1. PAYMENT SYSTEM IN NEPAL

2. Short Glimpse about Nepal
Federal Democratic Republic of Nepal
Land locked & least developed country.
Area: 147,181Sq.km
Population:28.8 million(mid July 2017)
GDP: USD24.47 Billion
Per capita :USD 1004
Inflation :4.00 percent
(Source: National Economic survey

3. LEGAL AUTHORITY
Nepal Rastra Bank-Central Bank of Nepal is mandated by Nepal Rastra Bank Act 2002 as an authority responsible for the regulation and supervision of Banks and Financial Institutions & payment system.
NRB is mandated by NRB Act 2002 for development of secure, healthy, and efficient payment system in the country.

4. Financial system overview
Banks and financial institutions are licensed under four categories by NRB
Other Institutions (10) which are licensed by NRB
Categories
Bank
Total
Total branch
(Mid Jan 2018)
“A”
Commercial bank 28
2919
“B”
Development bank 33
951
“C”
Finance Company 25
183
“D”
Microfinance 65 -
Total BFIS
151
4053

5. Financial system overview
Nepal Stock Exchange Company(229 companies listed for trading ) supervised by security Board of Nepal
S.N.
Company
No.
Regulated by 1.
Employee Provident fund 1
Nepal Government 2.
Citizen Investment Trust 3.
Postal Savings Bank 4.
Life Insurance Companies 18
Insurance Board 5.
Non life Insurance companies 20 6.
Reinsurance company 7.
Savings and Credit cooperatives
3200
Cooperative board

6. Financial system overview
S.N.
Company
No.
Regulated by 1.
Payment System Operator 3
Regulated and supervised by NRB 2.
Payment Service provider 36
Total 39

7. Financial access as on Mid June 2018
S.N.
Particular
“A”
“B”
“C”
Total 1.
No. of Branches
2919
951
183
4053 2.
No. of Branchless Banking Centres
1289 - 3.
No. of Branchless Banking Customers ( In Lakh)
1.89 4.
No. of Deposit Accounts (In lakh)
9.38
3.13
0.36
12.87 5.
No. of Loan Accounts (In lakh)
183.67
36.66
4.67
225.00 6.
No. of Mobile Banking Customers (In lakh)
36.45
3.35
0.20
40.00

8. Financial access as on Mid June 2018
S.N.
Particular
“A”
“B”
“C”
Total 7.
No. of Internet Banking Customers ( In Lakh)
7.67
0.14
0.03
7.84 8.
No. of ATMs
2420
173 31
2624 9.
No. of Debit Cards( In Lakh)
49.83
1.94
0.31
52.08
10.
No. of Credit Cards ( In Lakh)
0.97
0.28 -
1.25
11.
No. of Prepaid Cards( In Lakh)

9. Payment Systems in Nepal
Major payment instrument:
Cash: First and common mode of payment, cash is king concept.
CHEQUES: Cheques are Second common instrument for payment. To facilitate online quick settlement of cheques among BFIs, Electronic cheque clearing has been introduced with establishment of Nepal clearing house Ltd. (NCHL-ECC).
It enables clearing of cheques on same day irrespective of location of BFIs branches. ECC & Ips are major tools for clearing & settlement.
Cards: Debit Cards, Credit Cards, e payments are also used lately. Debit cards are most popular among users.

10. Payment system overview
Mobile banking :with Increasing access to mobiles (currently approx 80 %) mobile banking is also growing. Facilities include intra bank fund transfer, balance enquiry, mini statement, utility bill payments etc.
Internet Banking :BFIs are increasingly providing this facility to their customers.
ATM : Total number of ATM are 2624
Branchless banking: Effective tool for rural and semi urban areas. As of mid June 2018, 1289 branchless centers and 1,89, customers.

11. Existing Law, Policies and Guidelines
Bylaws
Payment and settlement Bylaw, 2015 (including second amendment 2017)
Policies, Guidelines
Licensing policy for Payment related Institutions 2016
Payment system Oversight Framework 2018
Other
National Payment System Development Strategy, 2014
Directives
Electronic retail payment threshold
Security features in electronic payment tools
Retail payment transaction threshold
Online banking & Settlement bank

12. NRB Strategic plan ( )
Nepal Rastra Bank strategic plan ( )
NRB aims at gradually moving towards cashless society by facilitating various instruments of electronic payments in a safe, secured and efficient manner.
Effective payment system enhances the stability of the financial sector, reduces transaction costs in the economy, promotes the efficient use of financial resources , improves market liquidity and facilitates effective implementation of monetary policy. NRB aims at increasing the effectiveness of payment through (i) strengthening payment and settlement legal framework and regulatory mechanism, (ii) introducing Real Time Gross Settlement (RTGS) for large value payment and (iii) establishing National Payment Gateway (NPG) and National Payment Switch (NPS)

13. Recent Developments
Establishment of dedicated Payment systems department.(PSD)
PSD is involved in establishing legal infrastructure for regulation of payment system in country.
Payment and settlement Act forwarded to parliament for necessary approval.
To facilitate interbank payments, Nepal clearing house has launched Interbank payment system (NCHL-IPS) on 17th August 2016.
It is web based interbank solution to facilitate domestic fund transfer between accounts maintained at different BFIs.
IPS introduced for prompt inter-bank payment.

14. Future course
Inter department task force headed by PSD has been formed to study modernization of domestic payment infrastructure such as Real time Gross Settlement (RTGS), Central Security Depository, Retail Payment System and National Financial Switch is required to give time frame for implementation.
Development of Modern, Effective and dynamic payment system in Nepal is Future agenda.
Development of effective oversight framework and other regulations will help ensure effective payment system in Nepal . BFIs as well as other payment related agencies will also be subject to effective supervision.
Cross boarder Cooperation in these areas expected.

15. Thank You