In recent years, Nepal Rastra Bank has issued significant amendments to modernize the foreign exchange regime. The Fifth Amendment to the Foreign Loan and Investment Management Bylaws, 2078 (2021), was issued on December 30, 2025, representing one of the most substantial liberalizations of Nepal's forex rules in recent years. Additionally, the Unified Forex Directive 2081 was amended through Circular 10/2082/83 dated April 6, 2026, introducing digital reporting requirements and expanded foreign currency facilities. This guide has been prepared to explain every aspect of the forex law in Nepal, including legal frameworks, individual and business limits, penalties, compliance requirements, and recent reforms.
The forex law in Nepal rests on two primary statutory pillars. The Nepal Rastra Bank Act 2058 (2002) establishes NRB as the sole authority for formulating foreign exchange policy, managing foreign exchange reserves, and licensing foreign exchange dealers. The Foreign Exchange (Regulation) Act 2019 (1962 AD), or FERA, controls all dealings in foreign currency, cross-border payments, capital movements, and foreign investment transactions.
| Legislation | Key Provisions | Administered By |
|---|---|---|
| Nepal Rastra Bank Act 2058 | Foreign exchange policy formulation, reserve management, dealer licensing, exchange rate determination | Nepal Rastra Bank |
| Foreign Exchange (Regulation) Act 2019 | Controls on foreign currency holding, dealing, cross-border payments, penalties for violations | Nepal Rastra Bank |
| Foreign Investment and Technology Transfer Act 2019 | Foreign investment inflows, repatriation, venture capital funds | Department of Industry / NRB |
| Foreign Loan and Investment Management Bylaws 2078 | Detailed procedures for foreign equity, loans, repatriation | Nepal Rastra Bank |
| Income Tax Act 2058 | Taxation on foreign income, withholding taxes, transfer pricing | Inland Revenue Department |
NRB's authority under the NRB Act includes issuing licenses to banks and financial institutions for foreign exchange dealing, framing rules and bylaws for forex transactions, inspecting and supervising licensed dealers, setting transaction limits and conditions, and prescribing the system for determining foreign exchange rates
The Foreign Exchange (Regulation) Act 2019 (1962 AD) is Nepal's foundational law for regulating all foreign exchange-related transactions. Despite being originally enacted in 1962, the Act remains highly relevant today due to frequent amendments and NRB directives that adapt it to modern financial realities. The Act has been amended multiple times, with significant revisions in 1987, 2002, and 2010.
The key objectives of FERA include regulating foreign exchange transactions in Nepal, controlling the import and export of foreign currency and bullion, preventing illegal capital flight and informal payment systems, ensuring foreign exchange earnings flow through formal banking channels, protecting Nepal's foreign exchange reserves, and facilitating legitimate foreign investment and repatriation.
The Act applies throughout Nepal and extends to all Nepali citizens residing outside Nepal, all firms and companies registered in Nepal operating abroad, and branches and agencies of such entities operating outside Nepal.
Under Section 3 of FERA, any person, firm, company, or body intending to conduct foreign exchange transactions must obtain a license from Nepal Rastra Bank. This requirement applies broadly across the financial and service sectors.
| Entity Type | License Fee | Annual Renewal |
|---|---|---|
| Commercial Banks | NPR 500,000 | As prescribed by NRB |
| Development Banks (National) | NPR 100,000 | As prescribed by NRB |
| Development Banks (Provincial) | NPR 20,000 | As prescribed by NRB |
| Hotels, Travel Agencies, Trekking Companies | NPR 2,000-4,000 per location | Annual renewal required |
| Casinos | NPR 50,000-100,000 | Bank guarantee required |
| Money Changers / Remittance Companies | As prescribed by NRB | Classification based on capital and turnover |
| Other Entities Dealing in Forex | Prior NRB permission required | Case-by-case basis |
The licensing process involves application submission to NRB with complete details, NRB evaluation of financial standing and compliance history, specification of transaction types and limits, payment of applicable fees and deposits, license issuance upon satisfaction of requirements, and ongoing compliance with all NRB orders and directives. NRB may also issue provisional licenses for temporary authorization subject to specific conditions.
