Nepal Rastra Bank eases forex payment rules, raising limits for businesses and service imports. See what’s changed and how it helps Nepal trade globally.

For years, making forex payments from Nepal has meant slow queues of paperwork, back-and-forth with banks, and approvals that could stall vendor contracts. SMEs trying to pay for their domain, hosting and other subscriptions with a dollar card with an annual limit of USD 500, agencies hiring overseas consultants, and importers of specialized services all know the drill: split invoices, justify “service import” line items, and hope the timing lines up with cash-flow.

Now, Nepal Rastra Bank (NRB) has eased its forex payment rules. Through a fresh circular to licensed forex dealers, NRB has raised transaction limits, pushed up approval thresholds, and simplified certain payments for service imports, including routine cross-border software, consulting, and test/exam-related fees. In plain terms: smaller tickets face fewer bottlenecks; standard service payments should clear faster.

Why the shift? With foreign exchange reserves on stronger footing, NRB is cautiously opening the valve—not a floodgate. The move signals growing confidence in the buffer behind the rupee while keeping safeguards for larger, riskier outflows. Think of it as a nudge toward efficiency without abandoning prudence.

For businesses, that could mean quicker vendor onboarding, fewer forced split payments, smoother advance payments on standard contracts, and less time eaten by compliance cycles. But big tickets will still meet speed bumps, regulatory recommendations, guarantees, and documentation haven’t vanished; they’ve just been calibrated.

This piece breaks down exactly what changed, what didn’t, and how to prepare your documents so payments clear on the first try. We’ll also flag the edge cases to watch, and ask the bigger question: is this the first step toward a more open forex regime, or a tactical tweak to keep commerce moving?

Why Forex Is Tightly Managed in Nepal

Foreign exchange reserves are Nepal’s safety buffer, mainly US dollars, used to pay for imports, stabilize the rupee, and absorb shocks (from remittance dips to commodity spikes). Nepal doesn’t export a lot of goods or services that bring in foreign money like some other countries do. So, foreign currency doesn’t just come flowing in naturally through trade. Instead, Nepal relies heavily on a few main sources to get dollars:

• Remittances – Money sent home by millions of Nepalis working abroad. This is the biggest source of foreign currency for Nepal.
• Foreign aid and grants – Help from other countries and international organizations for projects like building roads, schools, and hospitals.
• Foreign loans – Money borrowed from outside lenders to pay for big projects or government expenses.
• Foreign investment – Capital coming from foreign businesses or individuals investing in Nepal’s economy, such as in industries, real estate, or startups.

These inflows are generally easy to receive. Nepal is more than happy to accept dollars, euros, or other foreign currencies because they strengthen our foreign exchange reserves, the financial cushion that helps the economy function smoothly.

But, sending foreign currency out? That’s a whole different story. 

The reason is straightforward: when foreign currency leaves the country, it directly drains our foreign exchange reserves.

Think of it like this: if you have a limited amount of savings, you want to be careful about how much you spend. NRB, under the Foreign Exchange Regulation Act 2019, is legally mandated to safeguard these reserves. This helps make sure the country’s foreign currency savings stay healthy and available for essential needs.

The Legal Angle: Restrictions on Sending Money Abroad

Nepal historically bans residents from investing abroad under the Act Restricting Investment Abroad (also known as the Foreign Investment Prohibition Act, 2021 B.S. (1964 A.D.)). In practice, outbound investment is only possible when the government or NRB explicitly carves out exceptions.  

Section 3 of the  Foreign Investment Prohibition Act, 2021 spells it out:

 “No citizen is allowed to make any kind of investment outside Nepal unless the government explicitly allows it through a formal notice.”

Exceptions exist, but they are narrow. For example:

• With the fourth amendment to the Foreign Investment and Foreign Loan Management Bylaws, tech entrepreneurs exporting services and earning in foreign currency can now send money out of Nepal; up to 1 million US dollars, or 50% of their 3-year average foreign earnings (whichever is lower).
• Payments for imports of goods and approved services.

For a detailed look at this development, check out this article.

How NRB Manages These Reserves

NRB is the guardian of this piggy bank. When the stash runs low, NRB tightens forex rules, making it harder to send money abroad to save what’s left.

But when the reserves look healthy and full, NRB gets a bit more relaxed. 

It’s like having a well-stocked pantry, you don’t need to count every grain of rice, so you can afford to share a bit more.

So, why did NRB feel comfortable enough to ease those forex rules? Well, it all comes down to foreign exchange reserves, basically Nepal’s stash of foreign currency, mostly dollars.

