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Law of Hurt in Nepal (2026): Simple vs Grievous Hurt Guide
A 2026 practitioner's guide to the law of hurt in Nepal under Sections 191 to 197 of the Muluki Penal Code 207...
Read more →Currency Law in Nepal 2026: NRB Act 2058 + FERA 2019
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Table of Contents0sections
- The Nepal Rastra Bank Act 2058 — central-bank authority
- The Foreign Exchange Regulation Act 2019 — cross-border currency control
- The NPR-INR fixed peg
- Cryptocurrency, Bitcoin and the prohibition
- Counterfeit currency under the Muluki Penal Code 2074
- Bringing currency in and out of Nepal
- Why retain counsel for currency-law matters?
Currency law in Nepal sits across three statutes that operate in tandem. The Nepal Rastra Bank Act 2058 (2002) gives Nepal Rastra Bank — the central bank — exclusive authority to issue currency, regulate the rupee, and supervise the foreign-exchange system. The Foreign Exchange (Regulation) Act 2019 (1962) — Nepal's oldest still-operating financial statute — controls cross-border foreign-currency dealings, sets the licensing framework for FX dealers, and underpins the Indian Rupee convertibility regime that defines daily commerce on the southern border. The Muluki Penal Code 2074 (2017), Chapter 17, criminalises counterfeit currency, unauthorised currency-like instruments, and the alteration of banknotes — with penalties up to ten years' imprisonment for the most serious offences.
This guide is the practitioner's view of currency law in Nepal in 2026 (2083 BS): what NRB controls, what foreign exchange regulation actually means for an ordinary person carrying USD home, where the Indian Rupee fits, why cryptocurrencies are prohibited, and what the criminal penalties for counterfeiting and currency abuse look like.
Currency law in Nepal is governed by three statutes. The Nepal Rastra Bank Act 2058 (2002) gives Nepal Rastra Bank exclusive authority to issue and regulate the Nepalese Rupee. The Foreign Exchange (Regulation) Act 2019 (1962) governs cross-border currency transactions, FX dealer licensing, and remittance flows. The Muluki Penal Code 2074 Chapter 17 criminalises currency counterfeiting, unauthorised banknote-like instruments and the alteration of currency. Key features: the Nepalese Rupee (NPR) is pegged to the Indian Rupee at 1.6 NPR = 1 INR; non-Indian foreign currency is subject to NRB's FX regulation; cryptocurrencies, Bitcoin and other virtual currencies are prohibited and trading is criminalised; bringing in foreign currency requires declaration above prescribed thresholds; outbound foreign currency requires NRB endorsement above retail limits. Counterfeiting penalty under Penal Code Section 261 onwards: imprisonment up to 10 years for serious offences plus fine, with possession of counterfeit currency itself an offence. NRB licenses FX dealers, money changers, and remittance companies; unlicensed currency dealing is a criminal offence under the FX Act.
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Our regulatory team handles currency-law matters across the spectrum — counterfeit-money criminal defence, FX-violation prosecutions defended at the District Court, NRB licensing and compliance work for money-changer and remittance businesses, and cross-border currency advice for NRN clients moving funds between Nepal and other jurisdictions. The most common operational mistake we see is unawareness of the FX-declaration threshold — a businessperson returning from a trip abroad with USD or EUR in cash above the limit, without making the customs declaration, finds the cash impounded and faces a Foreign Exchange Act prosecution. The remedy is procedural compliance at the airport, not legal argument later.
The Nepal Rastra Bank Act 2058 — central-bank authority
The Nepal Rastra Bank Act 2058 (2002) is the constitutive statute of Nepal's central bank. Section 4 declares NRB to be the central bank with the principal objectives of formulating monetary and foreign-exchange policy, maintaining price stability, managing the financial system, and developing payment, banking and financial systems. Section 53 onwards gives NRB the exclusive authority to issue currency in Nepal — banknotes and coins denominated in Nepalese Rupees. No other entity can issue currency or anything resembling currency in Nepal; doing so attracts criminal liability under the Penal Code's currency chapter.