NRB has established specific foreign currency limits for individuals under the Unified Forex Directive. These limits are periodically revised based on Nepal's foreign exchange reserve position and monetary policy objectives.
| Category | Limit | Notes |
|---|---|---|
| Maximum foreign currency without customs declaration (entry/exit) | USD 5,000 or equivalent | Amounts exceeding this must be declared |
| Maximum cash an individual may personally keep | USD 1,500 | Must be exchanged or deposited within 35 days if exceeded |
| Nepali citizens traveling abroad (per trip) | USD 3,000 or equivalent | Increased from USD 2,500 in July 2025 |
| Online purchase of services (prepaid card) | USD 500 per year | For digital service purchases |
| Convertible foreign currency account purchases | USD 2,000 annually | Through authorized banking channels |
| Nepali citizens traveling to Tibet (surface route, one-time) | USD 1,000 | One-time facility |
| Nepali citizens traveling to Tibet (surface route, annual) | USD 2,000 per fiscal year | Applies to SAARC countries excluding India |
| Money exchangers to citizens | USD 5,000 | Increased from USD 500 in May 2023 |
The travel foreign exchange facility was revised upward in July 2025 when NRB Governor Prof. Dr. Bishwo Nath Poudel announced the increase from USD 2,500 to USD 3,000 per trip while unveiling the monetary policy for fiscal year 2025/26. The frequency limit was also removed, allowing multiple trips without restriction.
Businesses in Nepal are subject to specific foreign currency limits and procedural requirements for international transactions.
| Transaction Type | Limit | Requirements |
|---|---|---|
| Import of goods (per transaction) | Up to USD 100,000 | Through DD or TT with documentation |
| Foreign services payment (general) | Up to USD 25,000/month | No prior NRB approval required |
| Foreign services (with regulatory recommendation) | Up to USD 12,000 | Direct from commercial bank |
| Foreign services (above USD 12,000) | As approved | NRB Banking Department approval required |
| Silver import | Up to USD 300,000 | Through licensed banks |
| Educational affiliation and exam fees | Up to USD 500,000 per transaction | Increased from USD 25,000; auditor certification if annual payment exceeds USD 300,000 |
| IT services purchase by forex earners | Up to USD 25,000 annually | For Nepali citizens earning foreign currency online |
| IT services purchase by IT industries | Up to USD 100,000 annually | For software and related IT service purchases |
| General service payments (invisible imports) | Up to USD 50,000 annually | Including payments to foreign researchers/professionals by universities |
| Refundable forex deposit for visa processing | As required | Electronic cards authorized for A-class and national B-class banks |
For imports exceeding USD 50,000, banks must obtain Business Credibility Information (BCI) for the concerned foreign firm before opening letters of credit. The standard cash margin deposit is 2% for industries and 10% for commercial entities, but these are reduced to 1% and 3% respectively for transactions utilizing fully digitalized customs points.
Section 9C of FERA imposes strict restrictions on cross-border payments by persons residing in Nepal. No person residing in Nepal shall, without NRB permission, make payment of any kind to any person residing outside Nepal, draw, accept, or negotiate negotiable instruments creating payment rights for persons outside Nepal, accept loans creating payment rights for persons residing outside Nepal, or make payment by order or on behalf of persons residing outside Nepal.
All cross-border payments must be conducted through licensed entities and formal banking channels in compliance with NRB circulars and the Act's provisions. Violations of these restrictions attract severe penalties under Section 17 of FERA.
Importers using foreign exchange must comply with specific procedural requirements under Section 8 of FERA. Goods must be imported within the time specified by NRB after opening the letter of credit. All documents must be submitted to the bank as specified by NRB. Goods must be imported in consonance with the price and quantity stated in the letter of credit, with amendments allowed through proper channels. The type of foreign exchange and payment methods must follow NRB-prescribed procedures. Actual invoicing must be maintained with no over-invoicing or under-invoicing. Prescribed procedures must be followed for importing knowledge and information technology.
For exports, Sections 9A and 9B require the exporter to declare before the Customs Officer that payment will be received within the prescribed period in approved foreign exchange. The export declaration form must be completed with all required details. If payment amount differs from declared value, an application must be submitted to NRB with supporting evidence. Payment must be received only through prescribed modes. Payment must not be delayed beyond the prescribed period. No action may be taken to avoid receiving full payment value.
The 120-day rule requires importers to submit proof of customs clearance within 120 days. Banks' central offices may approve extensions if the importer provides valid justification for delays caused by circumstances beyond their control.
Section 10C of FERA provides for repatriation of foreign investment. A foreign investor who has obtained permission to invest in securities is entitled to repatriate investment made in securities and profits or dividends earned, investment made in loans or loan facilities and interest thereof, and technological fees and royalties as per technology transfer agreements.
Nepali citizens residing outside Nepal who obtain permission to invest in Nepal in foreign exchange are entitled to the same repatriation facilities.
The Fifth Amendment to the Foreign Loan and Investment Management Bylaws, issued on December 30, 2025, introduced major reforms. Prior NRB approval for foreign equity inflows was removed. Repatriation approval authority was delegated to Head Offices of A-Class Commercial Banks, which must process applications within 15 days. NRB approval is now required only if repatriation is sought to a country other than the original source country of investment. Any Nepali company may now invest up to USD 20,000 abroad without prior NRB approval, regardless of profitability or sector.
