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Nepal Rastra Bank, Credit Cards & the Neo Bank Illusion

by Khatapana

Jun 2, 2025 - 11 min read

Nepal Rastra Bank, Credit Cards & the Neo Bank Illusion

Neo Banks are coming but Nepal Rastra Bank’s outdated rules say otherwise. Credit cards are still a hassle. Digital banking? Not quite. Here’s what must change.

So here’s the thing.

Nepal’s new budget for fiscal year 2082/83 boldly announces the setup of a Neo Bank, that sleek, app-only bank with no physical branches. Sounds futuristic, right?

But here’s the catch: as of April 2025, Nepal has only around 300,000 active credit card users. That’s it. In a country where the labor force is over 8.43 million (World Bank, 2024), that means less than 4% of working people have a credit card.

That number alone tells us something's off. And here’s the funnier part: getting a credit card in Nepal is like applying for a visa to Mars. Even if you’re salaried at a well-known company, banks still ask you for:

A tax clearance certificate (even if you’re just an employee!),
A guarantor or collateral, and
Yes, a physical signature.

So while the Finance Ministry dreams of Neo Banks, Nepal Rastra Bank (NRB), the very institution that should be enabling this digital leap, is still stuck asking for paper forms and thumbprints.

Nepal Rastra Bank Wants Digital, But You Still Have to Smile for a Stranger on Camera

Honestly, digital banking in Nepal is growing, but it still feels like putting a touchscreen on a typewriter.

You can now open a bank account online, sure. But the process? It’s not really frictionless.

Here’s how it works in most banks in Nepal:

You apply for an account online.
Then, a video call is scheduled with a bank agent.
You must show your citizenship card, sign your name on blank paper, and put your thumbprint right there, on camera.
The agent takes your photo during the call, and voilà, that’s your KYC done.

This is what’s called Video KYC, a method of verifying your identity over a video call. It’s a step in the right direction, and Nepal Rastra Bank (NRB) has allowed it as a form of digital onboarding.

But is it e-KYC? Not quite.

What countries like India have is a whole different beast:

There, you can open a bank account using your Aadhaar number and one-time password (OTP).
Or you can scan your fingerprint at home or a local store, and it verifies against a central government database (UIDAI).
The entire process is automated, secure, and instant.

Nepal’s system, on the other hand, is still manual and human-driven. You’re talking to a real person who decides whether your photo and signature match. There’s no biometric database matching, no OTP verification, no centralized e-ID yet.

In short, it’s digital-looking, but not fully digitized.

And that’s where the contradiction lies. While NRB claims to be pushing for a digital economy, budget announcements about Neo Banks, real-time payments, and fintech ecosystems, it’s still building that vision on paper-based rules and human gatekeeping.

Until Nepal Rastra Bank makes real e-KYC legally valid (using the National ID system or something similar), Neo Banks will still need you to find good lighting and a clean thumbprint.

The Credit Card Paradox

Okay, so here’s a fun thought experiment.

You’re a full-time employee. You work at a decent company. Your salary comes in like clockwork every month. You pay your taxes, rent, and electricity bills. You buy your groceries using QR. You even top-up your mobile and pay your internet bills using a digital wallet.

But try getting a credit card in Nepal?

Good luck.

As of Chaitra 2081 (mid-April 2025), Nepal had just 277,625 active credit card transactions reported by Nepal Rastra Bank. That’s in a country with:

Over 8.33 million people in the labor force (World Bank, 2024),
Over 11.9 million debit cards, and
More than 56 million mobile banking transactions in a single month.

So, clearly, Nepalese people are comfortable using digital tools. We’re paying, sending, receiving, and scanning like pros.

But somehow, credit cards remain locked behind a wall of bureaucracy.

Let’s explore that next.

Why Is Credit Card Adoption So Low in Nepal?

Here’s where things get really frustrating.

Let’s say you want a credit card in Nepal. You’re not asking for a million-rupee limit. You just want the flexibility to pay now and settle later. Something to build your credit score or make online bookings easier.

