Nepal Rastra Bank Eases Foreign Currency Limits for Banks' Overseas Investment and Service Payments
Nepal Rastra Bank has amended its Unified Circular-2025 to allow banks and financial institutions greater flexibility in foreign investments, including up to 50% of their investment limit in highly liquid foreign government bonds rated 'A-' or higher. The central bank also raised foreign exchange limits for medical treatment, aviation imports, satellite services, and service payments to India and other countries.
Kathmandu, Oct 6 — Nepal Rastra Bank (NRB) has relaxed the limits on investments that banks and financial institutions (BFIs) can make abroad, issuing amendments to its Unified Circular-2025 through the Foreign Exchange Management Department.
Under the revised provisions, BFIs may invest an additional 10 percent of their total investment limit in highly liquid foreign government bonds issued by countries with an international credit rating of 'A-' or higher. This additional allocation can be scaled up to a maximum of 50 percent for a period of up to five years.
Previously, BFIs could invest funds held in agency accounts into low-risk instruments such as call deposits and certificates of deposit (with tenures of one year or less) without adversely affecting daily liquidity, subject to their internal policies. There was also a provision allowing investment of up to 40 percent of the total balance held in agency banks into such instruments with tenures of up to two years.
According to the NRB, the revised arrangement expands the scope for investment in highly liquid foreign government bonds.
In addition, BFIs are now permitted to invest in hedging services used to manage foreign exchange risk associated with foreign currency loan facilities or supplier credit for capital goods imports. Sectors eligible for such hedging include:
- Information technology
- Commercial agriculture
- Manufacturing
- Infrastructure development
- Tourism
- Energy
The maximum investment tenure for these financial instruments is set at five years.
Meanwhile, the NRB has also relaxed foreign currency exchange facilities for the import of medical treatment services, telecommunications equipment, and aviation equipment.
Nepali citizens can now access an annual foreign currency exchange facility of up to US $30,000 for medical treatment at hospitals abroad and for purchasing necessary medicines and medical equipment. The previous limit was $15,000.
Nepali airline companies can now make advance payments of up to $500,000 through BFIs for importing items such as aircraft engines or spare parts, based on documents including recommendations from the relevant regulatory body. A bank guarantee from a foreign bank is no longer required for this purpose. The previous limit was $100,000.
Nepali telecommunications service providers are now allowed to make annual payments of up to $500,000 for leasing or using satellite services under agreements with foreign service providers.
For payments related to service imports from countries other than India, commercial banks can now provide exchange facilities of up to $30,000 (or an equivalent amount) per transaction, based on agreement/consent approvals or exchange recommendations from the regulatory body—double the previous limit of $15,000.
For service imports from India, commercial banks can now provide exchange facilities for payments of up to INR 6 million per transaction, up from the previous limit of INR 4 million.