The man, arrested in Biratnagar city, was identified as 45-year-old Suresh Singh Kushwaha from Madhya Pradesh.
Police seized 150 notes of Rs.1,000 denomination and 200 notes of Rs.500 denomination from him.
The man was trying to take a flight to Kathmandu from Biratnagar, said Sub-Inspector Kumar Shrestha, chief of the airport security post.
The official said Kushwaha was to distribute the notes in Kathmandu.
In May, police had arrested two Indians - Sanjay Prasad Gupta and Kamalesh Thakur of Bihar - with fake Indian currency of face value Rs.3,40,000.
A Vietnamese national, Pham Van Dinh, was arrested last year with Rs.10 million in fake Indian currency.
--IANS (Posted on 14-08-2013)