But good luck jumping through the hoops.

Most banks in Nepal will throw a laundry list of requirements at you, and here’s where it gets absurd.

You might need to:

Show a tax clearance certificate (even if your taxes are already deducted at source every payday),
Bring a guarantor (yes, even with a fixed income and no loan defaults),
Oh, and don’t forget to be there physically, because your online KYC and salary slip still don’t count as “official” enough.

Now, you’d think this was a rare case. But no. Let’s look at what some of Nepal’s major banks actually require:

Nepal Bank wants you to be 21+ with a salary of at least NPR 20,000.
Global IME Bank sets the bar at 18+ and NPR 15,000/month, but you must be a citizen, or have a valid visa if you’re foreign.
NIC ASIA wants proof of 2 years' work or business experience, and detailed salary or financial statements.
NMB Bank is a bit more specific: if you’re self-employed, you must be at least 22, and show both income proof and business registration.
Prabhu Bank asks for NPR 10,000/month and a bank account with them.
Laxmi Sunrise Bank requires you to hold a hefty average balance; over NPR 100,000 for 6 months.
Standard Chartered has the lowest income threshold (NPR 9,000/month), but still demands all the usual documents.

So basically, every bank has its own version of gatekeeping. Age, income, experience, existing account, average balance.

It’s not one hoop; it’s a circus.

Now ask yourself:
If I’m earning regularly, paying bills digitally, and spending responsibly, why is it still so hard to get access to basic credit?

This is exactly where Nepal Rastra Bank’s outdated regulations play a role. Banks are risk-averse not because people can’t repay, but because the regulatory framework makes it easier to say “no” than to trust digital data.

And that’s how we end up with just 277,625 active credit card users in a country with over 8 million people in the workforce

Are Rules the Problem Here?

Nepal is buzzing with talk about “digital this” and “digital that.”

QR codes are everywhere. You can pay for a plate of momo with your phone. The budget says we’ll have Neo Banks soon. And every other bank ad you see says, "Now open an account from your mobile!"

But try scratching beneath the surface and things start to feel… oddly analog.

So what’s really stopping Nepal’s banking system from going fully digital?

Let’s talk about the biggest culprit: regulation.

1. Wait, You Call That e-KYC?

Yes, it’s true that some banks now let you open an account without going to a branch. Sounds great, right?

Until you realize that what we call “digital” is basically a video call where:

You hold up your citizenship card,
Sign your name and show your thumbprint on a blank paper,
And someone on the other side of the screen takes a screenshot of your face.

That’s called Video KYC. Better than nothing? Sure. But it’s still manual. A human has to check and approve everything.

Compare that to India, where e-KYC is linked to Aadhaar. It’s automated. You just enter your number, get an OTP, or scan your fingerprint, and boom. Your identity is verified in seconds.

In Nepal, we don’t have anything like that yet. The National ID system exists, but banks can’t access it to verify you digitally. And Nepal Rastra Bank hasn’t made full e-KYC legally valid yet.

So yeah, we call it digital, but it’s more like "digital with extra steps."

2. Too Much Paper, Too Many People in the Middle

Let’s say you want a credit card.

Now we’ve already talked about the eligibility madness; salary slips, tax clearance, even needing a guarantor in some cases. But here’s the thing: a lot of that red tape exists because the rules haven’t evolved.

Banks still ask for physical documents. They need hard copies of everything. And in most cases, you still need to go there in person and sign a bunch of forms just to access what’s supposed to be a modern product.

And why is that? Because Nepal Rastra Bank hasn’t updated the playbook.

There’s no national digital system that lets banks cross-check your income, employment, or identity in one place. So, they play it safe. Manual verification. Old-school compliance. Blue pens. Passport-size photos.

3. Fear Over Flexibility

To be fair, NRB isn’t just being difficult for no reason.

Their job is to prevent fraud and keep the financial system stable. But instead of adapting to new digital tools, they’ve gone the route of “if we can’t fully control it, better to just not allow it.”

