Nepal Rastra Bank (NRB) has issued a directive mandating banks and financial institutions to require a national identity card or its number for opening bank accounts starting January 14, 2025. This directive, however, has sparked confusion, especially as a legal case challenging the mandatory use of national identity cards for public services remains unresolved.

The directive, issued on January 9, 2025, states that banks must verify the national identity card details or number through electronic records before opening accounts. It also requires customers to update their national identity card details in existing accounts, particularly for high-ranking officials, by the same deadline.

However, a subsequent notification from NRB appeared to soften this stance, stating that banks and financial institutions should "make arrangements" for account opening based on the national identity card rather than strictly enforcing its use.

NRB spokesperson Ramu Poudel clarified that while the directive legally mandates a national identity card, practical accommodations can be made. “Customers without their identity cards can be facilitated to open accounts on the condition that they provide the card later,” he explained, adding that banks are expected to assist individuals facing difficulties accessing a national identity card.

A notice published by the government in the Nepal Gazette on June 24, 2024, had stipulated that a national identity card or its number could replace the citizenship certificate for accessing public services. This provision faced legal challenges, and on August 23, the Supreme Court issued an interim order barring the mandatory use of the national identity card.

The Office of the Attorney General subsequently filed a petition seeking to vacate the court's order, arguing that the lack of mandatory implementation hindered citizen data integration and investigations into crimes like money laundering. The hearing for the petition, initially scheduled for January 13, has been postponed to January 19.

Bankers have expressed concerns about the practical difficulties of enforcing the directive. While acknowledging legal obligations, they note that strict enforcement could lead to penalties for non-compliance. “We have already notified high-ranking account holders via SMS to update their details,” a banker said. “For new accounts, a national identity card or its number is mandatory, except in extreme cases of hardship.”

The government’s urgency to enforce the national identity card directive is partly driven by international pressure to strengthen anti-money laundering measures. Nepal faces a review by the Financial Action Task Force (FATF) and has one year to address deficiencies identified by the Asia Pacific Group (APG). Non-compliance risks Nepal being placed on the FATF's "grey list," which could harm its global financial standing.