Central bank facilitates cross-border online payments, eases transactions for traders and workers

KATHMANDU: In a landmark move aimed at enhancing financial inclusivity and easing cross-border transactions, Nepal Rastra Bank (NRB) has introduced significant revisions to its policies regarding digital payments.

The updated regulations permit traders and Nepali workers in India to utilize digital platforms for transferring money, marking a pivotal breakthrough in facilitating international transactions.

The amended circular, issued by the Foreign Exchange Management Department of NRB, allows Nepali traders to receive payments from their foreign partners via Quick Response (QR) Code, thereby streamlining the process of receiving merchant payments from abroad.

Under the National Payment Switch system, Nepali commercial banks and national-level development banks can now acquire such payments, albeit with an acknowledgment of associated risks in digital transactions, as emphasized in the revised guidelines.

Importers of foreign goods and services are also empowered to make payments to their foreign counterparts using similar digital platforms, further fostering efficiency and convenience in cross-border trade.

NRB’s initiative extends to Nepali citizens employed in India, granting them the ability to remit money back home through various electronic banking channels, including person-to-person transfers, e-banking, interbank payments, mobile banking, and QR codes via the National Payment Switch.

Similarly, Indian nationals working in Nepal are now permitted to utilize QR codes for depositing money into personal accounts opened in Indian banks and financial institutions.

However, NRB has imposed certain limitations on remittances from Nepal to India, capping the daily and monthly remittance amounts to INR 15,000 and INR 100,000, respectively, through digital payment channels.

The introduction of this cross-border payment system is anticipated to significantly benefit Nepali entrepreneurs and Indian visitors, eliminating the inconvenience of carrying large sums of cash, particularly given Nepal’s ban on Indian banknotes above INR 100.

Additionally, it promises relief for Nepali workers in India, who previously encountered challenges in remitting their earnings back home.

The groundwork for this digital payment ecosystem was laid during Prime Minister Puspa Kamal Dahal’s visit to India last June, culminating in a formal bilateral agreement last month.

The agreement establishes a joint mechanism for overseeing electronic transactions between the two countries, underscoring the commitment to fostering seamless financial connectivity and cooperation.