Banking & Finance Law in Nepal
Niti Partners & Associates is a leading banking and finance law firm in Nepal, advising banks, financial institutions, multilateral lenders, foreign investors and corporates across the financing lifecycle. Our practice covers loan structuring and documentation, lender due diligence, security, regulatory compliance, restructuring, default, Debt Recovery Tribunal proceedings and appellate litigation.
Our banking law practice in Nepal combines transactional, regulatory and litigation experience. This enables us to advise clients not only when financing is being structured, but also when a facility is amended, restructured, placed in default or taken through formal recovery proceedings.
Banking & Finance Legal Services in Nepal
Loan Agreements & Financing Documentation
We advise lenders and borrowers on the structuring, drafting, review and negotiation of loan agreements in Nepal, with particular attention to enforceability, security and recovery rights.
| Document / Work Item | What We Do |
|---|---|
| Term sheets and commitment letters | Advise on commercial and legal terms at the initial financing stage |
| Facility and loan agreements | Structure, draft, review and negotiate financing terms |
| Working capital and term financing | Advise on documentation for working capital and term facilities |
| Corporate and personal guarantees | Structure and review guarantee and credit support arrangements |
| Indemnities and other credit support | Draft and review additional credit support mechanisms |
| Security agreements and collateral documentation | Prepare and review security and collateral documentation |
| Intercreditor, subordination and priority arrangements | Advise on creditor priority, intercreditor and subordination arrangements |
| Conditions precedent and conditions subsequent | Review legal and documentary requirements for drawdown and continuing obligations |
| Legal opinions on enforceability and security | Advise on enforceability and security-related legal opinions |
| Amendments, waivers, restructuring and refinancing documentation | Draft and review amendments, waivers, restructuring and refinancing documents |
We review financing documents with the eventual enforcement position in mind, including events of default, security realization, guarantor liability and dispute-resolution mechanisms.
For detailed assistance with loan documentation and financing transactions, our banking lawyers in Nepal can advise on the structure and enforceability of the proposed facility.
Lender Due Diligence in Nepal
We conduct lender due diligence in Nepal for domestic and international financing transactions, including facilities involving project companies, operating businesses and secured corporate borrowers.
| Diligence Area | Scope |
|---|---|
| Corporate structure, ownership and authority | Review corporate structure, ownership and authority to borrow and provide security |
| Title to material assets and project land | Review ownership, title and relevant property interests |
| Existing loans, charges, mortgages and encumbrances | Identify existing financing, security and encumbrances affecting lender risk |
| Material contracts and regulatory approvals | Review material contractual obligations and required approvals |
| Existing litigation and arbitration | Identify disputes that may affect borrower or lender risk |
| Existing security interests and priority | Review existing security and priority considerations |
| Borrower and guarantor capacity | Assess legal capacity and relevant obligations |
| Licensing and sector-specific compliance | Review applicable licences and sector-specific regulatory requirements |
| Enforcement and recovery risks | Identify legal issues that may affect recovery or enforcement |
| Preparation of structured reports for lender and credit-committee review | Present findings in a structured format for lender and credit-committee consideration |
For foreign lenders, our diligence identifies Nepal-law issues that may affect transaction structure, security enforceability, conditions precedent and recovery.
Security Documentation & Perfection
Security is central to the practical value of a financing arrangement. We advise on the creation, documentation, perfection, priority and enforcement of security over assets in Nepal under Secured Transaction Act, 2006 and Civil Code 2017.
| Security Type / Work Item | Scope |
|---|---|
| Mortgages over immovable property | Advise on mortgage documentation, registration and enforcement |
| Pledge and hypothecation arrangements | Structure and review pledge and hypothecation arrangements |
| Security over movable assets | Advise on creation, documentation, perfection and enforcement |
| Assignment of receivables and contractual rights | Structure and review assignments supporting financing |
| Corporate and personal guarantees | Prepare and review guarantee arrangements |
| Share pledges and investment-related security | Advise on share and investment-related security |
| Registration and perfection requirements | Review applicable registration and perfection requirements |
| Priority and competing security interests | Assess priority and competing security issues |
| Security release and discharge | Advise on release and discharge following repayment or restructuring |
| Enforcement and collateral realization | Advise on enforcement and realization of secured assets |
We structure security with subsequent enforcement in mind, including the requirements that may arise in Debt Recovery Tribunal (Rin Asuli Nyadhikaran) proceedings.
