March 18: Nepal Rastra Bank has shown flexibility in allowing foreign banks to open branches in Nepal. In this regard, the central bank has lowered the provision of minimum paid-up capital required for foreign banks to open branches in Nepal by scrapping the policy issued in 2010 regarding opening of branches in Nepal. 

NRB confirmed that it has scrapped the Policy Provision for Opening Branch Office by Foreign Bank or Financial Institution in Nepal, 2010 and issued Foreign Bank Branch Licensing Policy,  2022 in its place.

Issuing a notice on Wednesday, the central bank said it has made arrangements that allow foreign banks to open branches in Nepal with a minimum paid-up capital of USD 20 million. Initially, the minimum paid-up capital was set at US$ 20 million US dollars, but in 2014, it was amended to maintain the paid-up capital on par with that of Nepali banks. 

At present, the minimum paid-up capital of commercial banks is Rs 8 billion and the foreign banks should also maintain the same amount. However, as per the new directive, up to USD 20 million is enough to open branches of the foreign banks. 

Executive Director of NRB Dev Kumar Dhakal said that the arrangement of paid-up capital has been made flexible to attract foreign banks to Nepal. "Foreign banks were not attracted because of the earlier provisions," he said, "So we have given some additional facilities." 

Even though NRB had issued a policy to open a branch 12 years ago, no foreign bank has opened a branch in Nepal so far. Only Doha Bank of Qatar, Masrek Bank of the UAE and ICICI Bank of India have opened liaison offices. The liaison office is not allowed to conduct banking transactions.