NRB also controls the foreign-exchange system under the same Act and the Foreign Exchange Regulation Act 2019. NRB issues licences to commercial banks, money changers and remittance companies to deal in foreign currency; sets exchange-rate policy; manages Nepal's foreign-exchange reserves; and supervises cross-border payment flows. The fixed peg of the Nepalese Rupee to the Indian Rupee at 1.6 NPR = 1 INR is a long-standing operational feature of the system, supported by NRB's intervention to maintain the peg.
The Foreign Exchange Regulation Act 2019 — cross-border currency control
The Foreign Exchange (Regulation) Act 2019 (1962) is one of Nepal's oldest financial statutes still in force. Its operating principle is that all foreign-currency dealings in Nepal are regulated by NRB — only authorised entities (licensed banks, money changers, remittance companies) can deal in foreign currency, and individuals must comply with declaration and limit rules for cross-border movement.
The Act imposes practical rules: foreign currency above a prescribed threshold must be declared at customs on entry into Nepal; outbound travel allows a limited cash quota in foreign currency without endorsement; remittance of money abroad above retail limits requires NRB approval; foreign investment inflows must be channelled through licensed banks under reporting requirements; export proceeds must be repatriated to Nepal within prescribed periods. Violations attract imprisonment, fine, and forfeiture of the foreign currency involved. The unauthorised dealer — typically the unlicensed money changer or hundi operator — faces criminal prosecution.
For NRN families and businesses moving funds between Nepal and abroad, the FERA framework is the operational gate. Inward remittance through licensed channels is fully legal and is the cornerstone of Nepal's external financial position. Outward investment by Nepali residents is restricted; carrying USD or EUR cash out of Nepal above the retail limit without endorsement is an offence even where the funds have a clean origin. The detailed FDI / FX advisory work is in our FDI guide.
The NPR-INR fixed peg
The Nepalese Rupee is pegged to the Indian Rupee at the fixed rate of 1.6 NPR = 1 INR — set through NRB's exchange-rate policy and supported by NRB's market intervention. The peg has been in place for decades and underpins the open border trade and the use of Indian Rupees in commercial transactions in Nepal alongside the Nepalese Rupee. Within prescribed thresholds, INR is freely usable for purchases in Nepal in border districts and major cities; INR notes of NPR 100 and 200 (i.e. INR 100 and 200) are widely accepted, while INR 500 and 2,000 notes are restricted by NRB notification due to anti-money-laundering and demonetisation-related concerns.
For non-Indian foreign currencies (USD, EUR, GBP, AUD, CHF, JPY and the rest), the rates float against NPR through the cross-rate to INR. NRB publishes daily reference rates that licensed dealers use as the basis for their quoted retail rates with a regulated spread. The same currencies are subject to the FERA controls on declaration, dealing and remittance.
Cryptocurrency, Bitcoin and the prohibition
NRB has consistently maintained that cryptocurrencies, Bitcoin and other virtual currencies are not legal tender in Nepal, are not recognised currency, and that dealing in them is illegal. The position has been reinforced through repeated public notices and is treated as a foreign-exchange violation under the FERA framework as interpreted by NRB. Trading on cryptocurrency exchanges, mining operations, and crypto-payment acceptance by businesses are all treated as unlawful.
Enforcement has been active. The Nepal Police Cyber Bureau has registered prosecutions against Bitcoin traders, hawala operators using crypto rails, and online platforms providing crypto services to Nepali users. The criminal liability flows from the FERA violation (unauthorised foreign-currency dealing) plus, where the activity involves online platforms, parallel offences under the Electronic Transactions Act 2063. The full prohibition framework and the international comparison is covered in our cryptocurrency law in Nepal guide.
Counterfeit currency under the Muluki Penal Code 2074
Chapter 17 of the Muluki Penal Code 2074 (Sections 261 onwards) covers offences related to currency. Counterfeiting Nepalese or foreign currency, possessing counterfeit currency knowing it to be counterfeit, manufacturing or possessing equipment intended for counterfeiting, importing counterfeit currency, and deliberately putting counterfeit currency into circulation are all offences. The penalties scale with the gravity — production of counterfeit currency at scale carries imprisonment up to ten years plus fine; possession with knowledge but without circulation attracts a lower band; the unaware recipient who realises and surrenders is not liable.
