Foreign exchange law in Nepal governs all transactions involving foreign currency — from individual currency holding limits to corporate import-export payments, foreign investment repatriation, and outward investment by Nepali companies. The principal legislation is the Foreign Exchange (Regulation) Act, 2019 (1962), commonly known as FERA, which grants extensive regulatory powers to the Government of Nepal and Nepal Rastra Bank (NRB). Although FERA dates back to 1962, it remains highly relevant through frequent NRB directives, circulars, and recent landmark reforms — including the 2025 opening of outward investment for Nepali companies. This guide covers the legal framework, licensing requirements, currency limits, import-export payment rules, service payments, outward investment, hedging, enforcement, and the key restrictions that individuals and businesses must understand.
| Law / Regulation | Key Function |
|---|---|
| Foreign Exchange (Regulation) Act, 2019 (1962) | Principal legislation — licensing, restrictions, penalties for all forex transactions |
| NRB Foreign Exchange Transaction Licensing and Inspection Bylaw, 2020 | Licensing procedures, inspection, and compliance for forex institutions |
| NRB Remittance Bylaws, 2023 | Rules for remittance service providers |
| NRB Foreign Investment and Foreign Loan Management Bylaw, 2021 | FDI repatriation, foreign loan management |
| Hedging Regulations, 2075 | Foreign exchange risk hedging for eligible projects |
| NRB unified circulars (annual) | Consolidated forex rules — limits, procedures, compliance requirements |
NRB's Foreign Exchange Management Department (FXMD) is the primary authority for foreign exchange regulation. FXMD's functions include: licensing and inspecting forex institutions, formulating forex policies, approving and recording foreign direct investment and foreign loans, managing profit repatriation, and facilitating import-export payment policies. NRB issues unified circulars annually that consolidate all forex rules applicable to banks, financial institutions, money changers, and other licensed entities.
Under Section 3 of FERA, no person or entity can conduct foreign exchange transactions without NRB permission or licensing. This applies to banks, financial institutions, money changers, hotels, travel agencies, cargo companies, casinos, and any other entity dealing in foreign currency. The licensing process involves submitting an application to NRB with company registration certificate, memorandum and articles of association, tax clearance, audited financials, citizenship/passport of shareholders, and payment of prescribed licensing fees. NRB issues a single license per institution for forex transactions.
| Limit Type | Amount | Notes |
|---|---|---|
| Carry without declaration | USD 5,000 (or equivalent) | Convertible foreign currency |
| Maximum cash holding | USD 1,500 | Physical cash limit per person |
| Declaration requirement | Above USD 5,000 | Must declare at customs upon entry/exit |
| Personal foreign exchange facility | Up to USD 1,000 | For services obtained from foreign entities |
| Indian currency | Small denominations only | ₹200, ₹500, ₹2,000 notes prohibited |
Non-declaration or exceeding limits can result in confiscation of currency, fines, and legal action under FERA.
Businesses importing goods must comply with NRB foreign exchange rules through licensed A-class commercial banks and B-class development banks. Key provisions include:
| Provision | Details |
|---|---|
| Per-transaction limit | Up to USD 100,000 for goods imports |
| Payment methods | Demand Draft (DD) or Telegraphic Transfer (TT) |
| Documentation | Purchase orders, invoices, letters of credit, banking compliance documents |
| Timely import | Goods must be imported within the period specified by the bank |
| EXIM code | EXIM code required for all import-export transactions |
Exporters are required to receive full payment for exported goods within the period specified by the bank, through prescribed methods (typically letter of credit). Exporters are prohibited from: receiving payment through unauthorized modes, delaying payment beyond the prescribed period, failing to receive the full declared value, and engaging in mis-invoicing or any act to avoid receiving full payment. If goods are not sold, the exporter must either bring payment by selling them or return the goods to Nepal. Violations are treated as serious offences under FERA.
| Threshold | Approval Requirement | Applicable Services |
|---|---|---|
| Up to USD 5,000 | Bank approval only (no NRB) | All foreign services |
| USD 5,001 – 25,000/month | Bank approval + regulatory body recommendation | Consultancy, IT, education, technical, professional |
| USD 25,001 – 50,000 | Regulatory body recommendation required | Complex service agreements |
| Above USD 50,000 | Mandatory NRB prior approval | Large-scale foreign service contracts |
Insurance companies can make foreign payments for specialist services (particularly in India) with Nepal Insurance Authority recommendation — NRB approval is not required in such cases.
