Cross-Border Money: FDI Inflows, Repatriation, Foreign Loans and Trade Finance
Money leaves Nepal on the strength of how it arrived, so the record made at the inflow is what decides whether repatriation works.
The single most expensive mistake a foreign investor makes in Nepal is treating the inflow as a banking formality and the outflow as the regulated event. It is the other way round. Repatriation in Nepal is a documentary reconciliation. The bank or the central bank is asking one question — can you show that this money came in, lawfully, in this amount, from this investor, and that shares were issued for it? — and the answer was written years earlier, at a moment when nobody thought it mattered.
The inflow sequence
Approval before money. The investment must first be approved by the competent approving body under the Foreign Investment and Technology Transfer Act 2075 (2019). Nothing in the foreign exchange chain works without that approval, and the entity named in it is the entity that must remit. See which approval route applies.
Notice before remittance. Under Bylaw 4(1) of the Nepal Rastra Bank Foreign Investment and Foreign Loan Management Bylaw 2078 (2021), an investor holding that approval may bring the money in without a separate NRB clearance, but must first give written notice to NRB’s unit in the Schedule-2 format. This is the step most commonly missed, usually because the offshore treasury is working to a closing date and the Nepali adviser was engaged for the company registration rather than the funding.
Remittance through the banking system. The money must arrive as an inward remittance in convertible foreign currency through a licensed bank, into the account of the Nepali company, from the approved investor. Cash, third-party payments, payments from an affiliate that is not the approved investor, and offsets against amounts the Nepali company owes the group are all ways of ending up with capital that exists commercially but not legally.
Recording within six months. The bylaw requires an application to record the investment within six months of the foreign currency reaching Nepal, in the Schedule-7 format with the Schedule-6 documents. The file must include updated shareholder records from the Office of the Company Registrar. This is the pivot of the whole system. Recording is the act that converts an inbound payment into repatriable foreign investment.
Shares issued to the named investor. The recording is only as good as the match between the remitter, the approval, the recorded amount and the share register. A share allotment made to a group holding company when the approval named an operating subsidiary, or an allotment made for a rounded rupee figure when the remittance converted to something else, produces a discrepancy that sits quietly in the file.
Monthly reporting by the bank. Banks and financial institutions report investment inflows, loan disbursements and repatriation outflows to NRB in the Schedule-17 format within seven days of each month end. The regulator therefore holds an independent record against which the investor’s own claim will later be checked.
The December 2025 amendment
Until the end of 2025, repatriation required an application to NRB, which decided within fifteen working days on the recommendation or approval of the investment-approving body. The Fifth Amendment to the bylaw, dated 2082/09/14 (29 December 2025), moved that decision to the commercial bank at which the foreign investor or the invested company holds its account. The bank decides and gives written notice to the applicant within fifteen working days of a complete Schedule-9 application. NRB retains the decision in defined residual cases, including where the approving body’s approval or recommendation cannot be obtained, and where the money is to be sent to a country other than the one the investment came from.
Two cautions attach to that paragraph. The amendment exists on NRB’s site in Nepali only, in a PDF whose character encoding is degraded; our reading is corroborated by the Kathmandu Post’s contemporaneous report of 31 December 2025 and by practitioner notes, though not by a certified English text. And the English consolidated bylaw that NRB publishes has been updated only to the third amendment, so it still describes NRB as the decision-maker. An investor or a foreign counsel reading the English version will confidently state a rule that has been superseded for eight months.
What the amendment did not do is remove the substantive condition. Decentralising the decision to the bank removes a queue. It does not remove the reconciliation. A bank that cannot tie the outflow to a recorded inflow will not approve it, and unlike NRB it has no discretion to construct a solution.
Where NRB does decide, in the residual repatriation cases and every foreign loan, the decision is delegated internally by size. Schedule-18 of the English text sets tiers running from a deputy director for approvals up to USD 2 million, through director and executive director grades, to the deputy governor up to USD 100 million and the governor above that. It is a useful thing to know before an application is filed, because a transaction sized just above a tier boundary is decided by a different official on a different meeting cycle. The delegation table may also have been revised by the fourth or fifth amendments.
What is repatriable
The bylaw covers the proceeds of sale of shares, profits and dividends, the balance remaining after liquidation, royalties under an approved technology transfer agreement, lease rentals, and damages or compensation awarded under law. It contemplates that repatriation goes to the foreign investor’s account in the country the investment came from. Sending it elsewhere runs through the Schedule-9(b) route with NRB approval and documented justification.
That last point is no technicality for groups that have restructured. An investment made from a Singapore holding company that has since been merged into a Dutch one, or whose beneficial ownership has moved, counts as the exception case rather than a routine repatriation, and it needs to be raised with NRB before a dividend is declared rather than after.
Foreign loans
Debt did not follow equity out of NRB’s hands. The bylaw requires prior NRB approval for a foreign loan, given in writing within fifteen working days of a complete Schedule-11 application, and the loan must be recorded within six months of inflow, with NRB issuing a recording certificate within seven working days.