Related offences in the same chapter cover the alteration of genuine banknotes (defacing, mutilating, or altering value), the manufacture of unauthorised instruments resembling currency or NRB-issued documents, and the use of counterfeit coins. The Penal Code is the criminal statute; NRB and the Nepal Police are jointly responsible for detection and investigation, with prosecution at the District Court. Banks are required to seize and report counterfeit notes presented at the counter and to report patterns to NRB and law enforcement.
Bringing currency in and out of Nepal
Inbound — a passenger arriving in Nepal can bring foreign currency in cash up to a prescribed threshold without declaration; above the threshold, declaration on the customs form on arrival is required. The threshold is set by NRB notification and revised periodically; check the current limit on the NRB website or at the airport before travel. Failure to declare results in forfeiture of the cash plus the FERA prosecution. Indian Rupees are subject to a separate threshold reflecting the open border arrangement with India.
Outbound — a passenger leaving Nepal can take a limited cash quota of foreign currency without prior NRB endorsement, with the quota set differently for tourist purposes (typically lower) and for medical treatment, education or investment purposes (typically higher with documentary support). Above the quota, NRB endorsement on the passport is required before departure, supported by documents establishing the purpose. INR is restricted on outbound travel because the Indian government's currency rules apply at the receiving end.
Why retain counsel for currency-law matters?
Three distinct work types arise. Compliance work — money changers, remittance companies, fintechs and FX-dealing businesses need NRB licensing, ongoing reporting compliance, and sectoral advice. Defence work — counterfeit-money prosecutions, FERA violations, hundi-operation cases, and unauthorised crypto-trading prosecutions all need criminal-defence counsel familiar with the currency statutes. Cross-border advisory — NRN clients moving funds between Nepal and other jurisdictions need clear advice on the FERA limits, the legal channels for inward remittance and the restrictions on outward investment.
Alpine Law Associates handles all three. Our regulatory team works with NRB licensees on compliance and licensing matters; our criminal-defence team handles counterfeiting and FERA prosecutions at the District Court; our cross-border advisory team coordinates with Indian, GCC and Western counsel for NRN clients with multi-jurisdiction currency questions. As a full-service law firm in Nepal we link currency-law work with the parallel banking, FDI, tax and corporate workstreams. Speak with our lawyers today →.
Last reviewed: April 2026
Frequently Asked Questions
Three statutes. The Nepal Rastra Bank Act 2058 (2002) gives NRB the central-bank authority over currency issuance and FX regulation. The Foreign Exchange (Regulation) Act 2019 (1962) controls cross-border foreign-currency dealings, FX dealer licensing and remittance flows. The Muluki Penal Code 2074 Chapter 17 (Sections 261 onwards) criminalises counterfeiting, unauthorised currency-like instruments and the alteration of banknotes.
Only Nepal Rastra Bank (NRB), under the exclusive authority granted by Section 53 onwards of the NRB Act 2058 (2002). No other entity — government department, bank, private company, individual — can issue Nepalese Rupee notes, coins, or anything resembling currency. Doing so attracts criminal liability under the Penal Code's currency chapter and administrative action by NRB under the NRB Act.
The Nepalese Rupee is pegged to the Indian Rupee at the fixed rate of 1.6 NPR = 1 INR. The peg has been in place for decades and is supported by NRB's exchange-rate policy and market intervention. INR is widely accepted in border districts and major cities for retail purchases. INR notes of denominations 100 and 200 are freely usable; INR 500 and 2,000 notes are subject to NRB restrictions due to anti-money-laundering and demonetisation-related concerns.
Yes, up to a prescribed threshold without declaration. Above the threshold, declaration on the customs form on arrival is required under the Foreign Exchange (Regulation) Act 2019. The threshold is set by NRB notification and revised periodically — confirm the current limit on the NRB website or at the airport before travel. Failure to declare results in forfeiture of the cash plus a FERA prosecution.
A limited cash quota of foreign currency without prior NRB endorsement, with the quota set differently for tourist purposes (typically lower) and for medical, education or investment purposes (typically higher with documentary support). Above the quota, NRB endorsement on the passport is required before departure, supported by documents establishing the purpose. INR is more restricted on outbound travel due to Indian receiving-end rules.
No. NRB has consistently maintained that cryptocurrencies, Bitcoin and other virtual currencies are not legal tender, are not recognised currency, and that dealing in them is illegal. The position has been reinforced through repeated public notices and is treated as a foreign-exchange violation under FERA. Enforcement has been active — the Nepal Police Cyber Bureau prosecutes crypto trading, mining and platform-providing activity, with parallel offences under the Electronic Transactions Act 2063.
