NRB governor Paudel says study underway to reform financial blacklisting rules in Nepal

KATHMANDU: Bishwanath Paudel, Governor of Nepal Rastra Bank (NRB), has said the central bank is reviewing provisions related to financial blacklisting in Nepal, particularly rules that place individuals on the blacklist after incidents such as bounced cheques and loan defaults.

Speaking at a program in Birgunj on Thursday, Paudel stated that the central bank is conducting a serious assessment of the existing regulatory framework governing the blacklist system in the country’s banking and financial sector.

He said the NRB is examining whether individuals should be immediately placed on a blacklist when a cheque bounce occurs and whether the existing mechanism fairly reflects the realities of business operations in Nepal.

“We are studying the provision that places individuals on the blacklist immediately after a cheque bounce,” Paudel said. “At the same time, we are also evaluating how the list of blacklisted individuals can be shortened and made more reasonable.”

According to the governor, a large number of people currently end up on the blacklist due to cheque bounce cases or loan-related issues with banks and financial institutions. As a result, the central bank is reviewing how many cases genuinely warrant blacklisting and how many should be treated differently under a more flexible regulatory approach.

Financial blacklisting in Nepal often restricts individuals and businesses from accessing banking services, obtaining loans, or conducting certain financial transactions. Industry stakeholders have long argued that the system can sometimes be overly punitive, particularly for entrepreneurs who face temporary liquidity challenges.

Paudel emphasized that excessive regulatory rigidity could hinder both business activity and broader economic growth.

“Neither businesses nor the country can function properly if everything is controlled only through strict enforcement or punitive measures,” he said.

The governor noted that entrepreneurship inherently involves risk and setbacks. He stressed that individuals attempting to run businesses should not be excessively punished for a single mistake or financial misstep.

“Business cannot be learned only from textbooks or academic education,” Paudel said. “It evolves through experience, setbacks, and repeated attempts. Therefore, our focus should be on helping businesses become more organized and sustainable rather than simply criticizing entrepreneurs.”

He also called for a shift in public discourse, saying that blaming entrepreneurs alone would not lead to economic development.

“National development cannot be achieved simply by criticizing businesspeople,” he said. “It is important to encourage entrepreneurs and support the private sector so that they can contribute to economic growth.”

The remarks come at a time when Nepal’s financial sector is gradually recovering from a period of tight liquidity and slower credit expansion. Banks and financial institutions have been under pressure to balance risk management with the need to support economic activity, particularly in sectors such as trade, manufacturing, and small and medium-sized enterprises.

Paudel also highlighted the central bank’s policy focus on promoting the digital economy and information technology industries, which he described as sectors with strong future growth potential for Nepal.

He said the NRB has been encouraging banks and financial institutions to accelerate digitalization as part of broader financial sector modernization.

“We expect significant growth in information technology industries in the future,” he said. “That is why we have been prioritizing the IT sector and urging banks and financial institutions to move toward digitalization.”

The governor also pointed to changing business patterns in cities such as Birgunj, noting that traditional businesses such as photo studios and automobile workshops were once common but are gradually declining as digital platforms reshape the market.

“Today, many businesses are shifting to digital platforms,” he said. “Entrepreneurs and business operators must adapt to these changes and develop digital strategies for their operations.”

Paudel added that the government and regulators are also working to create a more supportive environment for Nepali information technology companies seeking to expand abroad. According to him, efforts are underway to make it easier for domestic IT firms to invest in foreign markets and scale internationally.

The review of blacklisting provisions by the central bank could have significant implications for Nepal’s banking regulation, credit discipline, and business environment, particularly for small and medium enterprises that often struggle with short-term financial constraints.