Nepal Rastra Bank FDI Approval in Nepal

Are you searching for Nepal Rastra Bank FDI approval requirements? Understanding NRB's role in foreign direct investment is crucial for international investors entering Nepal. This comprehensive guide explains the complete NRB process, from initial notification to investment recording and repatriation, following the major regulatory reforms implemented in December 2025.

What is Nepal Rastra Bank FDI Approval?

Nepal Rastra Bank FDI approval refers to the regulatory oversight and foreign exchange management procedures required for foreign investments entering Nepal. While the Department of Industry (DOI) or Investment Board Nepal (IBN) grants primary investment approval, NRB manages the foreign exchange aspects, capital injection recording, and repatriation facilities under the Foreign Investment and Technology Transfer Act 2075 (FITTA 2019) and the Foreign Exchange (Regulation) Act 1962.

Furthermore, significant regulatory changes were introduced on December 30, 2025, through the Fifth Amendment to the Foreign Loan and Investment Management Bylaws 2078 (2021). These amendments shifted NRB's role from an approval-based regulator to a post-transaction supervisor for most foreign equity inflows .

Why NRB Recording Matters for Foreign Investors

NRB recording establishes the official foreign exchange status of investments, enabling future repatriation of profits, dividends, and capital. Without proper NRB recording, foreign investors cannot legally transfer earnings abroad or recover their investment upon exit. The recording process creates a verifiable trail of capital inflow through formal banking channels, which is essential for compliance with Nepal's foreign exchange regulations .

Moreover, the recent amendments have streamlined the process, reducing bureaucratic delays while maintaining necessary oversight for foreign exchange management .

Legal Framework Governing NRB FDI Procedures

Step-by-Step NRB FDI Process

Phase 1: Pre-Injection Notification (Before December 30, 2025)

Previously, foreign investors were required to obtain prior NRB approval before injecting capital, even after receiving DOI/IBN approval. This created a dual-approval system that added weeks to the investment timeline .

Phase 2: Current Process (After December 30, 2025 Amendment)

Step 1: Obtain Sectoral Approval
Foreign investors must first obtain approval from the Department of Industry (for investments below NPR 6 billion) or Investment Board Nepal (for investments above NPR 6 billion or hydropower projects exceeding 200 MW) .

Step 2: Submit Statutory Notice to NRB
Before capital injection, a statutory notice must be submitted to NRB stating the intent to bring foreign investment. This notice should include company incorporation documents, FDI approval letter, and investment details. Based on submitted documents, NRB issues an acknowledgment letter .

Step 3: Capital Injection Through Banking Channels
Foreign capital must be remitted via SWIFT transfer from the investor's foreign bank account to the Nepalese company's local bank account. The SWIFT message must clearly state "Foreign Investment" or "FDI for capital investment" to ensure proper identification .

Step 4: Obtain Inflow Certificate
After the investment amount is credited, the company must submit required documents to the bank to obtain an Inflow Certificate. This certificate serves as official proof that funds were legally transferred through formal banking channels and is essential for NRB recording .

Step 5: Share Registry Update
The company must apply to the Office of Company Registrar for an updated shareholder registry, submitting the inflow certificate, bank statements, and share registry forms. This creates legal proof of foreign ownership .

Step 6: NRB Investment Recording
Within six months of capital remittance, the foreign investment must be recorded with NRB. This involves submitting the inflow certificate, shareholder registry, company details, and investment specifics to NRB's Foreign Exchange Management Department .

Required Documents for NRB FDI Recording

Capital Injection Schedule Under FITTA 2075

Foreign investment must be injected according to a prescribed timeline based on the total approved amount :

NRB Foreign Loan Approval Process

For foreign loans (distinct from equity investment), prior NRB approval remains mandatory under the Foreign Exchange (Regulation) Act 1962 :

Step 1: Loan Agreement Execution
The borrower and foreign lender execute a loan agreement with terms including interest rate, repayment schedule, and security arrangements.

Step 2: In-Principle Application
Submit application to NRB with project proposal, feasibility study, preliminary loan terms, and financial statements. NRB reviews foreign exchange implications and debt servicing capacity.

Step 3: Final Approval
Submit executed loan agreement with supporting documents. NRB grants final approval and assigns a registration number for monitoring.

Step 4: Recording Within 6 Months
Record the approved loan with NRB within six months of remittance, submitting loan agreement, commitment letter, utilization plan, and repayment schedule .

Repatriation of Earnings: New Liberalized Framework

The December 30, 2025 amendment significantly changed repatriation procedures :

Previous Process

Applications for dividend repatriation, disinvestment proceeds, and investment returns were processed by NRB's Foreign Exchange Department, often causing delays despite a 15-day timeline .

Current Process (Post-December 2025)

Authority to approve repatriation has been delegated to Head Offices of A-Class Commercial Banks. Banks must complete approval within 15 days of receiving complete documentation. NRB approval is now required only when repatriation is sought to a country other than the original source country .

