Is Indian Rupee Accepted in Nepal?
Yes, Indian Rupees (INR) are widely accepted in Nepal and are the most convenient currency for Indian pilgrims. IMPORTANT: Indian INR 500 and INR 2000 notes are NOT accepted in Nepal. Carry denominations of INR 100 and below.
Nepal Rastra Bank Pegged Exchange Rate for INR
Nepal and India maintain a fixed exchange rate under a bilateral currency arrangement. Nepal Rastra Bank (NRB) officially pegs the Nepali Rupee to the Indian Rupee at a fixed rate that has been in force since 1993 without any floating adjustment. This is not a market rate. It is a government-mandated peg, meaning you will receive a consistent amount of local currency for every INR at any licensed money changer, bank, or hotel exchange desk in Nepal.
Because the rate is fixed, there is no advantage to shopping around for a "better" exchange rate inside Nepal. What varies between exchange points is the commission charged and the notes accepted. Money changers in tourist areas like Thamel (Kathmandu) sometimes charge a 1–2% service fee on top of the official rate. NRB-licensed banks typically exchange at the exact pegged rate with no commission. When exchanging at your hotel, confirm whether the official peg applies before handing over cash.
This predictability makes budgeting straightforward for Indian pilgrims. INR 25,000 (the border carry limit) is more than sufficient for personal expenses on most tours. Keep a small calculator or currency conversion note handy to verify change at local shops in Ranipauwa and Jomsom, where informal exchange can occasionally round down in the vendor's favour.
The INR 500 and INR 2000 Note Ban. Critical Update for 2024–2025
Nepal has maintained a long-standing restriction on Indian high-denomination notes. As of the most recent NRB notification (2024–25 fiscal year), Indian INR 500 notes remain banned from circulation in Nepal. The ban was originally introduced in 2015 when India demonetised the old INR 500 and INR 1000 notes, and Nepal lost hundreds of crores in unusable currency overnight. Since then, NRB has not reinstated acceptance of any INR 500 denomination, old or new.
The INR 2000 note was officially withdrawn from circulation in India by the Reserve Bank of India in May 2023 (RBI circular dated 19 May 2023). By the time Nepal could consider accepting it, India had already begun demonetisation. Nepal accordingly never formally accepted the INR 2000 note, and it remains invalid in Nepal as of 2025. If you are carrying INR 2000 notes, exchange them at Indian banks before you cross the border.
Practically, this means Indian pilgrims should travel with INR 100 and INR 200 notes only. INR 50 and smaller denominations are also accepted but have limited utility for larger transactions. Carrying large amounts in INR 100 notes can be bulky. A bundle of 250 notes = INR 25,000. Use zip-lock bags or a money belt to manage the physical volume. At the Sunauli or Raxaul border crossing, custom officers may check your notes. Having only valid denominations avoids any delays.
INR 25,000 Carry Limit at Indian Border Crossings
India's Foreign Exchange Management Act (FEMA) and the Nepal-India bilateral treaty together restrict the amount of Indian currency a traveler may carry into Nepal. The current limit is INR 25,000 per person per trip. This limit applies at all border crossings: Sunauli (UP), Raxaul (Bihar), Banbasa (Uttarakhand), and Jogbani (Bihar).
Carrying more than INR 25,000 in cash can result in confiscation at the border and potential penalties under FEMA. For a family of four, the combined limit is INR 1,00,000. Which is more than adequate for converting to local currency in Nepal. For most standard 5–7 day tour packages (where meals, hotels, and transport are already included), this is more than adequate for personal expenses such as puja samagri, souvenirs, horse riding fees, and tips.
If your budget requires more than INR 25,000 in Nepal, plan to withdraw Nepali Rupees directly from ATMs in Kathmandu or Pokhara using your Indian debit/credit card. International Visa and Mastercard debit cards work reliably at Nabil Bank, Standard Chartered, and Himalayan Bank ATMs in both cities. Note that Nepali Rupees cannot be freely converted back to INR at the Indian border. Whatever Nepali Rupees you have remaining should be spent or given as tips before returning.