Historically, Nepal prohibited outward investment by Nepali companies. This changed with the Economic and Business Environment Reform Act, 2081 (2025), which allows Nepali companies to invest abroad with NRB approval. This landmark reform aligns Nepal with global investment practices. Under Section 10A of FERA (as amended), NRB determines the conditions, sectoral limits, and procedures for outward investment through published public notices. Employee share purchase schemes of foreign parent companies are also permitted without foreign currency remittance.
Foreign investors in Nepal can repatriate profits, dividends, and capital under the Foreign Investment and Technology Transfer Act (FITTA). The NRB FXMD manages repatriation through licensed commercial banks. Branch offices of foreign companies executing government contracts can repatriate contract profits to their parent company. Proper documentation, tax clearance, and compliance with tax obligations are required for all repatriation transactions.
NRB's Hedging Regulations, 2075 allow eligible projects — particularly in infrastructure, energy, and manufacturing — to hedge foreign exchange risk through A-class commercial banks. Hedging protects long-term projects from currency volatility between the Nepali Rupee and foreign currencies. The facility is available under NRB-prescribed conditions and helps businesses manage exchange rate exposure on foreign loans and capital expenditures.
Individuals and businesses are prohibited from the following without NRB authorization:
| Prohibited Action |
|---|
| Making any payment to a person residing outside Nepal |
| Drawing, accepting, or negotiating instruments that create payment rights for non-residents |
| Accepting loans that create foreign payment obligations |
| Making payments on behalf of non-residents |
| Conducting forex transactions without a license |
| Failing to declare currency at customs (above USD 5,000) |
| Using informal payment channels (hawala, hundi) |
| Making unauthorized online payments in foreign currency |
FERA violations carry significant consequences: confiscation of currency, monetary fines, cancellation of forex license, and criminal prosecution. NRB conducts regular inspections of licensed institutions. During economic crises, the government can direct citizens to produce or transfer foreign exchange to authorized persons at NRB-determined rates. Enforcement priorities include undeclared currency, informal payment channels, unauthorized online payments, and export mis-invoicing.
NRB has issued specific rules for certain sectors: casinos must obtain express approval for any foreign currency dealings (clarified in 2025); hotels and travel agencies require separate forex licenses for tourist currency exchange; and remittance companies operate under the NRB Remittance Bylaws, 2023. Each sector has its own licensing, reporting, and inspection requirements under the FERA framework.
Foreign exchange compliance intersects with several other legal areas: foreign investment law for FDI repatriation, EXIM code registration for import-export transactions, VAT law for tax compliance on cross-border transactions, company registration for forex license eligibility, and contract law for international service agreements.
While Nepal Divorce Services is Nepal's first specialized divorce and family law firm, our legal team also advises on foreign exchange compliance and international business law. We can assist with NRB licensing applications, import-export payment structuring, service payment compliance, outward investment advisory, and FERA enforcement matters.
For legal assistance, contact us at +977 9841114443 or on WhatsApp.
| Topic | Guide |
|---|---|
| Foreign investment law | Foreign Investment Law in Nepal |
| EXIM code | EXIM Code Registration in Nepal |
| VAT law | VAT Law in Nepal |
| Company registration | Company Registration in Nepal |
| Contract law | Contract Law in Nepal |
| IPO & capital markets | IPO and Capital Markets Law in Nepal |
The Foreign Exchange (Regulation) Act, 2019 (1962) — commonly called FERA — is Nepal's principal legislation governing all foreign currency transactions, cross-border payments, capital movement, and foreign investment. The Act grants regulatory authority to the Government of Nepal and Nepal Rastra Bank (NRB) to license, regulate, and monitor all foreign exchange activities in the country.
Nepal Rastra Bank (NRB) is the primary regulator through its Foreign Exchange Management Department (FXMD). NRB issues licenses for forex transactions, sets currency limits, regulates import-export payments, manages foreign investment repatriation, and enforces compliance. NRB issues regular circulars and directives that update the rules under FERA.