Permitted Repatriation Categories

Timeline for NRB FDI Processes

Compliance Requirements After NRB Recording

Annual Obligations

• Submit annual performance reports to DOI/IBN
• File audited financial statements with NRB
• Maintain foreign exchange transaction records
• Update share registry for any ownership changes

Ongoing Reporting

• Quarterly progress reports for foreign loan utilization
• Debt service payment schedules for foreign loans
• Changes to loan terms or project scope (requires NRB approval)

Penalties for Non-Compliance

Key Differences: FDI vs Foreign Loan NRB Procedures

Recent Regulatory Changes (December 2025)

The Fifth Amendment to the Foreign Loan and Investment Management Bylaws introduced major reforms :

1. Removal of Prior Approval: NRB approval no longer required for foreign equity inflows after DOI/IBN approval
2. Decentralized Repatriation: Commercial banks now handle repatriation approvals
3. Outward Investment Liberalization: Nepali companies can invest up to USD 20,000 abroad without NRB approval
4. Post-Transaction Supervision: NRB shifted from approval-based to supervision-based regulation

Frequently Asked Questions About NRB FDI Approval

Is prior NRB approval required for foreign investment in Nepal?

No. As of December 30, 2025, prior NRB approval is no longer required for foreign equity investments. Investors only need sectoral approval from DOI or IBN, with NRB involvement limited to post-inflow recording .

What is the minimum foreign investment amount for NRB recording?

The minimum foreign investment for FDI approval is NPR 20 million (approximately USD 150,000). All foreign investments at or above this threshold must be recorded with NRB .

How long does NRB investment recording take?

The NRB recording process typically takes 15 to 20 working days from the date of submission of all required documents, including the inflow certificate and shareholder registry .

Can foreign investors repatriate profits freely from Nepal?

Yes, foreign investors can repatriate profits, dividends, and capital gains after tax clearance. Under the new December 2025 rules, commercial banks approve repatriation within 15 days. NRB approval is only needed if repatriating to a country other than the original source country .

What is an inflow certificate and why is it important?

An inflow certificate is issued by the receiving bank after foreign capital is deposited. It serves as official proof that investment funds were legally transferred through formal banking channels and is mandatory for NRB recording and future repatriation .

What happens if foreign investment is not recorded with NRB?

Failure to record investment within six months hinders future repatriation of capital, dividends, interest, or loan repayments. It also affects other regulatory and administrative proceedings of the company .

Do foreign loans require NRB approval?

Yes. Unlike equity investments, foreign loans require prior NRB approval under the Foreign Exchange (Regulation) Act 1962. The borrower must obtain approval before executing loan agreements .

What documents are required for dividend repatriation?

Required documents include: application letter, investment approval, NRB recording proof, tax clearance certificate, audited financial statements, AGM minutes for dividend declaration, and bank statements .

Can foreign employees repatriate their salaries?

Yes. Foreign employees in FDI companies can repatriate 100% of their net remuneration after tax deduction, as per NRB Circular 2081. Previously, only 70% could be repatriated .

What is the lock-in period for foreign investment?

Foreign investors must commit to not repatriating their investment for at least one year from the date of injection. This commitment must be submitted to NRB as part of the recording process .

Why Choose Corporate Np for NRB FDI Services?

Corporate Np specializes in Nepal Rastra Bank FDI approval and compliance services:

• FDI approval and documentation preparation
• NRB statutory notice submission and follow-up
• Capital injection coordination and inflow certificate assistance
• Share registry update facilitation
• NRB investment recording and compliance
• Repatriation application preparation and processing
• Foreign loan approval assistance
• Ongoing regulatory compliance support

With extensive experience in Nepal's foreign investment regulations, Corporate Np ensures seamless navigation of NRB requirements for international investors. Contact Corporate Np today for expert assistance with your NRB foreign investment recording needs.

References

For additional information on Nepal Rastra Bank FDI approval, consult these authoritative sources:

• Nepal Rastra Bank Official Website - Foreign exchange regulations and bylaws
• Department of Industry Nepal - FDI approval procedures
• Investment Board Nepal - Large-scale investment approvals
• Office of Company Registrar - Company registration and share registry
• Foreign Investment and Technology Transfer Act 2075 - FDI legal framework
• Foreign Exchange (Regulation) Act 1962 - Foreign exchange control laws
• Nepal Rastra Bank Foreign Investment Bylaws - Detailed procedural guidelines
• Inland Revenue Department - Tax clearance and compliance
• Credit Information Bureau Nepal - Blacklist verification
• Ministry of Finance Nepal - Economic policy and debt management

Disclaimer: The information provided in this guide is for general informational purposes only and does not constitute legal or financial advice. NRB regulations and procedures are subject to frequent amendments. The December 30, 2025 reforms represent significant changes, and investors should verify current requirements with Nepal Rastra Bank or qualified legal professionals before making investment decisions. Actual processing times and requirements may vary based on specific circumstances and regulatory updates.