Labour minister cracks down on outsourcing in Nepal’s banks, NRB ordered to enforce worker rights

KATHMANDU: Nepal’s government has launched a major crackdown on alleged labour exploitation in banks and financial institutions, ordering stricter enforcement of labour laws for thousands of outsourced security guards, drivers and office support staff working through third-party manpower suppliers.

The move comes after mounting complaints that commercial banks and financial institutions have been using outsourcing companies to bypass labour protections, depriving workers of minimum wages, benefits and legal entitlements.

The Department of Labour and Occupational Safety has formally written to Nepal Rastra Bank, instructing the central bank to ensure all banks and financial institutions fully comply with Nepal’s labour laws and regulations.

The action follows directives from Youth, Employment and Labour Minister Ramji Yadav after repeated grievances were lodged through the Prime Minister’s Hello Sarkar portal, the ministry and labour authorities.

Complaints of Labour Exploitation in Nepal’s Banking Sector

According to labour officials, banks have increasingly hired workers — particularly security guards, drivers and office assistants — through third-party labour supply firms instead of directly employing them.

Authorities say this outsourcing system has enabled some institutions to avoid providing legally mandated benefits, including:

• Government-mandated minimum salary
• Paid leave and public holiday benefits
• Dashain festival allowance
• Insurance and gratuity benefits
• Proper overtime compensation

Officials say many outsourced workers in Nepal’s banking sector have reportedly been made to work long hours for low wages, while being excluded from protections guaranteed under Nepal’s labour framework.

The government believes some banks have been violating provisions of the Labour Act 2017 and Labour Regulation 2018 despite existing legal obligations.

NRB Told to Tighten Monitoring of Banks

Labour authorities had previously written to Nepal Rastra Bank on Chait 27, 2082 BS, requesting stricter enforcement of labour laws among regulated financial institutions.

However, officials say complaints persisted, prompting a second and stronger intervention.

In its latest directive, the labour department has urged the central bank to intensify monitoring and reissue instructions to banks to ensure full compliance with labour legislation.

A key focus this time is mandatory labour audits.

Under Rule 56 of Nepal’s Labour Regulations 2018, all institutions are legally required to conduct annual labour audits by the end of the Nepali month of Poush, reviewing compliance with labour rights and worker welfare obligations.

For banks and financial institutions, labour audit reports are legally required to be submitted to Nepal Rastra Bank.

The labour department has now asked NRB to strictly enforce this requirement and ensure banks submit proof that outsourced workers are receiving minimum wages and legal facilities.

Outsourcing Companies Also Given Ultimatum

The government’s crackdown is not limited to banks.

Labour authorities have also issued warnings to labour supply companies, the Nepal Labour Suppliers Association, and organizations representing private security providers.

Officials say only companies licensed under Section 59 of the Labour Act are legally permitted to supply workers for:

• Security services
• Support services
• Professional support services
• Domestic assistance work

Authorities allege some outsourcing firms have failed to ensure even the most basic labour protections for workers deployed at banks.

The labour department says investigations found cases where outsourced security guards and support workers were not receiving the government’s minimum wage, festival allowances, or benefits required by law.

Some workers were also reportedly being assigned excessive working hours without proper compensation.

“The labour laws and regulations must be fully implemented,” the department warned, adding that firms failing to comply could face strict legal action under Nepal’s Labour Act and Labour Regulations.

Pressure Mounts on Nepal’s Banking Industry

The directive comes at a sensitive moment for Nepal’s banking industry, which is already under increased regulatory scrutiny over loan quality, labour governance, compliance practices and operational accountability.

Labour rights advocates say the government’s move could become a landmark intervention in Nepal’s formal employment sector, particularly for outsourced workers who have long claimed they are treated as “invisible employees” despite serving full-time in major institutions.

If strictly enforced, banks may now be required to submit labour audit evidence proving outsourced employees are receiving:

• Minimum salary fixed by the government
• Leave and social protections
• Insurance coverage
• Gratuity and statutory benefits
• Festival bonuses and overtime pay

Institutions found violating labour rules could face regulatory action and legal penalties.