The Nepal Rastra Bank (NRB) has directed banks and financial institutions (BFIs) not to reimburse burnt or damaged paper notes unless individuals present a recommendation letter from the police or local administration.
The move comes in response to reports that large bundles of cash were burned or looted during the recent Gen-Z protests, which targeted the residences of political leaders and private organizations.
Official Clarification
NRB Deputy Spokesperson Suman Neupane stated that notes damaged by fire or those carrying a smoky odor cannot be exchanged without official recommendations.
As per the NRB Act 2002, the central bank is not obliged to accept any note if:
- more than 50% of its surface has been torn, mutilated, or defaced, or
- the note is counterfeit.
In addition, individuals holding damaged notes must follow NRB’s prescribed guidelines. The regulations further prohibit the destruction, misuse, or unauthorized distribution of banknotes deemed unfit for circulation.
Political Residences Targeted
During the protests, demonstrators allegedly looted or burned cash worth millions of rupees from the residences of senior leaders, including:
- Sher Bahadur Deuba, Nepali Congress President and former Prime Minister,
- Ganga Dahal, daughter of Maoist Center Chair Pushpa Kamal Dahal, and
- Deepak Khadka, former Minister for Energy, Water Resources and Irrigation.
Cash belonging to several private organizations was also reported destroyed in the unrest.
Investigations Underway
The Central Investigation Bureau (CIB) has launched an inquiry into the circulation of burnt banknotes. Senior Superintendent of Police Hobindra Bogati said the public has been asked to report anyone found in possession of such notes.
Furthermore, under the Department of Money Laundering Investigation (DMLI) Act, cash holdings above Rs 1 million must be backed with proof of legitimate income. Failure to comply may result in punishment under the Revenue Leakage (Investigation and Control) Act, 1995.