Schedule-10 sets the commercial terms NRB will accept. Interest is capped by reference to a benchmark rate: up to benchmark plus 6 percent a year for a company borrowing from an ordinary foreign lender, up to benchmark plus 3.5 percent where the lender is related to the foreign investor, and from interest-free up to benchmark plus 2 percent for individual borrowing of up to USD 1 million. Loans may not fund real estate, housing, land development or securities trading. Indian rupee borrowing from banks runs from a minimum six-month to a maximum fifteen-year tenor.
The related-party cap is the one that reshapes deals. A group that intends to fund its Nepali subsidiary with shareholder debt priced at a commercial group rate will find the rate cut to the Schedule-10 ceiling or the approval withheld, which changes the thin-capitalisation and transfer pricing analysis for the whole structure. Better to know that before the intercompany agreement is signed.
Trade finance
Payments for imports are neither investment nor loans, and sit under the foreign exchange circulars. NRB’s amendment of 6 April 2026 reduced letter of credit cash margins to 1 percent for industries and 3 percent for commercial importers at digitalised customs points, against standard rates of 2 percent and 10 percent. It added documents against acceptance as a permitted method for Indian rupee imports alongside letters of credit, drafts and telegraphic transfers, permitted working capital loan accounts to be used as a payment source for imports, and cut physical import declaration copies from three to two with digital reporting. Proof of customs clearance must be submitted within 120 days.
The margin differential is a policy instrument aimed at customs digitalisation rather than at importers, and it is still worth a working capital calculation. On a large commercial import, the difference between a 10 percent and a 3 percent cash margin is the difference between financing a tenth of the shipment and financing a thirtieth.
Where files fail
Nothing about the outflow rules is difficult. The failures are all archival, and they cluster in four places: money that arrived before the approval or from an entity other than the approved investor; recording not applied for within the six-month window; shares never issued, issued late, or issued in a name or amount that does not reconcile with the recorded inflow; and capital increases funded by converting intercompany payables, which the group treats as an accounting entry and the bylaw treats as an investment that never came through the banking system.
Each of these is fixable in the month it happens and progressively harder afterwards. The single most useful thing a foreign parent can do in Nepal costs nothing. Keep one file containing the approval, the Schedule-2 notice, the SWIFT advice, the bank’s inward remittance certificate, the NRB recording, the share allotment and the updated Company Registrar record. Reconcile them to each other on the day the shares are issued, rather than on the day the board first asks about a dividend.
Sources
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Nepal Rastra Bank, Foreign Exchange Management Department · Dated 2082/09/14 (29 December 2025) · Tier 1 — Primary legal instrument
Supports: That the repatriation application is made to the commercial bank at which the investor or invested company holds its account, that the bank must decide and notify in writing within fifteen working days, and that remittance to a country other than the source of the investment proceeds under NRB approval.
Accessed 26 August 2026
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Nepal Rastra Bank Foreign Investment and Foreign Loan Management Bylaw, 2078 (2021) — English text
Nepal Rastra Bank · 2021, incorporating amendments to the third amendment only · Tier 1 — Primary legal instrument
Supports: Bylaw 4(1) pre-remittance notice, Bylaw 5(1) six-month recording deadline, Bylaw 6(1) repatriable categories, Bylaw 7 foreign loan approval and Schedule-10 interest caps and excluded sectors, Bylaw 8(1) loan recording, Bylaw 12 monthly bank reporting, and Schedule-18 delegated approval thresholds.
Accessed 26 August 2026
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NICCI hails central bank's move to facilitate dividend repatriation
The Kathmandu Post · 31 December 2025, reporting the amendment of 29 December 2025 · Tier 6 — Professional or news source
Supports: Independent contemporaneous confirmation that the amendment allows foreign investors to repatriate dividends through the commercial bank where they hold accounts, and that it removes duplicate filing with the Department of Industry and NRB.
Accessed 26 August 2026
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Gandhi and Associates · 2026 · Tier 6 — Professional or news source
Supports: A practitioner reading of the fifteen-working-day period and the requirement for NRB approval where funds are repatriated to a country other than the source of the original investment.
Accessed 26 August 2026
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Flash Alert on NRB amendments to the Unified Forex Circular 2081
PKF T R Upadhya & Co. · Reporting NRB Circular 10/2082/83 dated 6 April 2026 · Tier 6 — Professional or news source
Supports: Reduced letter of credit cash margins at digitalised customs points, the 120-day customs clearance evidence deadline, documents against acceptance for Indian rupee imports, and reduced physical import declaration copies.
Accessed 26 August 2026
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Foreign Investment and Technology Transfer Act, 2075 (2019)
Government of Nepal · 2019 — in force, as amended by the omnibus act authenticated 31 March 2025 · Tier 1 — Primary legal instrument
Supports: Sections 20 and 26, the statutory right of repatriation and the currency in which it is made, under which the NRB bylaw operates.
Accessed 26 August 2026
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