Want to experiment with crypto? Still banned.

Want to test a new fintech idea? There’s no official regulatory sandbox yet to safely test new tech.

Want your digital transaction history or QR payments to count toward your creditworthiness? Yeah, not gonna happen.

This kind of overly cautious mindset means we’re not building for the future. We’re just patching up the present.

4. Two Steps Forward, One Big Step Back

Look, Nepal Rastra Bank has done some good things; QR codes now work across wallets and banks. Real-time payments like connectIPS and Fonepay IBFT are running smoothly.

But at the same time:

You still have to sign on paper to get a credit card.
You still need a physical signature to open an account.
And you still have to prove your income the old-fashioned way, even if your entire salary history is already digital.

It’s like we’re living in a half-digital, half-paper world. And the system keeps dragging us back to the half with the more stamps and signatures.

Crypto? Still a Blanket Ban

Let’s be honest here. Just the word “crypto” makes people in Nepal lower their voice and look over their shoulder.

Why? Because crypto is completely banned here.

No trading. No exchanges. No wallet apps. If Nepal Rastra Bank finds out you’re dealing with it, they could freeze your bank account or even take legal action. It’s that serious.

But here’s where it gets frustrating.

Bhutan, yes our tiny neighbor with fewer banks than Kathmandu has coffee shops, is actively experimenting with crypto and blockchain. They've partnered with Ripple to pilot a Central Bank Digital Currency (CBDC). Not to gamble or speculate, but to explore how blockchain tech can improve cross-border payments and national finance systems.

Meanwhile, we in Nepal?

We slapped a full ban and called it a day.

This kind of blanket ban might feel “safe” on paper, but in reality, it's like refusing to learn about the internet in 1999 because you heard someone used it to spread a virus.

Let’s not forget that thousands of young Nepalis work online, whether it’s freelancing, remote tech jobs, or earning through global platforms. Many of them could genuinely benefit from crypto tools: cheaper remittances, international payments, decentralized savings.

But Nepal Rastra Bank didn’t create a sandbox to test it. Didn’t set up rules to regulate it. Just outright blocked it.

So while the rest of the world is asking, “How do we make this work safely?”
We’re still stuck at: “Let’s just pretend it doesn’t exist.”

And that says a lot about how we treat innovation in Nepal. If it’s new and doesn’t fit in our old rulebook, we don’t try to understand it, we just shut it down.

Check out more about crypto ban here.

Are Neo Banks Just a Dream?

Let’s talk about the latest Budget Speech 2082/83 headline that caught everyone's attention:

"Neo Banks to be established this fiscal year."

Sounds bold. Sounds exciting. Sounds like Nepal is finally ready to leap into the future of finance.

But let’s get real for a second.

Neo banks, by definition, are fully digital banks. No physical branches. No in-person visits. No chequebooks. Just a mobile app that lets you open an account, send money, save, invest, and borrow, right from your phone.

But here’s the problem: Nepal Rastra Bank hasn’t laid out a single concrete directive for how Neo Banks will actually work.

Right now, every bank in Nepal still needs a physical signature for your first account. There’s no legally accepted e-KYC. Even video KYC still requires a human on the other side and a paper-thin workaround to get verified.

So to be brutally honest, Neo Banks in Nepal are just a talking point at this stage.

Unless Nepal Rastra Bank:

Updates its KYC regulations,
Publishes a clear policy framework for digital-only banks,
And creates room for innovation without choking it with outdated compliance rules,

this is just going to be another “coming soon” announcement that never actually arrives.

Because without the groundwork, no amount of budget speeches can build a digital bank.

What Real Digital Banking Would Actually Look Like

Let’s imagine for a moment what digital banking in Nepal should feel like; not just on paper, but in practice.

You wake up on a Sunday morning, open an app, and within 5 minutes:

You’ve opened a new savings account.
You’ve applied for a credit card.
You’ve set up a monthly investment plan.
And guess what? No branch visits, no printed forms, no blue-ink signatures. Just your National ID, an OTP, and a selfie.

