Kathmandu-The  government has introduced a draft Foreign Exchange (Regulation and Management) Bill, 2082 that would, for the first time, allow Nepali citizens to invest abroad, replacing a decades-old law that largely prohibited such investments.

The proposed legislation, part of the government's broader push to further liberalize the economy, repeals the existing Foreign Exchange (Regulation) Act, which has long been regarded by businesses as restrictive.

While easing restrictions on outward investment, the bill retains the Nepal Rastra Bank's central authority over foreign exchange management. The central bank would continue to determine exchange rate policies, regulate foreign exchange transactions, oversee import and export payments, and approve the repatriation of dividends and other earnings.

The draft also gives the Nepal Rastra Bank broad executive powers to regulate foreign exchange transactions and investments outside the country.

Under the proposal, Nepali citizens would be permitted to invest overseas with prior approval from the central bank. The government would publish, through a notice in the Nepal Gazette, a list of sectors and businesses eligible for outward investment.

Companies involved in technology transfer abroad, including hotel management firms, would qualify for approval. Information technology industries would also be eligible to invest overseas under the proposed framework.

The amount of foreign exchange that investors may take abroad would be determined by the Nepal Rastra Bank. Approved businesses could use the funds for purposes including establishing branch offices, capital expenditures and other investment-related activities.

The bill does not allow residents of Nepal to freely purchase shares in foreign companies for investment income.

However, Nepali professionals working as experts, consultants or employees abroad would be allowed to receive equity or sweat shares from foreign companies. Income earned from those shares could be legally repatriated to Nepal with central bank approval.

The proposal also recognizes investments made overseas by Non-Resident Nepalis (NRNs) using income earned abroad. Such investments could be treated as Nepali investments, and profits generated from them would be allowed to be brought back into Nepal under the proposed legal framework.

The draft bill is expected to undergo parliamentary scrutiny before becoming law. If enacted, it would mark one of Nepal's most significant reforms of its foreign exchange regime, reflecting the country's gradual shift toward a more open investment policy.