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Laxmi Bank’s OrangeNXT Shutdown: NRB vs. Digital Nepal’s Future

by Khatapana

Aug 24, 2025 - 8 min read

Laxmi Bank’s OrangeNXT Shutdown: NRB vs. Digital Nepal’s Future

Nepal Rastra Bank halted Laxmi Bank’s OrangeNXT, Nepal’s first digital-only bank. What does this mean for 65,000 users and Digital Nepal’s future?

There was this one line in the budget speech this year that really stood out. The government said it was going to bring "fully digital banks" to Nepal.

That got a lot of people in tech talking. And for Nepalis working abroad, it sounded like a huge relief; a way to handle their money without all the usual headaches and late-night calls just to fix a remittance issue.

But then, just a few months later, the same central bank that promised this future tells Laxmi Sunrise Bank to put OrangeNXT on hold, the very first attempt at a fully digital bank in Nepal.

But then, just a few months down the line, the whole thing hit a wall. The central bank itself told Laxmi Bank to pause OrangeNXT, which was the first and only service of its kind in the country.

But Nepal Rastra Bank never made this notice public. We confirmed with NRB that the instruction was communicated directly to the bank, but no official announcement has been released. On the surface, OrangeNXT still looks alive as the app is still up on the Play Store, and you can download it, but the moment you try to set up a new account, you hit an error message.

And just like that, 65,000 customers were left wondering what was going on.

If you’re confused, you’re not alone. It’s a bit of a strange situation. The official policy says "let's go digital," but the first real-world attempt gets stopped in its tracks. It's confusing, and it makes you ask what’s really happening behind the scenes.

So what exactly went down here? Before we get into the OrangeNXT story, let’s back up a bit and understand what these “digital-only banks” are all about.

What Are Digital-Only Banks?

So when you hear “digital-only bank,” what should you picture? Exactly what it sounds like: a bank that lives entirely on your phone. No long queues, no branch offices, no dusty files. You download an app, open an account in minutes, verify yourself over video, and just like that, you’re banking.

Globally, this isn’t new. In Brazil, Nubank has more than 100 million customers and is worth over $60 billion. In the UK, Revolut started in 2015 and is already planning a massive IPO. Germany’s N26 and the UK’s Starling Bank even secured full banking licenses despite being branchless. In India, names like Jupiter, Niyo, and Fi Money have grown rapidly by working in partnership with licensed banks, because the Reserve Bank of India doesn’t issue separate licenses for digital-only banks.

So the model is simple: you either get a special license (like in Singapore or Hong Kong), or you partner with an existing bank. In both cases, the point is the same; make banking so easy that young people, migrant workers, or anyone tired of paperwork actually want to use it.

Now, with that context in mind, let’s talk about OrangeNXT, the closest Nepal has come to joining this global digital banking revolution.

What Happened With Laxmi Bank’s OrangeNXT

Back in January 2024, Laxmi Sunrise Bank teamed up with a fintech company called FoneNXT (part of F1Soft, the folks behind eSewa, fonepay) to launch Nepal’s first fully app-based banking service: OrangeNXT.

Here’s what made it special:

You could open an account from anywhere (even a remote village) using just your phone.
Instead of filling out those dreaded eight-page forms or drawing “house maps,” you could just drop a location pin.
Verification is done through video-KYC, so that means no more running to the bank for a signature.
Features? Oh, they went beyond just basic banking. OrangeNXT had “Save As You Pay,” a kind of digital piggy bank that set aside a little money every time you made a QR payment. It also offered Remit Saver accounts for migrant workers, Elegant Saving for professionals, and even Kids Saving options.

And people actually loved it. In just a year and a half, OrangeNXT attracted 65,000 customers and around Rs170 million in deposits. A huge chunk of its users were Nepalis working abroad; people who couldn’t physically visit branches but still wanted reliable banking. Even younger folks here in Nepal, tired of waiting in line for hours, signed up.

Why OrangeNXT Mattered

What made it so special was how it completely reimagined the user experience.

