Blog Detail

Notice on Foreign Currency Transfer via Online Financial Services for E-Commerce in Nepal

Date of Notice: 17 September 2020
Issued by: Payment System Department, Nepal Rastra Bank (NRB)

Nepal Rastra Bank (NRB), through its Payment System Department, issued a notice on 17 September 2020 directed at licensed banks, financial institutions, payment system operators, payment service providers, and concerned stakeholders. The notice relates to the receipt of foreign currency in Nepal via online financial services in connection with earnings from e-commerce and digital platforms.

Key Highlights of the Notice:

a) Valid Sources of Foreign Currency Income

The notice formally acknowledges foreign currency income received from the following activities as valid:

1. Export and sale of IT-related skills or expertise;
2. Monetization of content shared on social media platforms;
3. Retail transactions conducted via international online businesses or trade.

b) Transfer and Conversion to Local Currency

Once foreign currency is deposited into a local bank account, payment service providers (including banks and financial institutions) are permitted to convert and transfer the amount into a customer's digital wallet or other payment instruments in Nepalese Rupees, subject to applicable limits.

c) Payments for Royalties and Fees Abroad

Any royalty payments or related fees paid to foreign entities as part of generating the income mentioned above must be made in compliance with the Foreign Exchange Management Department’s guidelines.

d) Compliance with Legal Framework

All transactions must strictly adhere to the laws governing the prevention of money laundering, counter-financing of terrorism, and all other relevant legal provisions and regulations in force.

e) Monthly Reporting Requirement

Service providers must submit detailed monthly reports of such transactions to the Payment System Department in the specified format, no later than 15 days after the end of each calendar month.

Background and Impact

Prior to this Notice, individuals and businesses earning revenue from platforms like YouTube, Instagram, Facebook, Spotify, and other online sources were compelled to rely on international remittance systems like Western Union, as direct receipt of online income from third-party sources was not permitted.

With this notice, NRB has officially brought online income within the legal banking framework of Nepal. This move allows legitimate receipt and conversion of foreign currency into Nepalese Rupees through regulated banking channels, significantly easing financial access for digital entrepreneurs and e-commerce participants in the country.