NRB sets limits on digital transactions in Nepal

NRB brings new regulations for digital transactions in Nepal, sets Rs 25,000 monthly cap for payments using digital wallets

Nepal Rastra Bank (NRB), the central bank of Nepal has issued a new directive imposing ceilings on digital transactions in Nepal. Deputy governor of Nepal Rastra Bank, Chintamani Siwakoti informed that new regulations have been brought in considering all sectors concerned and international norms, reports Setopati. The new regulations will systematize digital payments in Nepal, he said.

What is in the new NRB directive?

As per the new directive by NRB, Banks and financial institutions are allowed to issue pre-paid card facility of up to Rs 100,000 at one time, and users of pre-paid card may withdraw Rs 500 to Rs 5,000 in one transaction and up to Rs 50,000 per month. Debit card users can withdraw a minimum of Rs 500 to the maximum of Rs 25,000 at a time, up to Rs 100,000 in a day, and a total of 4 transactions in a day. Credit card users will be allowed to withdraw cash only up to 25 percent of the credit limit. However, credit cards cannot be used for cash transactions.

Using Mobile Banking, you can make payment of up to Rs 5,000 in one transaction and daily and monthly payment limits are fixed at Rs 10,000 and Rs 50,000, respectively.

Similarly, using internet banking, you will be able to make payment of up to Rs 100,000 in a day and Rs 500,000 in a month. Also, you can make the transfer of Rs 100,000 at a time and up to Rs 10,00,000 funds in a month using internet banking.

Likewise, using digital wallets like Khalti, you will be able to able to make payment of up to Rs 15,000 a day and Rs 25,000 in a month. You can top-up upto Rs. 5000 at a time, Rs. 15,000 in a day, and Rs. 25,000 from Agents and Sub-Agents, and make transactions in the same volume.

You can transfer an amount ranging from Rs 100 to Rs 5,000 at a time to your digital wallet from bank account, and upto Rs. 15,000 in a day. But, you can transfer upto Rs. 50,000 to your wallet if you are to transact it on the same day. Your wallet cannot withstand more than Rs. 25,000.

However, it mandatory for all users to fill up KYC (Know Your Customer) form to carry out transactions above Rs.5,000. As digital wallet is a new technology in Nepal, no such limitations were imposed earlier.

The proposal to limit online banking transactions in Nepal was floated in a draft circular in December 2017. The NRB has now come out with final guidelines and sought to make strict rules for banks and mobile wallet operators.

What might be impacts of this regulation from NRB?

The volume of mobile banking transactions is showing an uptrend in Nepal and similar is the case for digital wallets. Digital Payment is slowly starting to become a habit, especially among the young population.

However, the new restrictions imposed on internet banking and mobile wallets are sure to directly impact online payment and e-commerce growth in Nepal.

Compared to developed countries and our own neighbors like India and China, online banking and digital payment services in Nepal still have a long way to go. At present, the total internet banking users in the country are estimated at 30 lakhs, and about 10 lakh digital wallet users. However, growth potential is immense and this number is expected to grow exponentially.

Online payments should be made safer, not imposed with such restrictions.

Digital wallets are largely viewed as a preferred mode of fund transfer for small value and to promote digital transactions among people who cannot easily open a bank account, especially those in rural areas.

Mainly a cash-based economy, this new regulation might discourage the growth of cashless transactions in Nepal, which is still at a nascent stage. There are fears, people will opt cash for higher transactions. It will surely impact the digital and cashless Nepal dream. Many people have expressed concern over new NRB regulations. They feel it will discourage electronic payments in Nepal, and promote usage of cash.

If you prefer electronic money over cold cash, is this new regulation a welcome move? What might be its impact on the cashless mission of Nepal? Should NRB revise the directive?

Read the full directive here:

Read also: All government transactions to go digital in Nepal

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NRB brings new regulations for digital transactions in Nepal, sets Rs 25,000 monthly cap for payments using digital wallets

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