Central Bank Allows Interbank Transactions in Convertible Foreign Currencies

Nepal Rastra Bank (NRB) has for the first time authorized commercial banks, national-level development banks, and infrastructure development banks to conduct interbank transactions in convertible foreign currencies.

Previously, interbank transactions were permitted only in Nepalese currency. With the latest amendment to the Unified Directives 2024, NRB now allows foreign currency interbank lending and borrowing for up to seven days.

The decision follows a significant rise in foreign exchange reserves and transactions. According to NRB, total foreign exchange reserves stood at Rs 2041 billion by mid-July, 2024, which increased by 25.9 percent to Rs 2569 billion by mid-June 2025. Foreign currency reserves held by banks and financial institutions, excluding NRB, grew by 53.2 percent during the same period, reaching Rs 294.92 billion. Indian currency accounts for 20.5 percent of total reserves as of mid-June 2025.

NRB officials say the move will facilitate liquidity management, currency swaps, and customer services in foreign currencies.

As of mid-June of the fiscal year 2024/25, interbank transactions totaled Rs 1681 billion, including Rs 1531 billion among commercial banks and Rs 150.33 billion among other financial institutions. This was a sharp decline from Rs 4060 billion in the previous fiscal year, attributed to slower credit growth relative to deposit expansion, leading to excess liquidity.