Evolution of Banking Law in Nepal: From Coinage to Digital Finance

Phase 1: Foundations (Pre–1945)

• 1876: Nepal Coinage Act—first monetary law.
• 1937: Nepal Bank Ltd.—first commercial bank.

Phase 2: Central Banking & Regulation (1945–1980)

• 1956: Nepal Rastra Bank (NRB) Act—central bank established.
• 1964: Banking Companies Act—licensing, operations.
• 1962: Foreign Exchange Regulation Act—capital controls.

Phase 3: Liberalization (1980–2000)

• 1984: Financial Institutions Act—new NBFI framework.
• 1985: FE Act amended—eased forex rules.
• Surge in private commercial banks (Nabil, Standard Chartered, Himalayan, etc.).

Phase 4: Reform & Consolidation (2000–2010)

• High NPLs, weak governance → NRB risk-based supervision, higher capital, prompt corrective action.
• Mergers/acquisitions reduced bank count; strengthened balance sheets.

Phase 5: Digital & Inclusive (2010–Present)

• Mobile banking, digital wallets, QR payments (eSewa, Khalti, IME Pay).
• NRB mandates: priority sector lending (agri, SME), financial literacy.
• AML/CFT framework aligned with FATF.
• 2020: Bank & Financial Institution Act (BAFIA) consolidated all banking laws.

From a single coinage act to a digital ecosystem—Nepal’s banking law has traveled far.