That’s exactly what’s happening now. With the reserves growing stronger, NRB feels confident enough to loosen those forex controls, letting people and businesses send more money abroad without jumping through hoops.

Breaking Down the New Forex Rules

Here’s the meat of the news, the actual policy changes that NRB introduced through amendments in the Circular issued to entities licensed to conduct foreign exchange transactions.

1. Forex Limits Raised for Service Payments:

Before, if you wanted to pay a foreign company for services, say, your favorite online software or a consulting fee, you could only send up to $5,000 per transaction (except if it was India). Now, that limit has gone up to $8,000. 

So, you’ve got more breathing room to send what you need in one go without breaking it up into smaller payments.

2. Increased Approval Threshold for Foreign Service Payments:
If a Nepalese firm or organization needs to pay a foreign service provider more than USD 8,000 in a single transaction, it must get approval or a recommendation from its regulatory authority. The regulator will review the payment’s necessity and justification before recommending whether foreign exchange can be provided. Previously, this approval was required for payments over USD 5,000.

3. Higher Thresholds for Advance Payments:

When paying money upfront to a foreign company—an advance payment—the rules have also changed. You can now send up to $15,000 without extra requirements. For amounts above that, a guarantee from a foreign bank is needed. This change helps businesses manage international contracts and payments more smoothly.

4. Simplified Payments for Language and Test Institutes:

Commercial banks can now provide up to USD 15,000 per transaction for payments of language and standardized tests like TOEFL, IELTS, GRE, GMAT, and SAT, without needing prior approval from the regulatory body.

Here’s a quick peek:

This is NRB telling: “We trust you to handle more forex without unnecessary delays, but we’re watching closely.”

Why These Changes May Not Be Enough

While NRB’s recent tweaks to forex limits sound like good news, the reality is these changes might not be as impactful as they first appear. Here’s why:

1. Payments Up to $8,000? Easier but Still Some Paperwork

For payments up to $8,000, banks can process the payment without prior NRB approval.

But you still need to submit specific documents for the bank to release the funds. This paperwork can slow things down, especially for smaller firms or individuals new to the process.

2. Payments Over $8,000 Still Need a Thumbs-Up

If you want to pay more than $8,000 to a foreign service provider in one go, you must get approval or a recommendation from your regulatory authority first.

This means all big payments still face strict checks before any foreign currency is released. So, businesses dealing with large contracts abroad still have to jump through hoops.

3. Advance Payments Over $15,000 Need Extra Guarantees

If you’re making an advance payment over $15,000, you need a bank guarantee from a foreign bank.

Getting this guarantee can be expensive and complicated.

So, despite the higher limit, upfront payments still come with tight restrictions.

Bottom line is: The path to easier foreign payments is wider but still has speed bumps for many businesses.

The Foreign Reserve Factor: Why Now?

The easing of forex limits is no coincidence; it comes on the back of a strong and steadily growing foreign exchange reserve. 

According to  NRB, 

• Gross reserves rose 25.9%, from Rs. 2,041.10 billion (mid-July 2024) to Rs. 2,569.38 billion (mid-June 2025).
• In US dollars, reserves increased 22.2%, from $15.27 billion to $18.65 billion during the same period.

With this safety net, NRB can be more flexible without risking economic instability.

Exploring the Boost in Nepal’s Forex Reserves

Nepal’s foreign currency stash has been growing steadily, and that’s why NRB is finally easing up on some of those strict forex rules. So, what’s behind this rise? It’s all about where the money’s coming from:

1. Remittances:
   The biggest source of foreign currency for Nepal, remittances come from millions of Nepalis working abroad who send money home to support their families and the economy. NRB reports, during the first eleven months of fiscal year 2024/25, remittance inflows increased by 15.5% to Rs. 1,532.93 billion, compared to a 17.2% increase in the same period the previous year.

2. Foreign Aid:

   Nepal’s foreign aid is another big chunk of the foreign currency pie.

   According to a report by Rising Nepal Daily, Nepal secured foreign aid commitments totaling Rs. 273.04 billion in the fiscal year 2024/25, slightly exceeding the budget estimate for the year. The Ministry of Finance detailed that this amount includes Rs. 215.54 billion in loans and Rs. 57.50 billion in grants. For comparison, the government had originally planned for Rs. 270 billion in aid for 2024/25—Rs. 217.67 billion in loans and Rs. 52.33 billion in grants.