That’s what true digital banking looks like.

Not dashboards on clunky apps. Not QR codes with logos slapped on. But a system that actually works for real people, simply and instantly.

Here’s what we’d see if Nepal really went digital:

1. Instant account opening through e-KYC

No more video calls with paper signatures. Just a national ID, biometric scan, and done.

2. Salary-linked verification

If you’re a salaried employee, your digital salary record should be enough to access banking products (including a credit card) without needing a tax clearance letter and a personal guarantee.

3. Fintechs accessing credit scoring via APIs

Just like India’s RazorpayX or Jupiter, fintech companies in Nepal should be able to plug into verified data (securely) to offer tailored financial products (loans, Buy Now Pay Later, micro-credit.)

4. Neo Banks doing more than just pretty apps
They should issue debit cards, credit cards, wallets, and loans, without any physical paperwork, without ever walking into a branch.

It sounds futuristic for Nepal, but it’s already happening in our neighborhood.
India has banks like Jupiter and Fi.
Indonesia has Jago Bank.
Even Bhutan is ahead of us when it comes to embracing tech in finance.

So the question is, again: What’s stopping us?

So, What’s Holding Us Back?

Let’s call it out; bluntly and truthfully.

Because the roadblocks aren’t tech. We’ve got smart engineers, decent internet, and a generation that’s already living on their phones.

The real bottlenecks are institutional.

1. Bureaucratic inertia

Nepal Rastra Bank and the Ministry of Finance are still moving at a paperwork pace in a mobile-first world. They’re often more focused on “control” than “enablement.”

2. Risk-aversion to anything new

Crypto? Banned. Neo banks? No regulation yet.
Anything new is treated like a threat instead of an opportunity. It’s a “what if it goes wrong?” culture, not “what if it works?”

3. Lack of push from the banking industry

Let’s be honest. Many banks are comfortable with how things work now. The current system, with physical paperwork, high entry barriers, and manual approvals, protects their monopoly.

Why would they push for reform if the status quo still pays well.

4. Fintech voices are missing

Fintech companies don’t have a proper lobby. Their voices are not heard at the policy table. So even when innovation is happening on the ground, it’s rarely reflected in official regulation.

And that’s how we end up with bold announcements like “Neo Banks coming soon”, with no follow-up from Nepal Rastra Bank on how they’re actually supposed to function.

What Needs to Change

We’ve spent enough time talking about what’s wrong. Let’s talk about how to fix it.

Here’s a realistic (but ambitious) to-do list for Nepal Rastra Bank:

1. Immediately issue e-KYC and remote onboarding regulations

Make digital account opening legally valid and standardized across all banks and PSPs.

2. Create a regulatory sandbox for fintech innovation

Let startups test products like digital micro-loans, stablecoins, or even cross-border crypto remittances in a controlled environment, just like Bhutan is doing.

3. Digitize tax and salary records, and integrate them with banks

If you receive your salary digitally, that data should be enough to prove your creditworthiness. No more juggling tax papers and salary slips.

4. Draft and publish a clear framework for Neo Banks
This means:

Who can launch them?
What capital and compliance rules apply?
How will they be supervised?
And most importantly, can they operate independently, or only under legacy banks?

Final Thoughts

So here we are.

Every year, we hear bold words like "Digital Nepal," "Financial Inclusion," and "Neo Banks."
But look closer, and it all starts to feel a bit hollow.

Because real digital transformation isn’t about fancy apps or colorful QR codes.
It’s about removing friction, earning trust, and making sure everyone, not just the privileged few, has access to modern finance.

And if we still live in a system where a salaried person with a stable income can’t get a credit card without bringing three documents and a guarantor!

How can we seriously call ourselves a digital-first economy?

Nepal Rastra Bank has a choice:
Keep protecting the status quo, or start building a system that actually works for people.

It’s time to stop just talking about Digital Nepal.
It’s time to actually build it.