Nepal Rastra Bank Act 2058 is the principal statute governing the establishment, functions, and powers of Nepal Rastra Bank (NRB), the central bank of Nepal. The Act was enacted on 17 Magh 2058 (January 30, 2002) and has been amended multiple times, most substantively by the First Amendment Act 2063 (2006) and the Second Amendment Act 2073 (2016). The legal framework is designed to ensure that NRB functions as an autonomous central bank with authority over monetary policy, foreign exchange management, banking regulation, and payment systems. When financial institutions operate in Nepal, they are required to comply with NRB directives, and violations are subject to penalties including fines and license revocation. The Act is often perceived as technical, yet it is made foundational for Nepal's financial stability. Attorney Nepal Pvt Ltd is recognized as a trusted service provider for banking and financial regulatory matters, and professional assistance is highly recommended to navigate NRB compliance.
Nepal Rastra Bank Act 2058 defines Nepal Rastra Bank as the central bank established under Section 3 of the Act to carry out the functions of central banking in Nepal. The Preamble states that NRB is established to formulate necessary monetary and foreign exchange policies, maintain price stability, consolidate balance of payments for sustainable economic development, develop a secure and efficient payment system, and appropriately regulate, inspect, and supervise the banking and financial system to enhance public credibility. Section 4 establishes the objectives of NRB, including maintaining price stability, real sector stability, foreign exchange stability, and balance of payments stability. Section 5 enumerates the functions, duties, and powers of NRB, and these provisions have been expanded through amendments to address evolving financial sector needs including digital payments and cooperative regulation.
A comprehensive legal framework is made applicable to Nepal Rastra Bank Act 2058, and multiple statutes and constitutional provisions collectively establish NRB's authority. The following bullet points outline the governing framework:
The Act has been amended nine times as of 2081 BS (2025), with the most recent amendment being the Act to Amend Certain Acts Relating to Cooperatives 2081 (2025).
Extensive functions and powers are vested in NRB under Nepal Rastra Bank Act 2058, and these powers are enumerated in Section 5 and elaborated throughout the Act. The following table outlines the core functions:
| Function | Legal Basis | Description |
|---|---|---|
| Currency issuance | Section 52 | Exclusive monopoly over issuance of banknotes and coins; backed by gold, foreign currency, and government securities |
| Monetary policy | Section 5(b) | Formulate and implement policies to maintain price stability and economic equilibrium |
| Foreign exchange policy | Section 57 | Full authority to formulate, implement, and enforce foreign exchange policy |
| Foreign exchange management | Section 58 | Issue licenses to forex dealers, set exchange rates, inspect and supervise forex transactions |
| Banking regulation | Section 5(f), 76-79 | License banks and financial institutions, regulate, inspect, and supervise their operations |
| Lender of last resort | Section 5(h) | Provide liquidity assistance to banks and financial institutions during financial stress |
| Government banker | Section 5(g) | Act as banker, advisor, and fiscal agent to the Government of Nepal |
| Payment systems | Section 5(i) | Establish, promote, and regulate payment, clearing, and settlement systems |
| Open market operations | Section 5(i1) | Conduct repo, reverse repo, and other instruments for liquidity management |
| Cooperative regulation | Section 5(f1), (f2) | Regulate and supervise cooperative organizations engaged in savings and credit |
These functions are exercised through the Board of Directors, the Governor, and various departments within NRB.
A structured governance framework is established under Nepal Rastra Bank Act 2058 to ensure accountability and operational efficiency. The following bullet points outline the governance structure:
The Governor and Directors take an oath of office and secrecy before the Chief Justice of the Supreme Court or a designated Justice.
Exclusive currency issuance powers are vested in NRB under Nepal Rastra Bank Act 2058, and these powers are governed by Section 52. The following bullet points outline the currency issuance framework:
The monetary unit is the Rupee, divided into 100 Paisa, and NRB is exempt from taxes, fees, and duties on central banking functions including coin minting and note printing.
Comprehensive foreign exchange powers are granted to NRB under Nepal Rastra Bank Act 2058, and these powers are consolidated in Chapter 7. The following bullet points outline the foreign exchange framework:
Unauthorized foreign exchange transactions are prohibited and constitute offences under the Act.
Extensive banking regulation and supervision powers are vested in NRB under Nepal Rastra Bank Act 2058, and these powers are elaborated in Chapter 9 and the Banks and Financial Institutions Act 2073. The following bullet points outline the regulatory framework:
NRB may also establish credit information centers, information networks, and exchange equalization funds to support the banking system.
Significant penalties are prescribed under Nepal Rastra Bank Act 2058 for violations of NRB's regulatory framework. The following table outlines the penalty structure:
| Violation | Penalty | Legal Basis |
|---|---|---|
| Unauthorized deposit-taking or lending | Fine up to 3x property value or imprisonment up to 3 years, or both | Section 96(1) |
| Unlicensed foreign exchange dealing | Fine up to NPR 1,000,000 or imprisonment up to 3 years, or both | Section 96(2) |
| Counterfeit currency | Fine up to 3x property value or imprisonment up to 3 years, or both | Section 96(1) |
| Violation of NRB directives (institution) | Fine up to violation amount, reprimand, restriction, or license revocation | Section 99-100 |
| Violation by director/official/employee | Fine up to NPR 500,000, suspension, or termination | Section 100(2) |
| Money laundering/terrorist financing | As per prevailing anti-money laundering laws | Section 79(4a) |
Cases relating to offences under the Act are filed by the Government of Nepal as plaintiff and are deemed incorporated in Schedule-1 of the State Cases Act 2049.
