KATHMANDU, Dec 31: Nepal Rastra Bank (NRB) has relaxed foreign investment regulations, easing the inflow and repatriation of foreign capital while allowing Nepali information technology (IT) companies to invest abroad more freely.
By amending the Nepal Rastra Bank Foreign Investment and Foreign Loan Management Bylaw, 2021, the central bank has removed the requirement for foreign investors to obtain prior approval from the NRB to bring foreign currency into Nepal or repatriate funds. Under the revised provision, foreign investors can now receive foreign exchange directly through commercial banks by submitting an application.
Previously, investors needed NRB approval to repatriate proceeds from the sale of shares, profits or dividends earned from foreign investment, remaining funds after the liquidation or dissolution of companies, and profits and royalties generated under technology transfer agreements.
Revised interest rate corridor system introduced
NRB Governor Biswo Nath Poudel said the amendments address long-standing complaints about excessive paperwork. “Arrangements have been made to make the investment environment more comfortable,” Poudel wrote on social media.
The revised bylaw has also lifted restrictions on blacklisted Nepali companies seeking foreign investment or loans. However, the concerned foreign investors must submit a pre-declaration acknowledging that they are fully aware of the blacklisted status of the Nepali firms.
Similarly, the NRB has eased rules for Nepali IT companies investing abroad. According to the amended bylaw, IT firms will receive the required foreign exchange from the central bank to invest in foreign companies or sectors, subject to thresholds linked to their paid-up capital.
Under the new provisions, service-exporting companies will not face additional conditions for investments of up to US $20,000. IT companies can now invest up to 50 percent of their average foreign exchange earnings over the previous three fiscal years or up to US $1 million, whichever is lower.
Analysts say the changes will help Nepali IT companies expand their international footprint. For years, many firms have sought to open overseas offices, enter partnerships, and compete globally but were constrained by policy and procedural hurdles.
Governor Poudel noted that the number of IT companies expanded nearly tenfold last year, highlighting the sector’s growing potential. Around 400 IT firms were registered last year, compared to about 40 in the previous year, he said.