Project Finance & Syndicated Lending
Niti Partners advises on the legal aspects of complex project finance in Nepal and syndicated lending transactions involving multiple lenders, project companies and sponsors.
Managing Partner, Sameep Khanal, acted as lender’s counsel on the USD 453 million financing of the Upper Trishuli-1 Project involving eight multilateral banks. The transaction was recognized by Project Finance International as its 2020 Transaction of the Year.
| Work Area | Scope |
|---|---|
| Syndicated and multi-lender financing | Advise on multi-lender financing structures and lender arrangements |
| Financing documentation | Review and negotiate facility and related financing documents |
| Security packages and perfection | Advise on security structure, documentation and perfection |
| Lender due diligence | Conduct Nepal-law due diligence relevant to lender risk |
| Conditions precedent | Review legal and documentary requirements for financing drawdown |
| Nepal-law legal opinions | Provide legal analysis on Nepal-law enforceability and transaction issues |
| Regulatory and foreign exchange considerations | Advise on applicable regulatory and foreign exchange requirements |
| Enforcement and default provisions | Review lender remedies, defaults and enforcement provisions |
For the firm’s dedicated treatment of project finance structures, regulatory considerations and infrastructure financing in Nepal, see our Project Finance in Nepal guide.
Regulatory Compliance & NRB Advisory
We provide ongoing NRB compliance advisory in Nepal to banks, financial institutions and businesses operating within the regulated financial sector.
Our advice considers the Nepal Rastra Bank Unified Directives, the Foreign Exchange Regulation Act, the Anti-Money Laundering Act and applicable NRB circulars, notices and regulatory requirements. Nepal Rastra Bank publishes the applicable directives, circulars and regulatory notices governing licensed banks and financial institutions. The Nepal Law Commission provides access to Nepal’s statutory framework, including legislation relevant to banking and financial regulation. Review of regulatory changes affecting financing transactionsWe also advise on the implications of the 2026 NRB Unified Directives and subsequent regulatory circulars applicable to banks and financial institutions. For ongoing NRB compliance and regulatory advisory, our lawyers can review regulatory exposure and documentation requirements applicable to a particular institution or transaction.
Cross-Border Financing & Local Counsel Services
Niti Partners acts as reputed local counsel in Nepal for international lenders, investors and international law firms working on financing transactions involving Nepal.
| Work Area | Scope |
|---|---|
| Foreign lender financing into Nepal | Advise on Nepal-law considerations for foreign lending structures |
| Nepal-law review of international facility agreements | Review financing documents for Nepal-law requirements |
| Security over Nepal-based assets | Advise on creation, perfection and enforcement of local security |
| Foreign exchange and payment restrictions | Identify applicable foreign exchange and payment requirements |
| Guarantees and other credit support | Review local guarantees and credit support |
| Enforceability of foreign-law financing arrangements in Nepal | Assess enforceability and relevant Nepal-law considerations |
| Local regulatory approvals and filings | Advise on required approvals, filings and regulatory processes |
| Nepal-law legal opinions | Provide Nepal-law opinions for international financing transactions |
| Coordination with foreign transaction counsel | Work with international lenders and foreign legal teams |
| Enforcement strategy involving Nepal borrowers or assets | Advise on recovery and enforcement involving Nepal assets or parties |
We integrate into international transaction teams where foreign counsel requires focused Nepal-law advice on financing, security, regulatory or enforcement issues.
