Nepal's security forces have seized gold worth over NRS 10 million that was being smuggled by road from India and arrested two men, an official said Thursday.

According to the Nepal Armed Police Force authorities in Kathmandu, a Hyundai car that had crossed into Birgunj city in southern Nepal Wednesday evening was found to be carrying a small amount of gold.

The posse under Deputy Superintendent Krishna Prasad Koirala detained the car, registered in Nepal, as well as its driver Arvind Singh, 35, and the passenger, Amit Daruka, 25, on the suspicion that they could be carrying a substantial amount of gold.

The car was searched again Thursday in the presence of customs and revenue officials as well as media personnel when 4 kg of gold was found hidden under the seat. In addition, searchers found gold jewellery weighing nearly 300 gm.

The haul is estimated to cost over NRS 10 million.

The seizure comes close on the heels of Nepal's apex bank and regulator, Nepal Rastra Bank (NRB), issuing a new directive on the import and sale of gold.

Earlier this year, it was reported that the import of gold in Nepal had risen to over 190 percent, causing the NRB to suspect foul play.

Subsequently, the apex bank tightened control on imports and sale. Banks were asked to sell only 10 kg of gold a day against the recorded demand of 25 kg in the domestic market.

The curb caused an acute scarcity especially with Nepal gearing up to celebrate a Hindu festival this month, Teej, marked by a rise in buying of ornaments.

Gold merchants have been complaining that they are forced to buy gold from India across the border while smuggling from India has increased.