Previously, outward investment was permitted only for profitable, export-oriented companies in the IT and services sectors. The Fifth Amendment removed these restrictions. Now, any Nepali company may invest up to USD 20,000 abroad without prior NRB approval, regardless of profitability, export orientation, or foreign currency earnings. Investments exceeding this threshold remain subject to regulatory approval.
Under Section 16 of FERA, any Nepali citizen residing in Nepal or any company, body corporate, or firm registered in Nepal must obtain NRB permission to open an account with a foreign bank. NRB may demand required statements and specify terms and conditions. The operation and use of such accounts shall be as specified by NRB through public notice.
Opening and operating foreign currency accounts within Nepal is also subject to NRB provisions. The Foreign Currency (Non-Resident) Account Regulation 2061 and Foreign Currency Account Regulation 2062 provide detailed procedures for different categories of foreign currency accounts.
Section 17 of FERA prescribes severe penalties for violations. The foreign exchange related to the offence shall be forfeited. The offender shall be fined additionally from the amount in question to three times the amount in question. If the foreign exchange cannot be forfeited, the claimed money shall be fixed and fined from the claimed money to three times the claimed money.
| Violation | Penalty |
|---|---|
| General contravention of FERA, Rules, Orders, or Directives | Forfeiture of foreign exchange + fine from amount to 3x the amount |
| When amount cannot be determined | Fine up to NPR 200,000 |
| Employee violating Act or divulging secrecy | Fine up to NPR 100,000 |
| Importer violating procedures or over-invoicing | Fine from amount to 3x the amount |
| Exporter violating Sections 9A, 9B, 9C | Fine from amount to 2x the amount |
| Accomplice to import/export offence | Half the punishment of primary offender |
| Failure to pay fine | Imprisonment up to 4 years |
| Amount in question NPR 10 million or more | Additional imprisonment up to 3 years |
| Constitutional body chief/member or political appointee | Double punishment (max additional 2 years imprisonment) |
If an offence is committed by a firm, company, or body, the director, office-bearer, employee, or agent taking responsibility for the work related to the offence shall be liable for punishment. However, if they could not be informed about the offence or submit evidence that they did their best to prevent it, they shall not be liable.
The Government of Nepal may designate investigating officers to inquire and investigate offences under FERA. Investigating officers have powers to search suspicious persons (body search by same gender), stop and search motor vehicles, search buildings or places of transaction with memorandum, arrest persons suspected of violating the Act, and hold persons in detention up to 30 days (not more than 7 days at a time) with court permission.
Under Section 14, the Government or NRB may inspect accounts, books, and documents of any licensee. Licensees must submit all demanded documents and provide all requested information. Failure to comply constitutes violation of the Act.
NRB may also order the exporter to bring payment if goods are sold, or sell the goods and bring payment or return them to Nepal if payment is not received within the prescribed time.
Section 6 of FERA grants the Government of Nepal emergency powers during economic or monetary crisis. The Government may, by Notification in the Nepal Gazette, order citizens owning foreign exchange to produce or arrange production of foreign exchange for sale to NRB or authorized persons at rates determined by the Bank. The Government may require transfer of rights to foreign exchange in the name of the Government at bank-determined rates. The Government may exempt certain persons or classes from such orders.
This power does not apply to foreign exchange obtained by any person from a licensee for approved purposes with NRB permission.
The Fifth Amendment to the Foreign Loan and Investment Management Bylaws, 2078, issued on December 30, 2025, represents a structural shift from approval-centric controls to post-transaction supervision. Key reforms include removal of prior NRB approval for foreign equity inflows, decentralization of repatriation approvals to A-Class commercial banks with 15-day processing mandate, liberalization of outward investment for all Nepali companies up to USD 20,000, and retention of NRB oversight for post-transaction monitoring.
The Unified Forex Directive 2081 was further amended through Circular 10/2082/83 dated April 6, 2026. Key changes include digitalization of Bi.Bi.Ni. Form reporting with reduction from three to two physical copies, authorization for A-class and national B-class banks to issue electronic cards for refundable visa deposits, expansion of foreign exchange facilities to reinsurance brokers, permission for Nepali forex earners to pay up to USD 25,000 annually for IT services, increase in IT industry software purchase limit to USD 100,000 annually, increase in general service payment limit to USD 50,000 annually, relaxation of SWIFT membership requirement allowing agreement with NRB-approved electronic payment providers, extension of import deadline beyond 120 days with valid justification, removal of border restrictions for rerouting import cargo to Chobhar Dry Port, and authorization for bank guarantees in Nepalese currency for joint ventures in global tenders where the Nepali partner holds more than 50%.
