NRB Approval No Longer Required to Bring in or Repatriate Foreign Investment

Kathmandu: Companies in Nepal will no longer require prior approval from Nepal Rastra Bank (NRB) to bring in foreign investment or repatriate invested funds. NRB has eased the policy through the Fifth Amendment to the Foreign Investment and Foreign Loan Management Regulation, 2021, issued on Monday.

With the new amendment, the previous requirement of NRB approval for foreign investment inflows or outflows during changes in share ownership has been removed. Foreign investors will now be able to directly exchange foreign currency and repatriate their earnings through licensed commercial banks.

According to NRB, the revised regulation aims to promote foreign investment by simplifying and streamlining procedures related to investment inflows and profit repatriation, making Nepal’s investment climate more competitive. Under the new provisions, investors can repatriate proceeds from share sales, profits or dividends, remaining funds after liquidation of a company or industry, royalties from technology transfer agreements, lease payments, legal compensation, and other legally permissible earnings.

The amendment also allows companies that are blacklisted to receive foreign investment, a restriction that previously existed. However, such companies will only be allowed to repatriate investment, dividends, or earnings after being removed from the blacklist. Foreign investors or lenders investing in blacklisted companies must submit a self-declaration acknowledging their awareness of the blacklist status and the restriction on fund repatriation.

The regulation further liberalizes foreign loan provisions. Foreign investors can now obtain foreign loans up to twice the company’s paid-up capital, and even loans up to five times the capital will not be restricted under the new framework. Interest rate provisions have also been made more flexible.

Similarly, NRB approval will no longer be required for both greenfield investments (establishing new industries) and brownfield investments (additional investment in existing industries). However, approvals from the Investment Board Nepal and the Department of Industry will remain mandatory as per prevailing laws.

NRB Spokesperson Guru Prasad Paudel stated that the amendment will significantly contribute to attracting foreign investment, improving the business environment, and boosting overall investment growth in Nepal.