NRB Bars Exchange of Burnt Notes Without Police Approval

Nepal Rastra Bank (NRB) has directed banks and financial institutions not to reimburse burnt or smoke-damaged paper currency unless accompanied by a recommendation from the police and local administration.

The central bank issued the instruction after large amounts of cash were reportedly destroyed or looted during the recent Gen Z protests. NRB clarified that notes with burn marks or smoky odor cannot be exchanged without official verification.

As per the NRB Act, 2002, the central bank is not obliged to accept any note where more than 50 percent of its surface is torn, mutilated, or defaced, nor any counterfeit note. Regulations also prohibit the destruction, misuse, or circulation of damaged banknotes, requiring such notes to be properly disposed of in line with the law.

Authorities have launched an investigation, citing the risk of looted cash entering circulation. The public has been urged to report anyone attempting to exchange burnt banknotes.

Under money laundering and revenue laws, any cash holdings above Rs. 1 million must be backed by legitimate income sources, and failure to comply is considered a punishable offense.