Yes. Under Section 3 of FERA, no person or entity can conduct foreign exchange transactions without prior permission or licensing from NRB. This applies to individuals, firms, companies, banks, money changers, hotels, travel agencies, and any other entity dealing in foreign currency. Applications are submitted to NRB with required documents, and licenses are issued after evaluation.
NRB limits for individuals:
Non-declaration can result in confiscation, fines, and legal action under FERA.
Importers can receive up to USD 100,000 per transaction for goods imports through A-class commercial banks. Payments must be made via Demand Draft (DD) or Telegraphic Transfer (TT). Importers must provide proper documentation including purchase orders, invoices, and letters of credit. The bank verifies compliance before releasing foreign exchange. Timely import of goods after payment is mandatory.
Exporters must receive payment for the full value of exported goods within the period specified by the bank. Payment must come through prescribed methods (typically letter of credit). Exporters cannot: receive payment through unauthorized modes, delay payment beyond the prescribed period, fail to receive full payment, or engage in mis-invoicing. Violations are treated as offences under FERA.
Yes, with limits. Companies can remit up to USD 25,000 per month for foreign services — including consultancy, IT services, education, technical, and professional services — without prior NRB approval. For amounts exceeding USD 50,000, prior NRB approval is mandatory. Insurance companies can make foreign payments for specialist services with Nepal Insurance Authority recommendation (no NRB approval needed).
Yes — this is a landmark 2025 reform. Following the Economic and Business Environment Reform Act, 2081 (2025), Nepali companies can now invest abroad with NRB approval. Previously, outward investment was prohibited. The conditions, sectoral limits, and procedures are determined by NRB through published public notices. This aligns Nepal with global investment practices.
Foreign investors in Nepal can repatriate profits, dividends, and capital under the Foreign Investment and Technology Transfer Act. The amount received as foreign currency under Section 7A of FITTA is treated as repatriable. NRB's FXMD manages the repatriation process through licensed commercial banks. Proper documentation and tax clearance are required.
NRB issued Hedging Regulations, 2075 allowing eligible projects to hedge foreign exchange risk through licensed banks. Hedging protects long-term projects (infrastructure, energy, manufacturing) from currency volatility between Nepali Rupee and foreign currencies. The facility is available through A-class commercial banks under NRB-prescribed conditions.
Violations under FERA include: conducting forex transactions without a license, failing to declare currency at customs, using informal payment channels (hawala), unauthorized online payments, and mis-invoicing exports/imports. Penalties include confiscation of currency, monetary fines, cancellation of forex license, and criminal prosecution. The government can also direct citizens to produce or transfer foreign exchange during economic crises.
Yes. NRB clarified in 2025 that casinos and similar entertainment businesses must obtain specific approval before dealing in any foreign currency, including Indian currency. This ended long-standing regulatory ambiguity. Casinos must comply with all FERA provisions including licensing, reporting, and NRB inspection requirements.
The Foreign Exchange Management Department (FXMD) of NRB handles: licensing and inspection of forex institutions, policy formulation for foreign exchange management, approval and record-keeping for foreign direct investment and foreign loans, repatriation management, and policy facilitation for import-export of goods and services. FXMD issues unified circulars annually that consolidate all forex rules.
Nepal has specific restrictions on Indian currency. Notes of ₹200, ₹500, and ₹2,000 denominations are currently prohibited from being brought into or taken out of Nepal. Only smaller denominations (₹100 and below) are generally permitted. Nepal is in the process of allowing higher-denomination notes (₹200 and ₹500) after nearly a decade of restriction. Travellers should verify current NRB rules before carrying Indian currency.
A lawyer can assist with: obtaining NRB forex licenses, structuring import-export payment compliance, advising on service payment thresholds, navigating outward investment regulations, managing profit repatriation for foreign investors, handling FERA enforcement actions, and ensuring compliance with NRB circulars and directives. Contact Nepal Divorce Services at +977 9841114443.
At Nepal Divorce Services, Nepal's first specialized divorce law firm, we understand that taking the first step toward divorce can feel overwhelming. Our experienced divorce lawyers are here to guide you through the legal process and help you move forward with confidence and clarity.
Whether you're inside or outside Nepal and need assistance with filing a divorce case, our services are accessible worldwide. Contact us at +977 9841114443, on WhatsApp, or Viber.