How the Changed Forex Policy Benefits Us

• Easier and Faster Payments

  Now, sending money abroad is less of a headache, no more waiting around for tons of approvals. Things just happen quicker. 

• Reduced Paperwork

  With fewer hoops to jump through, both businesses and individuals can get things done without unnecessary delays.

• More Flexibility for Businesses

  Companies have greater freedom to manage advance payments and service imports without tight restrictions.

• Support for Test Centers

  This change mainly makes life easier for the places that run tests like TOEFL or GRE here in Nepal. They can pay their foreign partners without hassle.

• Encourages Foreign Trade and Service

  With simpler payment rules, Nepal can connect better with the world, making it easier to import services and do business internationally.

What This Tells Us About Nepal’s Economic Future

With Nepal’s foreign exchange reserves soaring and NRB easing the rules, it’s clear that big things are on the horizon. So, what exactly does this mean for Nepal’s economic future? 

Let’s break it down:

• Stronger Financial Backbone

  Strong foreign exchange reserves mean Nepal’s economy has stronger muscles to flex in global markets and attract investors. This solid footing gives NRB the confidence to ease forex restrictions.

• Trust and Growth Signal

  When NRB says it’s okay to send more money abroad, it reflects trust in Nepal’s financial health—a clear green light for growth.

• Enhanced Economic Resilience

  Bigger reserves mean Nepal can handle shocks better, like sudden price hikes or unexpected money flows, without breaking a sweat.

• International Credibility Boost

  Healthy reserves boost Nepal’s credibility internationally, showing investors and trade partners that the country is financially responsible and reliable.

• Support for Growing Sectors

  Easier access to foreign currency helps key sectors like education, IT, and professional services expand without getting tangled in red tape.

• Foundation for Future Flexibility

  A strong reserve position lays the groundwork for further easing of forex rules in areas like merchandise imports and capital flows.

• Flexible Policy Space

  With a reserve cushion, NRB can afford to experiment with easing rules, monitoring impacts without immediate risk.

The Big Question: Is Nepal Using Its Growing Forex Reserves Well?

Nepal’s foreign exchange reserves are growing, thanks to remittances, foreign aid, and loans. But the big question is: Are we using this growing wealth wisely?

Here’s the reality:

• Big Projects, Big Problems:

  A large portion of foreign loans and aid is meant for infrastructure like roads, airports, and power plants. These can boost growth, but delays, mismanagement, and corruption often mean funds don’t deliver the results we expect.

• Debt Servicing Drains Resources:

  Part of the reserves goes to paying off old foreign loans. While important for maintaining creditworthiness, it’s money leaving the country instead of fueling new growth.

• Heavy Reliance on Imports:

  Nepal spends a lot of foreign currency on essentials like fuel, machinery, and medicines. This necessary spending quickly drains reserves without creating new income.

• Remittances Mostly Support Daily Needs:

  The largest chunk of foreign currency, remittance, mainly covers daily expenses, education, and repayment of loans for millions of families. While crucial, this doesn’t always translate into big investments that can boost the economy.

The Takeaway: We’re sitting on a growing stash of foreign currency, but it’s not fully mobilized to drive economic transformation. 

For real progress, Nepal must:

• Invest foreign funds in sectors like manufacturing and agriculture.
• Support businesses that create jobs and exports.
• Manage aid and loans better to avoid waste.
• Focus on projects that reduce reliance on imports.

Otherwise, this growing reserve remains just numbers in a bank, not a catalyst for change.

Closing Thoughts

The recent move to relax some foreign exchange rules is definitely a step in the right direction. It shows growing confidence in Nepal’s financial health and foreign reserves. This easing helps many, whether it’s businesses importing services, or entrepreneurs expanding their reach abroad, by making foreign payments a little smoother and faster.

But, like any journey, this is just the beginning. The increased limits and simpler procedures provide more room to breathe, yet the tighter controls on larger transactions mean the full freedom Nepalis hope for is still a work in progress.

What really matters now is how Nepal uses its growing foreign currency reserves. These reserves are more than just numbers in a bank—they’re the fuel for roads, schools, hospitals, power projects, and other vital infrastructure that can shape Nepal’s future. Yet, challenges like delays, bureaucracy, and the risk of mismanagement mean these funds must be handled with care and transparency. So, as Nepal takes cautious steps to open up its forex system, the real challenge lies in turning these policy changes and growing reserves into tangible progress on the ground. With strong foreign currency reserves and a focus on transparent, efficient management, Nepal has a real chance to transform financial stability into lasting development and broader opportunities for its people.