Specific financial provisions are made applicable to NRB under Nepal Rastra Bank Act 2058 to ensure operational autonomy and fiscal discipline. The following bullet points outline the financial framework:
The fiscal year of NRB aligns with the Government of Nepal's fiscal year.
Significant recent developments are occurring regarding Nepal Rastra Bank Act 2058, and proposed amendments are under consultation as of 2026. The following bullet points outline the key developments:
Stakeholders have raised concerns about regulatory overlap between NRB Act, BAFIA 2073, and the Payment and Settlement Act 2075, and consultations are ongoing to clarify these relationships.
What is the Nepal Rastra Bank Act 2058?
It is the principal statute establishing Nepal Rastra Bank as the central bank of Nepal, governing its functions, powers, and regulatory authority over monetary policy, foreign exchange, and banking supervision.
When was the Nepal Rastra Bank Act enacted?
The Act was enacted on 17 Magh 2058 (January 30, 2002) and has been amended nine times as of 2081 BS (2025).
What are the main objectives of Nepal Rastra Bank?
The main objectives are to maintain price stability, real sector stability, foreign exchange stability, consolidate balance of payments, develop a secure payment system, and regulate the banking and financial system.
Does NRB have monopoly over currency issuance?
Yes, Section 52 grants NRB exclusive monopoly over the issuance of banknotes and coins in Nepal.
What is the authorized capital of NRB?
The authorized capital is NPR 5 billion, increased from NPR 1 billion by the Second Amendment Act 2073.
Can NRB regulate payment service providers?
Yes, Section 5(i) and proposed amendments authorize NRB to regulate payment systems, and the draft amendment seeks to include PSOs and PSPs within the definition of financial institutions.
What penalties apply for unlicensed banking operations?
Penalties include fines up to three times the property value or imprisonment up to three years, or both, under Section 96.
Is NRB independent from the government?
NRB operates with statutory autonomy, though the Governor and Directors are appointed by the Government of Nepal, and the Act provides for consultation on capital alterations and certain policy matters.
What is the role of NRB as lender of last resort?
NRB provides liquidity assistance to banks and financial institutions during periods of financial stress to prevent systemic collapse.
Can NRB take over insolvent banks?
Yes, Section 79(5)(a) authorizes NRB to revoke licenses and take over or place in trusteeship banks that are insolvent or on the verge of insolvency.
What is the foreign exchange reserve requirement?
At least 50% of issued currency must be backed by gold, silver, foreign currency, foreign securities, or foreign bills of exchange, reducible to 40% with government approval.
Does NRB pay taxes?
No, NRB is exempt from taxes, fees, charges, and duties on its central banking functions.
How often does NRB publish monetary policy?
NRB publishes an annual monetary policy report and a monthly balance sheet.
What is the tenure of the NRB Governor?
The Governor serves a five-year term, renewable for one additional term.
What recent amendments are proposed to the NRB Act?
A draft amendment is under consultation to include PSOs and PSPs as financial institutions and to clarify digital banking provisions.
Attorney Nepal Pvt Ltd is established as a premier legal service provider for Nepal Rastra Bank Act 2058 matters, and comprehensive support is offered from licensing applications through regulatory compliance and dispute resolution. NRB directive analysis is conducted meticulously, and all banking and financial regulatory requirements are managed through licensed professionals. Court representation is provided by experienced financial litigation lawyers, and penalty challenges, license appeals, and compliance advisory are handled with strategic precision. The firm is committed to ensuring that every financial institution and individual complies with NRB regulations, and personalized guidance is made available for all central banking and financial regulatory matters. For reliable, efficient, and legally sound NRB Act services, Attorney Nepal Pvt Ltd is strongly recommended.
Call to Action: Contact Attorney Nepal Pvt Ltd today for expert assistance with Nepal Rastra Bank Act 2058. Professional legal support is provided to ensure your banking operations are fully compliant, your regulatory applications are properly filed, and your financial disputes are resolved in accordance with Nepali central banking law.
Updated on: June 30, 2026
Disclaimer: This article is made available for informational purposes only and shall not be construed as legal advice, advertisement, personal communication, solicitation, or inducement of any sort from Attorney Nepal Pvt Ltd or any of its members. No liability shall be accepted for consequences arising out of any action undertaken by any person relying on the information provided herein. Independent legal consultation is advised for case-specific matters.
References
For further reading and official verification, the following authoritative sources are made available:
Nepal Rastra Bank Act 2058 Consolidated Version
Nepal Rastra Bank Official Website
Nepal Law Commission Legal Resources
Bank and Financial Institution Act 2073
Ekantipur Draft Amendment NRB Act 2026
Evolutionary Overview of Central Banking in Nepal
Attorney Nepal Pvt Ltd Legal Services
June 30, 2026 - BY Admin