Restructuring & Non-Performing Asset Resolution
We advise lenders and borrowers when financing arrangements require restructuring of loan in Nepal, rescheduling or negotiated resolution.
| Work Area | Scope |
|---|---|
| Loan restructuring and rescheduling | Advise on restructuring and revised repayment arrangements |
| Amendments to financing documents | Draft and review amendments to existing financing documents |
| Settlement and repayment arrangements | Structure negotiated settlement and repayment arrangements |
| Security enhancement and restructuring | Review and restructure security supporting the facility |
| Distressed borrower negotiations | Advise lenders and borrowers during distressed negotiations |
| Recovery strategy | Develop legal strategies addressing recovery options |
| Asset and guarantor analysis | Review assets and guarantor obligations relevant to recovery |
| Transition from restructuring negotiations to formal recovery | Coordinate transition where negotiated restructuring is unsuccessful |
| Coordination with insolvency and liquidation proceedings | Coordinate restructuring and recovery strategy with formal distress proceedings |
Where consensual restructuring is no longer viable, our transaction and litigation teams can coordinate the transition to formal enforcement.
Trade Finance & Letters of Credit
We advise banks, importers, exporters and businesses on legal issues arising from trade finance instruments and payment obligations.
| Instrument / Issue | Scope |
|---|---|
| Letters of credit and documentary credits | Advise on LC documentation, rights and payment obligations |
| Bank guarantees and demand guarantees | Review guarantee terms and enforcement issues |
| Documentary discrepancies and payment disputes | Advise on discrepancies and resulting payment disputes |
| Trade finance documentation | Draft and review trade finance documentation |
| Fraud-related issues involving payment instruments | Advise on legal issues arising from suspected fraud involving payment instruments |
| Disputes concerning LC transactions | Advise on disputes involving letters of credit |
| Issuing, confirming and beneficiary bank issues | Address legal issues affecting relevant banking parties |
| Contractual disputes concerning payment obligations | Advise on contractual claims arising from payment obligations |
| Application of UCP 600 where incorporated into the relevant transaction | Advise on UCP 600 issues where incorporated into the transaction |
Our Litigation & Arbitration practice in Nepal supports disputes involving letters of credit, guarantees and other financial instruments requiring court or arbitral proceedings.
Mergers & Acquisitions Financing
We advise lenders, investors and acquiring companies on financing structures supporting corporate acquisitions and investments.
| Work Area | Scope |
|---|---|
| Acquisition financing structures | Advise on financing structures supporting acquisitions |
| Debt financing for acquisitions | Structure and review acquisition debt financing |
| Security packages supporting acquisition facilities | Advise on security supporting acquisition financing |
| Guarantees and corporate support | Review guarantees and corporate support arrangements |
| Financing conditions precedent | Review legal and documentary requirements for financing |
| Regulatory considerations | Identify applicable regulatory requirements |
| Refinancing and post-acquisition restructuring | Advise on refinancing and post-acquisition financing changes |
| Legal due diligence relevant to lender risk | Conduct due diligence relevant to acquisition financing |
Our corporate and financing lawyers coordinate transactional, regulatory and financing considerations within the same mandate.
For transactions requiring broader corporate and commercial law in Nepal support, our corporate practice can coordinate acquisition, financing and regulatory work.
Liquidation & Bankruptcy
We advise creditors, borrowers and other stakeholders on legal issues arising when a borrower enters liquidation, insolvency or other formal distress proceedings.
| Work Area | Scope |
|---|---|
| Creditor rights and recovery strategy | Advise creditors on available rights and recovery options |
| Secured and unsecured creditor claims | Advise on claims arising from secured and unsecured debt |
| Enforcement of security | Coordinate security enforcement with formal distress proceedings |
| Guarantor liability | Advise on guarantor obligations and recovery |
| Coordination between debt recovery and insolvency proceedings | Coordinate recovery strategy across applicable proceedings |
| Asset realization and distribution issues | Advise on realization and distribution of distressed assets |
| Negotiated settlements with creditors | Assist with negotiated settlements |
| Legal strategy concerning distressed companies | Develop legal strategies addressing distressed companies |
Legal strategy concerning distressed companies
This work is closely integrated with our DRT and banking litigation practice where recovery proceedings and insolvency processes overlap.
