NRB Introduces Special Rules for Major Payment Systems to Safeguard Financial Stability

Nepal Rastra Bank (NRB) has introduced new regulatory measures for large and critical payment systems that handle significant transactions and play a vital role in the financial sector. On Monday, the central bank released the Framework for Identifying Systemically Important Payment Systems, which lays out how such systems will be identified and brought under special supervision.

The framework explains that “systemically important payment systems” are those operated by companies that deal with time-sensitive or high-value transactions. These include systems that process the largest share of total payments, play a critical role in the country’s financial market infrastructure, account for over one-third of retail market value or two-thirds of retail market volume, or have extensive interconnections with other payment systems.

Companies falling under this category will be required to ensure a strong legal foundation, develop clear rules and procedures, manage risks effectively, guarantee timely settlements, conduct quarterly self-assessments, support financial stability, and comply with international standards, according to the framework.

NRB emphasized that disruptions in such systems could affect the entire financial sector and threaten financial stability, which is why a separate regulatory framework has been established. Kiran Pandit, Executive Director and Spokesperson of the Payment Systems Department, said a dedicated list will be maintained for high-value, high-volume, and high-risk payment systems, which will be regulated in line with global practices.

NRB had released a draft of the framework in May to gather feedback from stakeholders, and the final version reflects those inputs.

The government of Nepal authorized NRB to regulate the payment sector through the Payment and Settlement Act of 2018. Since then, NRB has set up the Payment Systems Department to oversee licensing and regulation of payment systems and services. Currently, in addition to banks and financial institutions, nine companies are licensed as payment system operators and 22 companies as payment service providers.