LICENSING POLICY FOR MOBILE
FINANCIAL SERVICE PROVIDERS,
OPERATORS AND REGULATORY
REGIMES
Mr. Prakash Rai
Deputy Director
Policy Planning Unit
Payment Systems Department
Nepal Rastra Bank
Licensing Policy to Institutions/Mechanism Operating
Payment Related Activities-2016
(Approved by meeting of the Board of Directors dated 12 June 2016)

Types of Institutions/Mechanism operating payment
related activities
- Payment Service Provider (PSP)
- Payment System Operator (PSO)
 License for PSP
- Transaction through electronic card
- Transaction through telecommunication network
- PSP performs intermediation between customer and
service provider and domestic money transfer service in
home country
Licensing Policy to Institutions/Mechanism……..
 License for PSO
- Performing payment related activities (automated clearing
house, network of electronic card and payment
switch/gateway)
 Banks and Financial Institutions (commercial banks,
development banks and finance companies) can perform as
both PSP and PSO
 Non-banks can perform as either PSP or PSO only
Licensing Policy to Institutions/Mechanism……..
 Provision Relating to Letter of Intent
- Institutions/mechanism, to perform payment related
activities, should obtain letter of intent (LOI) prior to
establishment
- Required documents: memorandum of association and
articles of association, business and technical feasibility
study report, personal details of promoters, copy of
citizenship certificate of the promoters and tax clearance
certificate of latest fiscal year of promoters
Licensing Policy to Institutions/Mechanism……..
 Provision Relating to License
- After getting LOI, institutions/mechanism should apply with
prescribed documents for license
- Nepal Rastra Bank shall carry out inspection of physical
and electronic infrastructure of institutions/mechanism
prior to granting license
Licensing Policy to Institutions/Mechanism……..
 Provision Relating to Paid up Capital
- Payment Service Provider
Institutions operating business through card : minimum Rs. 50 million
Institutions operating business through telecommunication technology
and network : minimum Rs. 10 million
- Payment System Operator: minimum Rs. 100 million
- If domestically issued payment instrument can be used for
the payment in abroad, the institution requires to maintain
paid up capital minimum Rs. 250 million
- Institution established abroad and operating for payment
related transaction in Nepal requires to maintain paid up
capital minimum Rs. 300 million
Licensing Policy to Institutions/Mechanism……..
 Special provision (exemptions) to institutions
established in abroad and operating business in 10 or
more countries
- Provision related to paid-up capital
- Provision related to human resource
- Provision related to standard of measurement of fit and proper test
- Provision related to submit letter of intent and other required
documents for approval
- Provision related to application fee and deposit
Licensing Policy to Institutions/Mechanism……..
 Miscellaneous
- Settlement of all payment related transactions in the
domestic economy to be done in Nepalese currency since
mid-July 2018
- Institutions, licensed for payment service operation by
issuing cards, are required to follow Payment Card
Industry-Data Security Standard (PCI-DSS) to ensure
secrecy of information regarding transaction and customer
within three years from the implementation of this licensing
provision
Directive 2/073
 Banks and Financial Institutions (BFIs): Mobile Financial
Service (MFS)
- MFS: transferring amount from one interest earning
account to another interest earning account and
goods/services and utilities’ bills payment
 Non-bank PSP: mobile payment service (MPS)
- MPS: transferring amount from one non-interest earning
account or wallet to another non-interest earning account
or wallet and goods/services and utilities’ bills payment
THANK YOU