Cash Transactions Above Rs. 500,000 Must Now Be Done Through Banks Only; Government Tightens Rules to Promote Transparency

The Government of Nepal has enforced a new provision requiring that any transaction worth Rs. 500,000 or more must be conducted strictly through banks, financial institutions, or digital payment channels.
This decision was made to strengthen anti–money laundering measures and help Nepal get removed from the FATF grey list, according to Government Spokesperson and Minister for Information and Communications, Jagdish Kharel.

Previously, individuals were allowed to conduct cash transactions up to Rs. 1 million. Under the new rule, any single transaction of Rs. 500,000 or above—either payment or receipt—must be routed through official banking channels.

Aim: Transparency and Cleaner Financial Practices

The Cabinet meeting held on Monday concluded that reducing cash-based transactions will help increase transparency in financial dealings and strengthen the formal economy.
According to the government, stricter limits on cash usage will:

• Prevent the circulation of undisclosed or black money,

• Reduce illegal financial activities,

• Improve tax compliance and transparency,

• Promote digital payment systems nationwide.

Impact Across All Sectors

The decision is expected to affect businesses, traders, and general consumers alike. Sectors that commonly involve high-value transactions will see immediate changes, such as:

• Real estate dealings

• Gold and silver trading

• High-value electronics

• Automobile and motorcycle sales

• Construction materials

• Other expensive goods and services

In these sectors, the use of cash will now be highly restricted, and digital or banking channels must be used instead.

The government has stated that this step is crucial for national financial integrity and aligns Nepal with international standards of transparency and anti–money laundering compliance.