Kathmandu – The prolonged negotiations over the establishment of a Chinese bank branch in Nepal finally appear close to conclusion.

During the 13th meeting of the Nepal-China Tibet (Xizang) Trade Facilitation Committee, held in Lhasa on June 17 and 18, the Chinese side committed to obtaining final approval from its central government and moving forward with the plan. 

This marks a breakthrough in implementing a decade-old agreement.

Nepal and China’s central banks first reached a financial cooperation agreement in March 2016 (Chaitra 2072 BS) during then-Prime Minister KP Sharma Oli’s visit to China. The deal laid the groundwork for banking service expansion and information exchange, but little progress had been made since.

This time, however, China has pledged to move ahead after securing approval from the central government.

According to Nepal’s Ministry of Foreign Affairs, China has now shown policy-level readiness to set up a bank branch in Nepal. “We’ve received clear signals that China is preparing to open a branch after resolving technical matters,” said a ministry source.

China is currently Nepal’s second-largest trading partner, accounting for nearly 15 percent of total trade. However, the absence of an effective banking mechanism has led to heavy reliance on informal channels, business representatives say.

Nepali traders have long urged for a Chinese bank’s presence to ease payment procedures. It is expected that such a bank would streamline transactions, improve transparency, simplify currency conversion, and lower trade costs.

Data from Nepal’s Department of Customs shows that in the first six months of the current fiscal year (2081/82 BS), Nepal imported goods worth over Rs 31.45 billion from China. In contrast, exports to China stood at just Rs 248.1 million.

In the previous fiscal year (2080/81 BS), imports from China totalled about Rs 29.87 billion, while exports amounted to only Rs 258.8 million.

Nepal’s Bank and Financial Institutions Act, 2073 (BAFIA), allows foreign banks to operate through subsidiaries, branches, or joint ventures with Nepali partners. The legal framework is already in place, and Nepal Rastra Bank can issue the necessary approvals.

The Nepali delegation in Lhasa was led by Bipin Acharya, Joint Secretary at the Ministry of Industry, Commerce, and Supplies, and included officials from the Home, Finance, and Agriculture Ministries, along with Nepal’s Consul General in Lhasa, Laxmi Prasad Niraula. The Chinese team was led by Wang Qichun, Deputy Secretary-General of the Tibet Autonomous Region Government.

The meeting also discussed topics such as Kerung border entry passes, direct customs clearance, bonded warehouses, and invoicing. Among these, the discussion on establishing a Chinese bank branch was seen as the meeting’s most significant outcome.