Regulatory Framework

• Office of Company Registrar (OCR): Manages company registrations, ensuring legal compliance for incorporation, regular updates and change of control records, etc.

• Inland Revenue Department (IRD): In Nepal, the Inland Revenue Department (IRD) is primarily responsible for the administration and collection of various taxes. Their main functions include:

  1. Tax Collection: The IRD is responsible for collecting a range of taxes, including income tax, Value Added Tax (VAT), excise duties, and other internal taxes.

  2. Tax Policy Implementation: Implementing and enforcing tax policies set forth by the government. This includes ensuring compliance with tax laws and regulations.

  3. Taxpayer Services: Providing services to taxpayers, such as processing tax returns, issuing tax refunds, and offering guidance on tax-related matters.

  4. Tax Compliance and Enforcement: Monitoring and ensuring compliance with tax laws. This includes conducting audits and investigations into tax evasion or fraud.

  5. Policy Development and Reform: The IRD also plays a role in developing tax policy and proposing reforms to improve the tax system.

  6. International Tax Affairs: Managing international tax matters, including the implementation of tax treaties and handling cross-border tax issues.

• Nepal Rastra Bank (NRB), Payment System Department: Among several regulatory activities performed by NRB, it primarily looks into the following areas of the payment systems -

  • Regulation and Supervision: NRB regulates and supervises Nepal's payment systems, ensuring their smooth and secure operation.

  • System Development and Modernization: The bank is responsible for upgrading and modernizing payment system infrastructure, incorporating new technologies for efficiency and security.

  • Policy Formulation: NRB formulates policies for the operation and management of payment systems, setting standards and guidelines to govern these systems.

  • Promotion of Electronic Payments: The department actively promotes electronic payment methods to reduce cash reliance and enhance transaction efficiency.

  • Risk Management: It identifies and manages risks in payment systems, focusing on operational, settlement, and systemic risks.

  • International Collaboration: NRB engages in international collaborations to align with global best practices in payment systems.

In essence, the NRB's Payment System Department is pivotal in maintaining the integrity, efficiency, and stability of Nepal's financial transaction systems.

• Department of National ID and Civil Registration: Integrates national ID systems with fintech, enhancing KYC processes.

• Monetary Policy, etc

• Department of National ID and Civil Registration (National ID)

• The Journey of Khalti

• E-Commerce Act in Nepal, Electronic Transaction and Transfer Act

Industry Landscape

The types of Banking

• Brick and Mortar Banking - refers to traditional banking services offered through physical branch locations. This primarily includes services around Physical Branches, In-Person services, Physical verification, Deposit Lockers, etc.

• Digital Banking - Digital Banking is an extension of a brick and mortar banking, providing access to the banking through digital channels and offerings - such as funds transfer, bill payments, account management, and loan applications, typically through a website or mobile app.

• Neo Banking - Neo Banking represents a more radical shift from traditional banking. Neo banks are fintech firms that operate exclusively online and do not have any physical branches. Key features include:

Other Industry components

• BFIs - Banking and Financial Institutions

• PSO - Payment services operator

• PSP - Payment services provider

• Digital Wallets -

Nearby Markets and Crossborder payments

(some literature missing...)

• UPI India

• Remittance

• Cross Border Payments

• Visa, MasterCard, EMVCo