Lucknow, Aug 31 - The arrest of a Nepali youth from Uttar Pradesh's border town of Rupadiha with fake Indian currency notes has exposed how Nepal was being used as a conduit for counterfeit Indian notes printed in Pakistan, police said Monday.

Sources in the Anti-Terrorist Squad (ATS) claimed that the confessions made by arrested people have even given leads to the nexus of the fake currency operators with Nepal's erstwhile king Gyanendra's family.

The arrest Sunday of Vicky Manihar in Rupadiha, over 150 km from here, followed a similar crackdown by the Madhya Pradesh ATS in Bhopal from where two young men were nabbed earlier last week.

'Leads provided by them brought the Madhya Pradesh sleuths to Uttar Pradesh, where the local ATS joined them to get hold of yet another man with close connections with the ousted Nepal royal family,' a top police officer told IANS here.

Atiq alias Rana and Rajesh Gupta were picked up in Bhopal with fake Indian currency of the order of Rs.