RBI Bars Pakistan, Bangladesh Citizens from Carrying Indian Notes to Nepal and Bhutan
New FEMA rules allow ₹200 and ₹500 notes up to ₹25,000 only for Indian, Nepali, and Bhutanese citizens.
Move aims to safeguard Indian rupee integrity and prevent misuse across neighbouring borders.
By Our Legal Reporter
New Delhi: December 07, 2025:
In a significant regulatory move, the Reserve Bank of India (RBI) has barred citizens of Pakistan and Bangladesh from carrying Indian currency notes to Nepal and Bhutan. The decision, announced on November 28, 2025, comes through amendments to the Foreign Exchange Management (Export and Import of Currency) Regulations, 2015, under the FEMA Act, 1999.
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This ruling is expected to impact cross-border travellers and traders, while reinforcing India’s efforts to safeguard the integrity of the rupee and prevent its misuse in neighbouring jurisdictions.
Background of the Regulation
Earlier, under Regulation 8 of FEMA, travellers could carry Indian currency notes of up to ₹100 denomination to Nepal and Bhutan. A limited proviso allowed carrying ₹200 and ₹500 notes of the Mahatma Gandhi (New) Series up to ₹25,000.
However, the regulation did not impose any citizenship-based restrictions. This loophole allowed foreign nationals, including those from Pakistan and Bangladesh, to carry Indian notes across borders.
The amended regulation now explicitly prohibits Pakistan and Bangladesh citizens from carrying Indian currency to Nepal and Bhutan, while continuing to allow Indian, Nepali, and Bhutanese citizens to carry up to ₹25,000.
RBI’s Observations
The RBI clarified that the move was necessary to:
- Safeguard the Indian rupee’s integrity in cross-border transactions.
- Prevent misuse of Indian currency in unauthorized trade and money laundering.
- Align with national security concerns, given sensitive geopolitical relations.
- Ensure clarity in FEMA rules, removing ambiguity about who can carry Indian notes.
The RBI emphasized that the facility of carrying ₹200 and ₹500 notes up to ₹25,000 remains valid only for Indian citizens and residents of Nepal and Bhutan.
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Why This Matters
This ruling has wide implications:
- For travelers: Indian citizens visiting Nepal or Bhutan can carry up to ₹25,000 in ₹200 and ₹500 notes.
- For Pakistan and Bangladesh nationals: They are barred from carrying Indian currency, limiting their ability to transact in these countries.
- For Nepal and Bhutan economies: Indian currency remains widely accepted, but restrictions ensure controlled circulation.
- For security: Prevents misuse of Indian notes in illegal trade and cross-border smuggling.
Impact on Nepal and Bhutan
Nepal and Bhutan have historically accepted Indian currency due to close economic ties. The new rules mean:
- Tourists from India: Can continue to use Indian notes up to ₹25,000.
- Local businesses: Will benefit from clarity on permissible denominations.
- Foreign nationals (Pakistan, Bangladesh): Must rely on local currency or other international payment methods.
This ensures smoother transactions while protecting against misuse.
Expert Opinions
Legal and financial experts welcomed the move.
- Economists: Say the restriction strengthens India’s currency management.
- Lawyers: Stress that FEMA amendments provide legal clarity.
- Policy analysts: Believe the move balances economic cooperation with security concerns.
According to financial analyst Takendra Verma, “The RBI’s decision is both economic and strategic. It protects the rupee while ensuring legitimate cross-border trade continues.”
Challenges Ahead
While the regulation is clear, challenges remain:
- Implementation: Border authorities must enforce the restriction effectively.
- Awareness: Travelers must be informed to avoid penalties.
- Monitoring: Authorities must track misuse of Indian currency in informal trade.
Experts suggest that awareness campaigns and strict border checks will be essential.
Global Best Practices
Globally, countries adopt similar measures to protect their currency:
- United States: Restricts carrying large amounts of cash across borders without declaration.
- European Union: Requires disclosure of currency above €10,000.
- China: Limits carrying yuan abroad to prevent misuse.
India’s move aligns with these practices, ensuring currency integrity and national security.
Conclusion
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The RBI’s amendment to FEMA regulations, barring Pakistan and Bangladesh citizens from carrying Indian notes to Nepal and Bhutan, is a strategic step to protect the rupee. By allowing only Indian, Nepali, and Bhutanese citizens to carry up to ₹25,000 in ₹200 and ₹500 notes, the RBI has balanced economic cooperation with security concerns.
For travelers, the ruling provides clarity. For authorities, it strengthens monitoring. As India continues to refine its currency management policies, this decision sets a strong precedent for transparency, accountability, and regional stability.
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