'It is the currency act of India, not Nepal, that bans the circulation of Indian 1,000 and 500-rupee notes outside India,' says Pagini. 'So once these notes are found outside, they become contraband money.'

While the Indian government made the law to crack down on fake Indian currency rackets and funding of terror activities, it is affecting bona fide tourists, students and businessmen.

'Thousands of Nepalis live and work in India,' Pagini says. 'While returning to Nepal, they have a problem carrying hard cash. They have to carry only Indian currency of the denomination Rs.100 or less, which proves cumbersome.'

This month, the Federation of Nepalese Chamber of Commerce and Industries petitioned NRB, asking it to lift the ban on the Indian notes.

'We had to explain that it is not in our hands,' Pagini said. 'Unless India amends its own act, the ban will be on in Nepal and other countries as well.'

Last month, when NRB Governor Dipendra Chhetri and RBI Governor D. Subbarao met in Colombo at the Asian Clearing Union meeting, Nepal renewed its request to India to amend its currency act.

The request had been made last year as well when the then Nepali prime minister Pushpa Kamal Dahal Prachanda made his first official visit to New Delhi.

This year, when his successor Madhav Kumar Nepal visits New Delhi again, Pagini said the issue would be broached once more.