First, think about migrant workers. If you’re working in Qatar or Malaysia, the last thing you can do is walk into a Kathmandu branch with your passport and fill out eight pages of forms. OrangeNXT let you open an account from anywhere; video-KYC, location pin instead of a “house map,” and you were good to go. This mattered because remittances are Nepal’s lifeline. They bring in over Rs1.47 trillion every year, more than a quarter of our GDP. Making it easier for migrants to bank formally only strengthens the entire economy.

Second, it worked for young people. Let’s be honest, no one in their 20s wants to stand in a sweaty queue at Laxmi Bank or any other bank just to update their details. OrangeNXT was designed with Gen-Z in mind, with gamified savings features like “Save As You Pay,” kids’ accounts, and instant notifications. Banking finally felt like it belonged on your phone, not in a dusty ledger.

And finally, it was a test run for something bigger. OrangeNXT showed that fully digital banking in Nepal was possible, at scale. In just 18 months, 65,000 people signed up and deposited Rs170 million; that’s only 0.0023% of Nepal’s total deposits, but it's quite impressive for a product that didn’t even offer loans yet. It was proof that if you build something simple and digital, people will come.

And yet, just when the model was showing promise, policy and practice began pulling in opposite directions.

Policy vs Practice

And this is where the story takes a frustrating turn.

Then came the twist. Despite this success, Nepal Rastra Bank told Laxmi Bank to suspend OrangeNXT. Why? Because, according to the regulator, there’s no clear law or framework that allows a fully digital-only bank to exist in Nepal. In other words: “Cool idea, but sorry, the rulebook doesn’t cover it.”

As a result, customers will now have to migrate their OrangeNXT accounts back into traditional formats. Imagine thinking you’d finally escaped bank queues forever, only to be told you’re right back where you started. Overnight, every OrangeNXT user is once again back to filling forms and waiting in line at a branch, at least until Nepal Rastra Bank develops a proper regulatory framework.

The government’s 2025/26 budget explicitly promised neo-banks as part of its financial inclusion drive. Nepal Rastra Bank itself, in Section 100 of its Monetary Policy, said it would create the legal and procedural framework for digital-only banks this fiscal year. In other words, policy documents gave fintech companies a green light.

But in practice, the same NRB pulled the plug on OrangeNXT because “there’s no legal framework.”

And this isn’t the first time something like this has happened. Remember when Nabil Bank tried to launch “Nabil Neo”? NRB told them they couldn’t use the term “neo-bank” and forced them to rebrand as “NBank.” The regulator has been consistently nervous about the word “neo-bank,” even as other countries move ahead.

Sure, developing a solid framework for neo-banks is a complex process. But does the need for caution automatically mean that progress has to stop? It makes you wonder if there isn't a way to do both at the same time.

The irony is that while regulators were halting OrangeNXT, Nepal’s digital finance ecosystem was exploding all around it.

Nepal’s Current Fintech Landscape

While OrangeNXT has been put on hold, Nepal’s digital finance ecosystem is booming. The data from Nepal Rastra Bank’s Payment Systems Report (Jeth 2082 / Mid-June 2025) makes that crystal clear.

Mobile banking is king. In just one month, there were 57.7 million mobile banking transactions worth over Rs452 billion. To put that in perspective, that’s almost 15 times Nepal’s annual education budget moving through people’s phones in a single month.
Wallets are everywhere. Services like eSewa, Khalti, handled 37.8 million transactions in the same month, moving Rs42.9 billion. That’s a sign that Nepalis are more than ready for cashless banking.
QR codes are exploding. QR-based payments crossed 35 million transactions worth Rs93.5 billion. From tea shops in Kathmandu to grocery stores in Pokhara, QR stickers are replacing cash notes.
E-commerce payments are catching up. Card-based online payments reached nearly 200,000 transactions worth Rs1.25 billion; still small compared to mobile banking, but growing fast as more people shop online.

Add to this the fact that NRB itself launched the Digital Finance Innovation Hub in March 2025, a sandbox where fintech products can be tested under supervision.