Online forex trading through unlicensed international brokers is not permitted under Nepal's forex law. The Foreign Exchange (Regulation) Act requires all foreign exchange transactions to be conducted through NRB-licensed entities. Trading in foreign currency pairs through offshore brokers constitutes a violation of FERA because it involves making payments to persons residing outside Nepal without NRB permission.
Individuals and businesses seeking to hedge foreign exchange risk may do so through authorized banking channels. NRB permits banks to engage in proprietary derivatives transactions, with the sum of outstanding buy and sale amounts not exceeding 30% of core capital (increased from 25% under the April 2026 amendment).
The Nepal Rastra Bank Act empowers NRB to deal in foreign exchange through spot, advance exchange rate, swap, option, or similar instruments. However, these facilities are available only to licensed banks and financial institutions, not to individual retail traders.
What is the Foreign Exchange (Regulation) Act in Nepal?
The Foreign Exchange (Regulation) Act 2019 (1962 AD), commonly known as FERA, is Nepal's principal legislation governing foreign currency, foreign exchange transactions, cross-border payments, capital movement, and foreign investment. It is administered by Nepal Rastra Bank.
How much foreign currency can I carry from Nepal?
Nepali citizens traveling abroad can carry up to USD 3,000 or equivalent per trip as of July 2025. The maximum foreign currency that can be held without customs declaration is USD 5,000. The maximum cash an individual may personally keep is USD 1,500.
Is forex trading legal in Nepal?
No, online forex trading through unlicensed international brokers is not legal in Nepal. All foreign exchange transactions must be conducted through NRB-licensed banks and financial institutions. Violations attract penalties under FERA Section 17.
What is the penalty for violating forex law in Nepal?
Penalties include forfeiture of foreign exchange involved, fines from the amount in question up to three times the amount, imprisonment up to 4 years for failure to pay fines, and additional imprisonment up to 3 years if the amount exceeds NPR 10 million.
Can I open a foreign currency account in Nepal?
Yes, but NRB permission is required. Any Nepali citizen or company registered in Nepal must obtain NRB permission to open a foreign currency account. The operation and use of such accounts are governed by NRB regulations.
What are the recent reforms in Nepal's forex law?
The Fifth Amendment to the Foreign Loan and Investment Management Bylaws (December 30, 2025) removed prior NRB approval for foreign equity inflows, decentralized repatriation approvals to commercial banks, and liberalized outward investment. The April 6, 2026 Circular further digitalized reporting and expanded foreign currency facilities.
How much can Nepali companies invest abroad?
Any Nepali company may now invest up to USD 20,000 abroad without prior NRB approval, regardless of profitability or sector. Investments exceeding this threshold require regulatory approval.
What is the limit for online service purchases in foreign currency?
Nepali citizens can purchase online services up to USD 500 per year using prepaid cards. Nepali citizens earning foreign currency online can pay up to USD 25,000 annually for IT services. IT industries can purchase software and related services up to USD 100,000 annually.
Can foreign investors repatriate profits from Nepal?
Yes, foreign investors are entitled to repatriate investment made in securities and profits or dividends earned, investment made in loans and interest thereof, and technological fees and royalties as per technology transfer agreements. Repatriation approvals are now processed by A-Class commercial banks within 15 days.
What is the NPR-INR exchange rate peg?
The Nepali Rupee is pegged to the Indian Rupee at a fixed rate of 1 INR = NPR 1.60 (NPR 160 = INR 100), maintained by Nepal Rastra Bank since the early 1990s. Rates against other currencies float in line with the Indian Rupee's movement.
Attorney Nepal PVT LTD is recognized as a leading provider of foreign exchange and corporate legal services in Nepal. With extensive experience in FERA compliance, NRB regulations, foreign investment structuring, and cross-border transaction advisory, the firm has successfully assisted numerous businesses and individuals in navigating Nepal's complex forex regulatory landscape.
The legal team at Attorney Nepal PVT LTD specializes in structuring foreign exchange transactions to comply with Nepali law while maximizing operational flexibility. Services include FERA compliance advisory and audit, NRB license application and renewal, foreign investment approval and repatriation strategy, cross-border payment structuring, foreign currency account advisory, import-export documentation compliance, forex penalty defense and dispute resolution, and ongoing regulatory compliance management.
For a confidential consultation on forex law compliance in Nepal, contact Attorney Nepal PVT LTD today. Your transactions deserve a strong legal foundation, and your compliance deserves expert guidance.
The information provided in this guide is for general informational and educational purposes only. It does not constitute legal or financial advice, and no attorney-client relationship is created by reading this content. Laws, regulations, and NRB directives may change, and individual circumstances vary. For advice specific to your situation, consult a qualified legal and financial professional. Attorney Nepal PVT LTD disclaims all liability for actions taken or not taken based on this content.
For further reading and authoritative sources on forex law in Nepal, the following resources are recommended:
June 14, 2026 - BY Admin