NRB Act set for amendment, New provisions on digital banks and currency proposed

KATHMANDU: The government has prepared a draft bill to amend the Nepal Rastra Bank Act, 2002 (2058 BS), introducing major reforms aimed at strengthening central bank autonomy, modernising regulation and formally recognising digital banking and digital currency instruments.

According to the Ministry of Finance Nepal, the amendment is being pursued to align the central bank’s mandate, objectives and regulatory framework with internationally accepted central banking practices and Nepal’s evolving financial system.

Officials said the revision is also necessary to implement commitments mentioned in the fiscal year 2025/26 (2082/83 BS) budget, the central bank’s Fourth Strategic Plan (2022–2026) and recent monetary policy directions.

Digital banking and currency recognition

One of the most significant features of the draft amendment is the formal inclusion and regulation of digital banks. The proposal defines a digital bank as a licensed financial institution that conducts banking transactions primarily through digital platforms without relying on a physical branch network.

The draft also expands the legal definition of currency and monetary instruments, allowing the central bank to recognise additional digital or electronic payment tools through public notice. Existing instruments such as cheques, drafts, credit cards and remittance tools are also retained within the definition.

The move comes amid rapid growth in online payments, mobile banking and digital finance services in Nepal, signalling the central bank’s effort to modernise the legal framework for fintech and payment systems.

Broader regulatory and institutional reforms

The amendment bill proposes several structural and regulatory changes, including:

Strengthening the autonomy of the central bank

Promoting risk-based supervision of banks and financial institutions

Reinforcing provisions related to inflation control and monetary stability

Updating reporting and balance sheet systems in line with international accounting standards

Clarifying procedures for resolution and settlement of banks and financial institutions

Aligning central bank responsibilities with Nepal’s federal governance structure

The draft also seeks to clarify the definition of financial institutions, expanding it to include financial holding companies, sector-specific lending institutions, payment service providers, remittance companies and digital banks formally designated by the government.

Coordination powers and governance provisions

Amendments have also been proposed to Section 10 of the Act to allow the central bank to coordinate more formally with provincial governments, local bodies, cooperatives, public agencies and private sector institutions at both national and international levels.

Another proposed change concerns Section 27, which deals with acting leadership at the central bank. The draft states that if the governor dies, resigns, is suspended, travels abroad, takes leave or is otherwise unable to perform duties, the government will appoint the senior-most deputy governor as acting governor.

Public consultation underway

The Finance Ministry has opened the draft for public feedback and is currently collecting suggestions from stakeholders. After incorporating revisions, the government plans to table the amendment bill in Parliament in the coming session.

If enacted, the reform would represent one of the most significant overhauls of Nepal’s central banking law in two decades, potentially reshaping the country’s regulatory approach to digital finance, monetary governance and financial sector supervision.