Table of Contents
Currency law in Nepal governs the issuance, regulation, and management of the country's monetary system. The Nepal Rastra Bank Act, 2002 is the primary legislation that outlines the legal framework for currency regulation. Nepal Rastra Bank (NRB), the central bank of Nepal, has the sole authority to issue currency, regulate foreign exchange, and maintain financial stability.
The Nepalese Rupee (NPR) is the official currency, and its issuance is backed by monetary policies designed to control inflation, ensure liquidity, and promote economic growth. The Foreign Exchange (Regulation) Act, 1962 governs foreign exchange transactions to prevent illegal currency trading and money laundering.
Currency laws in Nepal also ensure the protection of consumers against counterfeit money, facilitate international trade, and maintain exchange rate stability, particularly with the Indian Rupee, with which the Nepalese Rupee has a fixed exchange rate.
The government periodically amends currency laws to adapt to economic changes, digital transactions, and financial technology advancements. NRB also plays a crucial role in regulating cryptocurrencies, which are currently not legally recognized in Nepal.
Sec 257(2a) of the National Penal Code, 2074 has defined Currency means any kind of currency note, postal order, postal note, money order, cheque, draft, traveler's cheque, letter of credit, letter of exchange, bond, and credit card, and this term also includes other similar kinds of monetary instrument as specified by the Bank, as required, by publishing and circulating a public notice. Offenses relating to currency are mentioned in the National Penal Code.
Offenses relating to currency
1) Prohibition of counterfeiting of Currency. (National Penal Code, 2074 Sec 256)
counterfeit currency means a currency that is so forged in an unauthorized manner or counterfeit as resembling or having reason to believe it to be a currency issued by the Government of Nepal or Nepal Rastra Bank or foreign government or competent foreign body.
No person shall counterfeit, or attempt to counterfeit any currency.
Punishment
A sentence of imprisonment for a term of five to ten years and a fine of fifty thousand to one lakh rupee.
2) Prohibition of using Counterfeit currency. (National Penal Code, 2074 Sec 257)
No person shall, with the intention of using as genuine, purchase, sell, export, import, transact, or use as genuine, any counterfeit currency or attempt to do such act or possess such currency.
Punishment
A sentence of imprisonment for a term not exceeding seven years and a fine not exceeding seventy thousand rupees.
3) Prohibition of Making, possessing or repairing instruments for counterfeiting currency. (National Penal Code, 2074 Sec 258)
No person shall make, repair, purchase, sell, give, take, export, import, or possess any instrument or other material knowing that or having a reasonable reason to believe that it is intended to be used in or for forging or counterfeiting currency.
Punishment
A sentence of imprisonment for a term not exceeding seven years and a fine not exceeding seventy thousand rupees.
4) Prohibition of making currency contrary to standards. (National Penal Code, 2074 Sec 259)
No authority or person entrusted by the law in force to make currency shall knowingly make currency in contravention of the standards specified by law, make currency in violation of the terms and restrictions applicable to the making of currency, make currency in excess of the quantity specified or do any act with the intention of making currency with such deviation or cause benefit to himself or herself or any other person from such act or facilitate such act.
Punishment
A sentence of imprisonment for a term not exceeding seven years and a fine not exceeding seventy thousand rupees.
5) Prohibition of taking outside currency-making instruments. (National Penal Code, 2074 Sec 260)
No person shall, except with the order of the competent authority under law, take any currency-making machinery, equipment, or other instrument out of the place where currency is made.
Punishment
A sentence of imprisonment for a term not exceeding five years and a fine not exceeding fifty thousand rupees.
6) Prohibition of diminishing weight or altering the form of currency. (National Penal Code, 2074 Sec 261)
No person shall diminish the weight of metallic currency or alter the composition of metallic element or export, import, or possess currency, by causing the currency of one type to appear like the currency of another type, with the intention of using it as genuine or knowing that it may be used as genuine.
Punishment
A sentence of imprisonment for a term not exceeding five years and a fine not exceeding fifty thousand rupees.
7) Prohibition of bringing prohibited currency into use. (National Penal Code, 2074 Sec 262)
No person shall bring into use, exchange, or possess a currency in use but the circulation of which has been banned by order of the competent authority under the law, in violation of such order.
Punishment
A sentence of imprisonment for a term not exceeding one year or a fine not exceeding ten thousand rupees or both the sentences, The currency so brought into use, exchanged, or possessed shall also be forfeited.
8) Prohibition of burning, tearing, melting bank notes or coins or writing on bank notes. (National Penal Code, 2074 Sec 263)
No person shall, except with the order of the competent authority, burn a coin or banknote tendered as currency or so melt or tear it that it is incapable of being used.
No person shall write on or cross off bank notes.
Punishment
A sentence of imprisonment for a term not exceeding three months and a fine not exceeding five thousand rupees.
9) Prohibition of misusing torn bank notes. (National Penal Code, 2074 Sec 264)
No individual assigned by a legally authorized authority to destroy or dispose of damaged banknotes shall misuse, withhold, or distribute such notes for personal gain. These notes, deemed unfit for circulation due to wear, illegibility, or other reasons, must be properly disposed of as required by law.
Punishment
A sentence of imprisonment for a term not exceeding three years and a fine not exceeding thirty thousand rupees.
10) Forfeiture. (National Penal Code, 2074 Sec 264)
The currency, machine, equipment, or tools used in, and materials related to, the commission of any offense shall be forfeited.
Procedure
- State party case
- Statute of limitation shall be one year from the date of knowledge of the commission of any offense.