Chapter 17 of the Muluki Penal Code 2074 (Sections 261 onwards) covers counterfeit-currency offences. Manufacturing counterfeit currency or counterfeiting at scale attracts imprisonment up to 10 years plus fine. Possession of counterfeit currency knowing it to be counterfeit attracts a lower band. Manufacturing or possessing equipment intended for counterfeiting and importing counterfeit currency are also offences. The aware recipient who realises and surrenders the counterfeit note to a bank is not liable.
Yes. Money changers operate under licences issued by NRB under the Foreign Exchange Regulation Act 2019. The licensing requirements include capital adequacy, know-your-customer compliance, transaction record-keeping and periodic reporting to NRB. Unlicensed money changing — including hundi operations — is a criminal offence under FERA, with imprisonment, fine and forfeiture of the FX inventory. NRB also licenses remittance companies and bank FX departments.
Yes, within the limits of the Foreign Exchange Regulation Act 2019 and NRB notifications. Outward remittance for personal purposes (medical, education, family maintenance, gift) is permitted within retail limits through licensed banks. Outward remittance for investment requires specific NRB approval and is generally restricted. Outward remittance must be channelled through licensed banks; using unlicensed channels (hundi) is a FERA offence. The procedure involves submission of documents establishing the purpose to the bank.
NRB is the constitutive central bank under the NRB Act 2058 (2002). Its currency-related functions include exclusive issuance of Nepalese Rupee currency, formulation of monetary policy, regulation of foreign exchange under the FERA framework, licensing of FX dealers and remittance companies, supervision of cross-border payment flows, management of Nepal's foreign-exchange reserves, and maintenance of the NPR-INR peg through market intervention.
The Nepalese Rupee is the sole legal tender. INR is widely accepted in border districts and major cities for retail purchases under the long-standing open-border arrangement, but it is not legal tender in the formal sense — a creditor cannot insist on payment in INR. INR notes of denominations 100 and 200 are freely usable; INR 500 and 2,000 notes are restricted under NRB notification. The fixed peg at 1.6 NPR = 1 INR governs the conversion rate.
The undeclared foreign currency is liable to be impounded at customs and forfeited. The carrier faces a Foreign Exchange Regulation Act 2019 prosecution, with potential fine and imprisonment depending on the amount and the circumstances. The remedy is procedural compliance — declaration on the customs form on arrival, with supporting documents establishing the source of funds for amounts above the threshold. Counsel can sometimes recover the impounded cash through procedural challenge but the safer practice is to declare.
Yes, in foreign-currency accounts maintained by licensed commercial banks under NRB regulation. NRN clients are eligible for NRN foreign-currency accounts; resident Nepalis can hold foreign currency within prescribed limits. The accounts are subject to KYC, source-of-funds verification, and FERA reporting. Withdrawal in foreign currency is permitted for purposes recognised under FERA — outward remittance, foreign travel, education abroad, medical treatment abroad — within the operational limits.
Hundi is the informal cross-border money-transfer system that operates outside the licensed banking and remittance channels. It is illegal under the Foreign Exchange Regulation Act 2019 — the operator is conducting unlicensed FX dealing, and the user is participating in an unauthorised transaction. Hundi is associated with money-laundering, tax-evasion and terrorism-financing concerns and is actively prosecuted by NRB and law enforcement. Use the licensed remittance companies (Western Union, MoneyGram, IME, Prabhu Money Transfer, etc.) instead.
Alpine Law Associates handles three currency-law work types. Compliance — NRB licensing for money changers, remittance companies and FX-dealing businesses, with ongoing reporting and audit support. Criminal defence — counterfeit-money prosecutions, FERA violations, hundi-operation cases, and crypto-trading prosecutions defended at the District Court. Cross-border advisory — NRN clients moving funds between Nepal and other jurisdictions, FDI inflows and outward investment with NRB approval. Speak with our lawyers today →
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This article is intended solely for informational purposes and should not be interpreted as legal advice, advertisement, solicitation, or personal communication from the firm or its members. Neither the firm nor its members assume any responsibility for actions taken based on the information contained herein.