NRB opens overseas expansion path for Nepali IT companies, Marking a structural shift in export policy

KATHMANDU: Nepal Rastra Bank (NRB) has formally opened the door for Nepali information technology (IT) companies to invest abroad and establish overseas branches, a move widely seen as a structural policy shift that aligns Nepal’s digital economy with global markets. The reform, introduced through amendments to the Foreign Investment and Foreign Exchange Management Regulation, represents one of the most liberal outward-investment policies Nepal has adopted in recent years.

Under the new framework, Nepali exporting companies are now allowed to invest up to USD 1 million overseas, while companies that are not yet exporters can invest up to USD 20,000 in foreign markets. The central bank has also signaled that these ceilings are not fixed and will be reviewed and revised upward based on outcomes and market response, a reassurance aimed at building long-term confidence among entrepreneurs and investors.

IT Sector Gains from Gradual but Meaningful Reforms

The policy shift comes after several years of incremental reforms in Nepal’s investment and business climate. The IT sector, in particular, has emerged as a key beneficiary.

In recent years, the Ministry of Finance has introduced measures to make company registration easier, partially relax foreign direct investment (FDI) thresholds, and bring greater predictability to tax rates. These reforms have already produced visible results: while only around 40 IT companies with foreign investment were established two years ago, the number surged to nearly 400 companies within a year, reflecting growing investor confidence and improved regulatory clarity.

NRB officials acknowledge that the central bank’s latest decision builds directly on these reforms but goes further by addressing a long-standing constraint—Nepali companies’ inability to legally expand abroad. Nepal had imposed strict restrictions on outward foreign investment as recently as 2021, effectively preventing domestic firms from competing globally. The current policy reversal is therefore considered a watershed moment for export-oriented services, especially software, digital services, and IT outsourcing.

Reduced Paperwork, Easier Profit Repatriation

One of the most significant changes addresses complaints from foreign investors and Nepali firms alike regarding excessive paperwork. NRB has removed the requirement to obtain prior central bank approval for profit repatriation, a step expected to reduce transaction delays and compliance costs.

According to the amended regulation, once foreign investment has been approved through the relevant authority, banks and financial institutions can facilitate transactions without repeated NRB clearances, provided reporting requirements are met

. Policymakers believe this will improve Nepal’s reputation as a credible destination for technology-driven investment and services exports.

Strategic Implications for Nepal’s Digital Exports

Although the investment limits may appear modest at first glance, economists and industry leaders argue that the long-term implications are substantial. Allowing IT companies to open overseas entities enables Nepali firms to access global clients directly, comply with foreign procurement rules, and integrate into international value chains—something that was previously possible only through informal or indirect arrangements.

NRB officials have emphasized that the banking sector will actively support this expansion, positioning banks as facilitators of international growth rather than gatekeepers. The policy is also expected to improve foreign exchange inflows over time, as overseas earnings from Nepali IT firms are repatriated through formal channels.

A Message to Nepal’s Youth and Startups

Beyond regulatory language, the policy carries a clear message to young entrepreneurs and startups: Nepal is no longer asking its digital talent to think small. Authorities are encouraging innovators to launch new products, target international markets, and compete globally while operating from Nepal.

For a country where outward investment was once tightly restricted, the new approach signals a fundamental change in mindset. By coupling controlled liberalization with regulatory oversight, NRB aims to balance macroeconomic stability with the need for growth in high-value export sectors such as IT.

As Nepal seeks to diversify its economy beyond remittances and traditional sectors, the opening of foreign investment avenues for IT companies may prove to be one of the most consequential policy decisions of the decade.