Where to Exchange Currency: Banks, Hotels, and Money Changers
Licensed money changers are the fastest exchange option in Kathmandu. Thamel, the main tourist hub, has over 40 licensed counters open from 7 AM to 8 PM daily. They exchange INR at the official NRB rate. Unlicensed street exchangers occasionally operate near tourist areas. Avoid them entirely, as counterfeit Nepali Rupee notes have been reported. All licensed operators display a yellow NRB certificate on their premises.
Banks with exchange facilities in Pokhara include Nepal Investment Bank, Machhapuchhre Bank, and Kumari Bank, all located within 500 metres of Lakeside (Baidam). Opening hours are 10 AM to 3 PM Sunday to Thursday and 10 AM to 1 PM Friday; banks are closed on Saturday (Nepal's weekend). The Tribhuvan International Airport in Kathmandu has two NRB-approved exchange counters open from 6 AM to 10 PM. Useful upon arrival.
Beyond Pokhara, exchange options disappear rapidly. Jomsom has one or two small informal exchange points but no formal bank exchange window. Do not rely on exchanging money in Jomsom or Ranipauwa. Come prepared from Pokhara or Kathmandu. If you have any remaining INR, keep it for incidental expenses at Indian hotels en route home rather than trying to exchange in remote Mustang.
Digital Payments in Nepal: 20.9 Million Mobile Banking Users
Nepal's digital payment ecosystem has grown dramatically. According to Nepal Rastra Bank's Payment Oversight Report 2023/24, there were 20.9 million mobile banking users in Nepal as of mid-2024, and mobile banking transactions exceeded INR 3.1 trillion equivalent in the fiscal year. The dominant platforms are eSewa and Khalti, both of which function like India's Paytm or PhonePe. However, these wallets require a Nepali bank account or a Nepali mobile number to operate. Indian visitors cannot easily use them without a local SIM.
QR-code payments using Nepal's NCHL (Nepal Clearing House Ltd) IPS system are increasingly common in Kathmandu restaurants and hotels but are not yet widespread in Mustang. In Jomsom and Ranipauwa, cash remains the primary transaction method. A few hotels in Jomsom accept international card payments via POS terminals, but network outages make card acceptance unreliable.
Indian UPI (Unified Payments Interface) is not yet interoperable with Nepal's payment systems as of early 2026. While there have been announcements about India-Nepal UPI integration from the National Payments Corporation of India (NPCI), implementation at the point-of-sale level in remote areas like Muktinath is several years away. Plan your Mustang leg entirely on cash.
Practical Cash Strategy for the Muktinath Route
For a standard 5-day Muktinath tour from Kathmandu (all-inclusive package), budget roughly INR 3,125–5,000 per person for personal expenses: puja samagri and flower offerings (INR 125–315 at temple), horse ride from Ranipauwa to temple gate (INR 375–625 one way), porter or luggage handling if needed (INR 188–315), tips for driver and guide (INR 315–625 customary per person total), and souvenirs such as Shaligram stones or woollen goods from Jomsom market (INR 315–1,250).
Carry this cash from Jomsom. Do not count on withdrawing or exchanging further up the route. Exchange or withdraw in Kathmandu first, then top up in Pokhara if needed, and carry the final amount into Jomsom. Keep cash in a waterproof inner pocket or concealed money belt. The Kali Gandaki valley is windy and dusty, and loose currency can be lost. Divide your cash into two portions: a daily spend envelope and a reserve kept in your locked bag.
One practical denomination tip: bring a supply of small Nepali Rupee coins (INR 6–13 equivalent) for donation boxes inside the Muktinath temple complex. Each of the 108 Mukti Dhara water spouts has a small donation slot, and devotees customarily drop a small coin at each one. Having 108 small coins prepared in advance is both convenient and spiritually meaningful. Your guide can help source these in Jomsom if you ask the evening before your darshan.
References & Sources
- Nepal Rastra Bank (NRB). Foreign Exchange Management – NRB Official Exchange Rate Policy
- Nepal Rastra Bank (NRB). Payment Oversight Report 2023/24 – Mobile Banking and Digital Transactions
- Nepal Rastra Bank (NRB). Foreign Exchange (Regulation) Act 2019 – Currency Import/Export Provisions
- Reserve Bank of India (RBI). RBI Circular: Withdrawal of INR 2000 Banknotes from Circulation (May 2023)
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