Still, rapid growth comes with concerns. And OrangeNXT exposed the gaps Nepal Rastra Bank is most worried about.

Risks and Regulatory Gaps

Now, to be fair, it’s not like Nepal Rastra Bank woke up one morning and decided to kill the buzz for fun. Regulators always worry about risks, and digital-only banks like OrangeNXT bring a few to the table.

For starters, there’s the missing rulebook. Nepal doesn’t yet have a proper neo-bank framework. That means NRB had no clear way to say, “Yes, OrangeNXT fits here.” Without rules, everything felt like it was happening in a legal gray area.

Then comes the global worry: video-KYC and deepfakes. If someone can fake their face and open an account, you suddenly have a money laundering problem. Even big markets like India have raised red flags about this. For Nepal, which is already on the FATF grey list over money laundering and terrorist financing concerns, this is a serious concern.

And then there are Nepal-specific gaps that made OrangeNXT tricky:

Deposit safety: Were OrangeNXT accounts covered by Nepal’s Deposit and Credit Guarantee Fund, which only insures up to Rs300,000 per depositor? Nobody had a straight answer. If not, customers’ money wasn’t fully protected.
Cybercrime: Cases of digital banking fraud are rising every year. Mobile banking scams, phishing, even fake QR codes; it’s a growing headache.
Legal liability: If something went wrong, who would be held accountable? The licensed bank (Laxmi Bank), or the fintech partner (FoneNXT)? That was never made crystal clear.

So yes, NRB’s caution wasn’t entirely misplaced. But the bigger question is: do you deal with these risks by building safeguards or by simply pulling the plug?

What This Means for Nepal’s Digital Finance Future

Shutting down OrangeNXT has ripple effects that go far beyond one bank app.

For investors, it’s a major red flag. If even a well-established player like Laxmi Sunrise Bank, working with one of Nepal’s most credible fintech companies, can’t get regulatory certainty, why would global investors bet on Nepali fintech? This is how startup capital dries up.

For the diaspora, it’s a letdown. Migrant workers finally had a service that worked across borders, without the pain of branch visits. Now they’re back to calling relatives in Nepal to run errands at banks. Not exactly the image of a “Digital Nepal.”

For the market as a whole, it could lead to an innovation freeze. While the world races ahead with digital-only banks, Nepal risks falling further behind. We may still be swiping paper forms while our neighbour India, rolls out AI-powered financial services.

And perhaps most importantly, it creates a credibility gap. On one hand, the government announces bold digital ambitions. On the other hand, the regulator suddenly reverses course. The message this sends is that Nepal loves to talk about innovation, but it struggles to actually walk the walk.

How Are Other Countries Doing It?

To see how badly Nepal needs clarity, look at how other countries have handled digital-only banks.

A. Separate Digital Banking Licenses

Some regulators decided: let’s make a brand-new license for these banks.

Singapore: Created Digital Full Bank (DFB) and Digital Wholesale Bank (DWB) licenses. Big names like Grab, Sea, and Ant Group secured them in 2020.
Hong Kong: Issued 8 virtual banking licenses back in 2019. These banks operate with zero branches.
Pakistan: Introduced Digital Retail Bank (DRB) licenses requiring about NPR 1.5 billion in minimum capital during the pilot phase.
Malaysia & Philippines: Finalized frameworks, making space for digital-only players.
Europe: Lithuania has become a fintech hub by welcoming neobanks through clear regulations.

B. Partnership Models with Licensed Banks

Others said: you can’t be a full bank yet, but you can partner with one.

United States: Neobanks like Chime don’t hold licenses; instead, they partner with licensed banks like Bancorp Bank.
India: Neobanks like Open, Niyo, and Jupiter operate by teaming up with traditional banks.
United Kingdom: A mixed model. Some like Monzo and Starling got full licenses, and they’re making real money (Starling reported profits of £195M in FY 2023), while others stick to partnerships.

And Nepal? It sits in limbo. No digital-only licenses, no formalized partnership model. Which is why OrangeNXT, despite being backed by a major player like Laxmi Bank, was always going to end up stuck in regulatory quicksand.