KATHMANDU: Nepal Rastra Bank (NRB) has issued a new directive titled “Guidelines on Dividend Distribution for Licensed Payment Institutions, 2025”, aiming to make dividend distribution more transparent and better regulated.
According to Kiran Pandit, Executive Director at the central bank, the guidelines are intended to ensure that profit-sharing practices among institutions licensed to operate in Nepal’s payment system are conducted with greater clarity and accountability.
The new framework seeks to improve how profits are distributed and reinvested, helping institutions boost their risk-bearing capacity and operational efficiency. NRB believes that this initiative will support the development of a more secure, stable, and capable payment infrastructure across the country.
As per the directive, all licensed institutions must now formulate a dividend distribution policy in alignment with NRB’s guidance. This policy must be endorsed by the institution’s board of directors before being implemented. Institutions are also required to detail their capital planning strategies, especially with regard to maintaining regulatory capital and setting priorities for reinvestment.
The guidelines highlight the establishment of risk-bearing and reserve funds, to which institutions must allocate a fixed percentage of their profits. These funds are intended to be used in cases of unforeseen financial shocks, and any expenditure from them must be reported to the central bank.
Similarly, payment system operators must establish an Infrastructure Development Fund, contributing a specified portion of profits toward it. This fund will be used for expanding and upgrading their operational infrastructure.
When declaring dividends, institutions must ensure that they are based on audited financial statements and that retained earnings are not in the negative. Additionally, the guidelines state that cash dividends should only be declared if there is adequate cash in reserve and if there are no restrictions imposed by loan agreements or other financial obligations.
By mandating these provisions, Nepal Rastra Bank hopes to promote sound financial governance within the digital payment sector and strengthen long-term institutional sustainability.
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