Nepal Rastra Bank eases regulations on foreign investment in stock market

KATHMANDU: In a significant move aimed at promoting foreign investment in Nepal, the Nepal Rastra Bank has announced a groundbreaking amendment to the Foreign Investment and Foreign Loan Management Regulation, 2078. The revised regulations eliminate the requirement for approval from the Nepal Rastra Bank for foreign investments in the stock market and industrial sector within the country.

Previously, foreign investors were mandated to obtain approval from the Nepal Rastra Bank before bringing any investment into Nepal. However, with the recent amendment, this cumbersome process has been abolished, making it easier for foreign funds to flow into the country.

Under the updated regulations, foreign investment within the country can now be directed to approved institutions listed on the Stock Exchange Board without the need for prior approval from the Nepal Rastra Bank.

This move is expected to streamline the investment process, attract more foreign capital, and foster a more investor-friendly environment.

Furthermore, the amended regulations extend beyond the stock market to include the industrial sector, as per the Industrial Enterprises Act, 2076. Foreign investments in this sector no longer require explicit approval from the Nepal Rastra Bank.

The modified system enables companies or industries to deposit foreign investment directly into their accounts after completing the specified process outlined by the Nepal Rastra Bank.

In the event that foreign investment cannot be brought within the specified period, the revised regulation allows for an extension of the approval period from the relevant authority.

Additionally, the provision has been made to handle excess amounts that may arise due to exchange rate fluctuations.

If the approved foreign investment amount is not utilized within the set timeframe, the excess amount can be used as foreign investment after obtaining approval from the relevant authority.

The amended regulations also introduce provisions related to accounting, allowing for the preparation of necessary measures if the amount and date of the excess foreign investment are mentioned upon approval.

Institutions providing support-approval for foreign investments exceeding the approved amount can now be brought into the country, subject to certain conditions outlined in the regulation.

This bold move by the Nepal Rastra Bank is expected to enhance the ease of doing business in the country and make Nepal a more attractive destination for foreign investors. The financial landscape is set to undergo a transformative change, opening up new avenues for economic growth and development.