Regulatory Audits & Compliance Reviews
We conduct legal and regulatory reviews for banks, financial institutions and businesses exposed to financial-sector regulation.
| Audit Area | Scope |
|---|---|
| Review against applicable NRB directives and circulars | Assess compliance with applicable NRB regulatory requirements |
| AML/CFT and KYC compliance reviews | Review AML/CFT and KYC systems and requirements |
| Financing documentation reviews | Review financing documents for legal and regulatory compliance |
| Security and collateral documentation audits | Audit security and collateral documentation |
| Regulatory reporting and licensing review | Review reporting obligations and licensing requirements |
| Identification of documentation and compliance gaps | Identify gaps requiring remedial action |
| Preparation for regulatory inspections | Assist with preparation for regulatory inspections |
| Legal responses to regulatory observations | Assist in responding to regulatory observations |
| Remedial documentation and compliance support | Support corrective documentation and compliance measures |
The purpose is to identify legal and regulatory exposure before it develops into a dispute, enforcement issue or regulatory proceeding.
Our Banking & Finance Capability at a Glance
| Capability | Niti Partners’ Depth |
|---|---|
| Loan documentation & security drafting | Full-cycle capability to draft, review, structure and enforce financing documentation |
| DRT & appellate litigation | In-house capability backed by 35+ years of DRT, High Court and Supreme Court experience |
| Project finance for multilateral lenders | Upper Trishuli-1: USD 453 million financing involving 8 multilateral banks |
| Cross-border lender representation | Nepal local counsel integration for foreign lenders and international law firms |
| Lender due diligence | Dedicated lender due diligence with structured reports suitable for credit-committee review |
| Regulatory audit support | NRB compliance review, regulatory audit support and inspection preparation |
| M&A financing | Acquisition financing, debt structuring and post-acquisition financing support |
| Trade finance & LC disputes | Letters of credit, bank guarantees, trade finance disputes and UCP 600 capability |
Debt Recovery Tribunal & Loan Recovery Litigation
Niti Partners has a substantial Debt Recovery Tribunal (DRT) practice in Kathmandu, representing banks, financial institutions, borrowers and guarantors in loan recovery and banking disputes.
Punya Prasad Khanal, a leading Debt Recovery Tribunal lawyer in Nepal, brings more than 35 years of litigation experience, including extensive experience in banking disputes and proceedings before the Debt Recovery Tribunal, High Court and Supreme Court of Nepal. His experience covers recovery disputes, security enforcement, payment claims and guarantor liability.
Our loan recovery litigation in Nepal covers the enforcement lifecycle, including:
| DRT Work Area | Scope |
|---|---|
| Claims before the Debt Recovery Tribunal | Represent lenders and relevant parties in DRT claims |
| Recovery of defaulted loans and financial obligations | Pursue recovery of qualifying financial obligations |
| Enforcement of mortgages, pledges and other security | Advise and act on enforcement of secured interests |
| Collateral liquidation and realization | Support realization and liquidation of collateral |
| Guarantor and surety liability | Advise on claims and enforcement involving guarantors and sureties |
| Disputes concerning loan and security documentation | Address disputes concerning facility and security documents |
| Challenges to recovery and enforcement measures | Advise on challenges to recovery measures |
| Appeals before the Debt Recovery Appeal Tribunal | Represent clients in applicable appeals |
| Writ proceedings before the High Court and Supreme Court | Advise and represent clients in relevant writ proceedings |
| Coordination with restructuring, liquidation and insolvency proceedings | Coordinate DRT recovery with restructuring and formal distress proceedings |
The DRT is not treated as a separate litigation silo. We examine the underlying facility documentation, security structure, guarantees, regulatory position and enforcement history when developing a recovery strategy.
