असुल नभएको ब्याजबाट लाभांश बाँड्न नपाइने, राष्ट्रिय परिचयपत्रसँग केवाईसी जोड्न समयसीमाBanks Barred from Distributing Dividends on Uncollected Interest

Kathmandu — Nepal Rastra Bank has amended the Unified Directives, 2082, introducing new rules to make banks’ financial statements more realistic and to link customer identification records with the National Identity Card system.

Under the revised provision, interest collected within 15 days after the end of a fiscal year may be recorded as income for the previous fiscal year. This means interest accrued by mid-July but collected by the end of July may be included in the previous year’s profit-and-loss account.

Previously, banks had to collect such interest by the final day of the fiscal year to recognise it as income. The additional 15-day period is expected to reduce year-end collection pressure on banks and provide borrowers with limited relief in settling their interest obligations.

However, interest that remains uncollected after the 15-day period cannot be treated as retained earnings or distributable profit.

Banks must transfer the relevant amount to a regulatory reserve after deducting applicable income tax, employee bonuses and allocations to statutory funds, including the general reserve and corporate social responsibility fund.

The amount may be transferred back to retained earnings only after the interest is actually recovered from the borrower.

The measure is expected to prevent banks from inflating profits on the basis of income recorded only on paper. It will also restrict institutions from distributing dividends from interest that has not been received in cash.

The revised rule could provide a more accurate picture of banks’ earnings, asset quality and dividend-paying capacity. It may particularly affect institutions with a high volume of accrued but uncollected interest.

Deadline set for National ID-based KYC

The central bank has also set a deadline for banks and financial institutions to connect customer records with the National Identity Card system.

Banks must obtain a self-declaration from account holders by the end of Asoj 2083 regarding whether they possess a National Identity Card. The declaration may be collected through mobile applications or other suitable channels.

Customers who have already received the card must submit either the card or its identification number within the same period so that their know-your-customer, or KYC, records can be updated.

Banks must remind customers without a National Identity Card every six months to obtain one and update their account information.

Nepal Rastra Bank had already introduced identity verification through electronic National ID records for new account openings from mid-January 2025.

Special provisions have been retained for Nepali citizens living abroad. They may open bank accounts online using other required documents even if they do not have a National Identity Card or identification number.

Such customers must provide their National ID details and update their KYC records within 35 days of returning to Nepal.

The National Identity Card requirement will not apply to children below 16 years of age or to persons with disabilities and vulnerable individuals who are unable to care for themselves. They may continue to open and operate bank accounts using other recognised documents.

The amendments address two separate weaknesses in the banking system. The first prevents unrealised interest from being presented as freely distributable profit, while the second seeks to establish a more reliable and uniform customer identification framework.

Together, the measures are expected to strengthen transparency in financial reporting, improve customer verification and reduce risks related to inaccurate earnings and incomplete identity records.