Nepal’s central bank has once again banned the utilisation of Indian currency pertaining to denominations of Rs 500 and Rs 1,000 after allowing them for the past one year.
The decision comes a day after India demonetised the high-value notes.
Nepal's central bank has issued a directive to the Nepali banking and financial institutions as well as "currency exchange centres" to stop transacting the two currency notes.
The Nepal Rastra Bank (NRB) issued a directive in this regard on Wednesday. It also decided to write to the Reserve Bank of India for the management of the higher-denomination notes in Nepal, according to officials.
Limited use of Indian currency notes of Rs 500 was allowed in Nepal in 2015 with restrictions after they had been restricted for 13 years since 2002.
India's ban on the currency notes on Tuesday is likely to trouble traders in border areas, who rely heavily on Indian currency because of their businesses and imports from India through the "open borders".
Indian currency is widely used in Nepal for day-to-day transactions, especially in the border areas.
Also, a large number of Nepalese citizens working in India send remittances to their family in Nepal in higher denomination notes.
Nepal, a landlocked country, depends on India for trade and supplies.