This depth supports Niti Partners’ position as a leading DRT practice in Kathmandu and one of Nepal’s leading banking litigation teams for matters extending from tribunal proceedings to appellate and writ litigation.
For, debt recovery and DRT litigation support, our team can advise lenders and financial institutions on enforcement strategy from the initial recovery assessment through appellate proceedings.
Banking & Finance Work Across the Financing Lifecycle
| Stage | Legal Focus |
|---|---|
| Structuring | Financing structure, lender protections, regulatory and foreign exchange considerations |
| Due Diligence | Borrower, guarantor, asset, security, licensing and litigation review |
| Documentation | Facility agreements, guarantees, security and intercreditor arrangements |
| Compliance | NRB directives, AML/CFT, KYC, foreign exchange and regulatory reporting |
| Restructuring | Rescheduling, amendments, settlements and security enhancement |
| Default | Enforcement strategy, security realization and guarantor liability |
| DRT Proceedings | Loan recovery, security enforcement and collateral realization |
| Appeals & Writs | Debt Recovery Appeal Tribunal, High Court and Supreme Court proceedings |
Why Our Banking Practice Extends Beyond Transactions
We litigate the documents we draft
Financing documents are ultimately tested when a borrower defaults. Our transactional and litigation lawyers therefore consider enforceability, security, guarantees, default provisions and recovery remedies when structuring and reviewing financing arrangements.
Structuring through enforcement
Our banking practice covers the financing lifecycle from initial structuring through documentation, regulatory compliance, restructuring, default and formal recovery. This allows clients to obtain coordinated advice as the circumstances of a financing relationship change.
Banking disputes with regulatory and transactional context
A loan recovery dispute can involve more than an unpaid facility. It may require analysis of the security, regulatory requirements, foreign exchange restrictions, corporate authority, guarantor obligations, restructuring history and validity of enforcement measures.
Our lawyers approach these issues across transactional, regulatory and litigation disciplines rather than treating each stage as an isolated matter.
Our Banking & Finance Team
Sameep Khanal
Managing Partner | International Arbitration & Project Finance
Focus: Project Finance | Multilateral Lenders | Cross-Border Financing
Sameep Khanal advises on project finance, infrastructure transactions, cross-border financing and international dispute resolution. His representative experience includes acting as lender’s counsel on the USD 453 million Upper Trishuli-1 financing involving eight multilateral banks, recognized by Project Finance International as its 2020 Transaction of the Year.
Punya Prasad Khanal
Chairman | Banking Litigation & Debt Recovery
Focus: Debt Recovery Tribunal | Banking Disputes | Supreme Court Litigation
Punya Prasad Khanal has more than 35 years of litigation experience, including extensive work in banking disputes, loan recovery and commercial litigation. His practice includes representation before the Debt Recovery Tribunal, High Court and Supreme Court of Nepal, including matters concerning recovery, security enforcement and guarantor liability.
Serving Banks, Lenders & Businesses Across Nepal
Niti Partners & Associates advises domestic and international clients from its office at Thapagaon, Kathmandu on financing transactions, banking regulation, cross-border lending and financial disputes.
Our clients can engage the firm at any stage of a financing relationship, whether reviewing a proposed facility, conducting lender due diligence, addressing an NRB compliance issue, restructuring a distressed facility or pursuing recovery before the DRT.
For related corporate and commercial matters, our lawyers can coordinate banking advice with broader corporate transactions and commercial arrangements.
Frequently Asked Questions: Banking & Finance Law in Nepal
What is the Debt Recovery Tribunal in Nepal and when can a lender file a claim?
