nepal argue that the INR25,000 cap may still limit spending, especially for those intending to make large purchases or stay for extended periods. In addition, many Indian tourists remain unaware of the currency rules, leading to frequent arrests and fines. This confusion further exacerbates the challenges faced by businesses that rely on Indian tourists.

Nepal currently allows visitors, including Indians, to bring up to US$5,000 (or its equivalent in other convertible currencies) into the country without needing to declare it at customs. Any amount above that must be declared, and visitors are restricted from taking more than US$5,000 out of the country. Under the new policy, Nepali currency can also be carried to India, but it is subject to Nepal’s own currency limitations. Nepalis are allowed to carry up to NPR5,000 when traveling to India and other countries.

India remains Nepal’s largest source of international tourists, and this easing of currency restrictions is expected to bring positive economic benefits. Chandra Prasad Dhakal, the President of the Federation of Nepalese Chambers of Commerce and Industry, has long urged the government to revise these limits, pointing to the rapid economic growth in India and the growing middle class in regions bordering Nepal. With millions of potential tourists in India, especially from these bordering areas, Nepal stands to gain significantly from the relaxation of currency regulations.

India’s currency policies have evolved over the years. In February 2015, the Reserve Bank of India allowed Nepalis to carry INR500 and INR1,000 notes up to INR25,000, marking a departure from the earlier ban on these high-denomination notes in Nepal. However, by December 2018, Nepal’s Cabinet enforced a ban on all Indian currency notes exceeding INR100. This move was followed by the Nepal Rastra Bank issuing a circular in January 2019, prohibiting the trade and use of such notes.

In response to the growing demand for digital payment options, Nepal has introduced alternatives such as QR code-based payments for Indian tourists. Since March 2024, Indian visitors have been able to make payments using mobile apps, particularly in urban areas. While this digital payment system has provided some relief, its reliance on internet connectivity has been a limitation in rural and remote areas, affecting tourists traveling for adventure sports or mountaineering.

Before the devastating earthquake of 2015, it was estimated that around 1.2 million Indian tourists entered Nepal annually by land. Today, officials believe that number has risen to approximately 2 million, though many remain unregistered. Last year, 317,773 Indian tourists arrived by air, contributing to a growing market for Nepal’s tourism sector. These land-based tourists tend to stay for an average of 5.8 days and spend around NPR11,310 each, with their visits helping sustain border hotels, especially during off-peak months. Popular destinations such as Bhairahawa, Chitwan, and Pokhara significantly benefit from the seasonal influx of Indian tourists.

Nepal is easing currency restrictions by allowing higher Indian denominations, a move aimed at enhancing cross-border travel and tourism. This policy change will benefit travelers and businesses, promoting smoother transactions and boosting the local economy.

In conclusion, the easing of currency restrictions between Nepal and India represents a significant policy shift that will have far-reaching implications for both the economy and tourism sector in Nepal. With the potential to foster greater cross-border economic activity, enhance tourism, and improve the livelihoods of Nepali workers, this move is poised to bring tangible benefits to the people and businesses of Nepal. However, it will be important for both Nepal and India to continue monitoring and adapting their policies to further enhance the flow of tourism and trade while ensuring transparency and security for all parties involved.