Nepal Rastra Bank to Regulate Use of AI in Banking Sector

Nepal Rastra Bank (NRB) is bringing the use of artificial intelligence (AI) in banks and financial institutions under a formal regulatory framework.

Unveiling the draft of Artificial Intelligence (AI) Guideline 2025 on Sunday, the central bank proposed a series of measures aimed at ensuring the safe, transparent and responsible use of AI. The draft prioritizes risk management, data privacy and customer protection in all AI-driven activities.

According to the guideline, banks and financial institutions will be allowed to use AI for credit scoring, fraud detection, risk management, customer service and supervisory functions. However, institutions must assume full responsibility for all decisions and outcomes produced by AI systems. To ensure accountability, the draft requires each institution to establish an AI governance framework and form an AI steering committee.

Banks will also need to classify their AI systems as “high risk” or “low risk” and adopt appropriate cybersecurity measures based on the risk category.

The draft mandates strict compliance with privacy laws when using AI, including obtaining explicit customer consent before using personal data. Customers will also have the right to opt out of AI-driven services. AI-generated content must be clearly labeled and disclosed to the public.

NRB has set December 30 as the deadline for submitting feedback on the draft. The central bank said it will finalize and issue the guideline after reviewing the suggestions received within the stipulated period.