The Debt Recovery Tribunal is the specialized forum for qualifying bank and financial-institution debt recovery claims in Nepal. A lender may initiate proceedings where a borrower has defaulted on a recoverable debt and statutory requirements for filing are satisfied. A debt recovery tribunal Nepal lawyer can assess jurisdiction, documentation and recovery strategy and can also cover appeals.
How long does loan recovery litigation take in Nepal?
Loan recovery litigation in Nepal does not have one fixed timeframe. Duration depends on the claim, evidence, objections, security enforcement, tribunal workload and whether appeals or writ proceedings follow. Straightforward matters may progress differently from contested claims involving guarantors or collateral. A case-specific assessment should be made after reviewing the facility and security documents.
Can a foreign lender enforce security over assets in Nepal?
Yes, subject to Nepalese law and the nature of the security. A foreign lender must consider applicable foreign exchange, banking, registration, security and enforcement requirements before relying on Nepal-based collateral. Cross-border financing Nepal transactions should therefore address enforceability at structuring stage. Local counsel support can identify Nepal-law requirements for the proposed security package.
What regulatory approvals are required for foreign lending into Nepal?
Foreign lending into Nepal can involve foreign exchange and regulatory requirements depending on the borrower, transaction structure, lender and use of funds. NRB compliance advisory Nepal should therefore be obtained before execution. The applicable Foreign Exchange Regulation Act, NRB directives and transaction-specific approvals or reporting requirements should be reviewed as part of the financing structure.
What is the difference between restructuring and formal recovery proceedings?
Restructuring seeks to modify or resolve an existing financing relationship through measures such as rescheduling, amendment or settlement, while formal recovery seeks legal enforcement of the lender’s rights following default. Restructuring may preserve a viable borrower relationship; recovery may involve DRT proceedings, security realization or appeals. The appropriate route depends on the facility and recovery prospects.
How does NRB classify non-performing loans in Nepal?
NRB’s framework classifies loans according to applicable regulatory criteria, including the period and nature of overdue obligations and other prescribed indicators. Non-performing asset resolution Nepal therefore requires reference to the current NRB Unified Directives rather than relying on a generic classification. The applicable regulatory treatment should be checked against the directive in force at the relevant time.
What is the role of local counsel in cross-border financing in Nepal?
Local counsel provides Nepal-law advice within an international financing structure. This can include due diligence, security, regulatory approvals, foreign exchange issues, enforceability opinions and enforcement strategy. For local counsel Nepal banking work, Niti Partners can coordinate directly with international lenders, transaction counsel and other advisers so Nepal-law issues are incorporated into the wider financing documents.
Can a guarantor be pursued separately from the borrower in Nepal?
A guarantor’s liability depends on the guarantee, applicable law and circumstances of the default. Loan recovery litigation Nepal may involve claims concerning both borrower and guarantor obligations, but the precise remedy depends on the contractual terms and procedural framework. The guarantee should be reviewed alongside the underlying facility before determining the appropriate recovery strategy.
What security can be created over movable assets in Nepal?
Security over movable assets can take forms including pledge, hypothecation and other legally recognized arrangements depending on the asset and transaction. Security agreement drafting Nepal requires careful consideration of ownership, possession, registration, priority and enforcement. The appropriate structure should be assessed before financing closes, particularly where multiple lenders or competing security interests are involved.
What is the process for enforcing a foreign judgment or arbitral award in Nepal?
Enforcement depends on whether the decision is a foreign judgment or arbitral award and on the applicable Nepalese statutory framework and treaty obligations. Cross-border financing Nepal disputes should address enforcement at the drafting stage by selecting appropriate dispute-resolution mechanisms. Contact Niti Partners for Banking & Finance Legal Support
For banking transactions, financing documentation, regulatory advice, lender due diligence, cross-border financing or DRT proceedings, contact Niti Partners & Associates.
Niti Partners & Associates
Phone: +977 9803831179
Email: [email protected]
Contact Niti Partners for banking transaction, regulatory, financing or debt recovery support.