Kathmandu, Jan. 21 -- Nepal's central bank has banned the use of Indian currency notes of Rs 2,000, Rs 500 and Rs 200 denominations, a move that could affect Indian tourists visiting the Himalayan nation where Indian currency is widely used.

Nepal Rastra Bank on Sunday issued a circular prohibiting Nepali travellers, banks and financial institutions from holding or carrying and trading Indian bank notes higher than Rs 100, the Kathmandu Post reported.

The central bank said in its circular letter that Indian currency of 200, 500 and 2,000 denominations cannot be carried and used for trading, it said, Under the new regulation, Nepali citizens cannot carry these denominations to countries other than India. Similarly, Nepalis are also not a...