Kathmandu: The Nepal government 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.

The Indian currency is extensively used by Nepalese people and businesses for their savings and transactions.

The government has asked the people to refrain from keeping or carrying Indian bank notes higher than Rs 100 denomination as it has not legalised them, Nepal's minister for information and communications Gokul Prasad Baskota said.

"The government has decided not to use, carry and keep the Indian bills of 200, 500 and 2000 denominations. The government will soon issue a formal notice in this matter," he said.

The decision will adversely affect Nepalese labourers working in India as well as Indian tourists visiting Nepal.

India is Nepal's largest trade partner and supplies the majority of its consumer goods.

The Indian government introduced new banknotes of Rs 2,000, Rs 500 and Rs 200 denominations after the demonetisation of old notes worth Rs 500 and 1,000 in 2016.

However, the move hit countries such as Nepal and Bhutan where Indian currency is widely used.

Nepal Premier KP Sharma Oli said earlier this year that demonetisation hurt the Nepalese people and added that he would raise the matter with Indian leaders.

People have been using the new Indian currency in Nepal for nearly two years now.