Executive Summary
Nepal Rastra Bank (NRB) has issued the Fifth Amendment to the Foreign Loan and Investment Management Bylaws, 2078 (2021) for on 30 December 2025 (though NRB Board decision was done on December 11, 2025). The amendment reflects a regulatory shift from approval-centric controls to post-transaction supervision. It simplifies foreign equity inflows, decentralizes repatriation approvals to commercial banks, and relaxes restrictions on outward investment by Nepali companies.
Foreign Equity Inflows
The amendment removes the requirement for prior NRB approval for foreign equity investments, including investments in existing companies and share transfers.
Previous Position:
Foreign investors were required to obtain NRB approval for foreign exchange entry even after receiving sectoral approval from the Department of Industry or the formerly Investment Board of Nepal (which is no longer investment approving authority). This additional layer applied particularly to brownfield investments and share acquisitions.
Changed Position:
NRB approval is no longer required for foreign equity inflows once approval is obtained from the Department of Industry or the Investment Board of Nepal. Foreign capital may be remitted through authorised banking channels, with NRB involvement limited to post-inflow recording for foreign exchange purposes.
Repatriation of Dividends and Investment Proceeds
The amendment decentralises the approval process for repatriation of investment-related proceeds.
Previous Position:
Applications for repatriation of dividends, disinvestment proceeds, and investment returns were processed by the Foreign Exchange Department of NRB. Although a 15-day timeline existed in principle, processing was often delayed due to centralised review.
Changed Position:
Authority to approve repatriation has been delegated to the Head Offices of A-Class Commercial Banks. Banks are required to complete the approval process within 15 days of receiving complete documentation. NRB approval is required only where repatriation is sought to a country other than the original source country of investment.
Outward Investment by Nepali Companies
The amendment relaxes restrictions on outward investment under the Act Restricting Investment Abroad.
Previous Position:
Outward investment was permitted only for export-oriented Nepali companies, primarily in the IT and services sectors, subject to profitability requirements and foreign currency earnings thresholds. Prior approval from NRB was required even for limited overseas investments. Summary of the earlier law can be read here.
Changed Position:
Any Nepali company may now invest up to USD 20,000 abroad without prior NRB approval, regardless of profitability, export orientation, or foreign currency earnings. Investments exceeding this threshold remain subject to regulatory approval and applicable conditions.
While the monetary cap remains limited, the removal of eligibility and approval barriers marks a structural change in Nepal’s outward investment framework.
Conclusion
The Fifth Amendment represents one of the most significant liberalisations of Nepal’s foreign exchange regime in recent years. By eliminating duplicative approvals for foreign equity inflows, decentralising repatriation decisions, and opening a limited outward investment window for all Nepali companies, NRB has reduced regulatory friction while retaining targeted supervisory oversight.
The full text of the Fifth Amendment to the Foreign Loan and Investment Management Bylaws, 2078 (2021) can be accessed here.
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Q1. What is the Fifth Amendment to the Foreign Loan and Investment Management Bylaws, 2078?
The Fifth Amendment is a regulatory reform issued by Nepal Rastra Bank on 30 December 2025 that liberalises foreign equity inflows, decentralises repatriation approvals, and relaxes outward investment restrictions for Nepali companies.
Q2. When did NRB issue the Fifth Amendment to the Foreign Loan and Investment Management Bylaws?
NRB issued the Fifth Amendment on 30 December 2025, based on a Board decision dated 11 December 2025.
Q3. Why is the NRB Fifth Amendment considered a major FDI reform?
It removes prior approval requirements for foreign equity inflows, delegates repatriation approvals to commercial banks, and allows limited outward investment without NRB approval, shifting Nepal’s forex regime from approval-based to supervision-based regulation.
Q4. Is NRB approval still required for foreign equity investment in Nepal?
No. NRB approval is no longer required for foreign equity inflows once sectoral approval is obtained from the Department of Industry or the Investment Board of Nepal.
Q5. Does the new rule apply to share transfers and brownfield investments?
Yes. The removal of NRB approval applies to investments in existing companies, share acquisitions, and share transfers involving foreign investors.
Q6. How can foreign investors remit equity capital into Nepal after the amendment?
Foreign investors may remit capital through authorised banking channels after receiving sectoral approval, with NRB involvement limited to post-transaction foreign exchange recording.
Q7. Has the Investment Board of Nepal lost its role in approving FDI?
The Investment Board of Nepal is no longer the primary investment-approving authority for most foreign investments, with approvals now largely routed through the Department of Industry depending on the sector and threshold.
Repatriation of Dividends & Exit Proceeds
Q8. Who approves repatriation of dividends under the new NRB rules?
Repatriation of dividends and investment proceeds is now approved by the Head Offices of A-Class Commercial Banks instead of NRB.
Q9. What is the timeline for dividend repatriation approval in Nepal?
Commercial banks are required to process repatriation approvals within 15 days of receiving complete documentation.
Q10. When is NRB approval still required for repatriation?
NRB approval is required only if repatriation is sought to a country other than the original source country of investment.
Q11. Does the amendment reduce delays in repatriation of foreign investment returns?
Yes. By decentralising approvals to commercial banks, the amendment significantly reduces administrative delays previously caused by centralised NRB review.
Outward Investment by Nepali Companies
Q12. Can Nepali companies invest abroad without NRB approval?
Yes. Any Nepali company may now invest up to USD 20,000 abroad without prior NRB approval.
Q13. Is outward investment limited to export-oriented companies?
No. The Fifth Amendment removes the requirement that outward investment be limited to export-oriented or foreign-currency-earning companies.
Q14. Does a Nepali company need to be profitable to invest abroad?
No. Profitability is no longer a prerequisite for outward investment up to the USD 20,000 threshold.
Q15. What law governs outward investment by Nepali companies?
Outward investment is governed by the Act Restricting Investment Abroad, as relaxed by the Fifth Amendment to the Foreign Loan and Investment Management Bylaws.
Compliance & Practical Impact
Q16. Does the Fifth Amendment eliminate all regulatory oversight by NRB?
No. While prior approvals are removed, NRB retains post-transaction supervision and foreign exchange reporting oversight.
Q17. How does the amendment affect foreign exchange compliance in Nepal?
The amendment simplifies entry and exit of capital while retaining compliance through banking-channel reporting and post-inflow monitoring.
Q18. What documents are required for repatriation under the new regime?
Required documents typically include proof of investment, tax clearance, dividend declarations or sale proceeds, and banking compliance forms, subject to bank-specific requirements.
Investor-Focused Long-Tail SEO Questions
Q19. Is Nepal becoming more investor-friendly after the NRB Fifth Amendment?
Yes. The amendment reduces regulatory friction, improves capital mobility, and aligns Nepal’s forex regime with international best practices.
Q20. How does Nepal’s FDI regime compare to previous years after this amendment?
Nepal’s FDI regime is now significantly more liberal, particularly for equity inflows and repatriation, compared to its historically approval-heavy framework.