Understand how remittance funds 25%+ of Nepal's GDP, and how migrant families can leverage the 10% IPO quota and extra 1% FD bonus.
Remittance (विप्रेषण / रेमिट्यान्स) is the transfer of money by Nepali migrant workers living and laboring abroad (Gulf countries, Malaysia, South Korea, Europe, North America) back to their households and bank accounts in Nepal. It forms the core pillar of Nepal's Balance of Payments (BOP) and foreign currency reserves.
Without remittance, Nepal would face economic collapse within months: foreign currency reserves would evaporate, preventing the import of petrol, medicine, and cooking gas. For individual families, over 70% of remittance is consumed by immediate household food, clothing, and rent. Transforming this inflow from consumption into productive wealth (IPOs, mutual funds, high-yield FDs) is the single biggest opportunity for Nepali diaspora households.
Earnings are converted through licensed money service businesses (e.g. Western Union, IME, Prabhu Money Transfer, bank wire) linked directly to Nepali banks.
The foreign currency is transferred to Nepal Rastra Bank's nostro accounts, expanding the national forex reserve, while the equivalent NPR is credited to the family's account.
Migrant workers with a valid labor permit (श्रम स्वीकृति) and Remittance Demat Account can apply for 10% reserved IPO shares on MeroShare, boasting high allotment probabilities.
Depositing remittance into a dedicated Remittance Fixed Deposit yields an extra 100 basis points (1.0%) above regular domestic deposit interest rates.
| Feature / Dimension | Formal Banking Rail (IME, Prabhu, Bank) | Illegal Hundi Network (हुन्डी) | Impact on Worker & Family |
|---|---|---|---|
| Legal Status | 100% Legal & Regulated by NRB | Criminal Offence (Forex Act 2019) | Hundi money can be confiscated by police |
| 10% IPO Reserved Quota | Fully Eligible on MeroShare | ZERO Eligibility | Formal rails unlock guaranteed share wealth |
| Bank FD Interest Rate | Regular Rate + 1.0% Extra Bonus | Standard or zero banking interest | Formal channels yield millions more in interest |
| Credit & Home Loan Access | Official income proof for bank loans | Zero verifiable income proof | Hundi users are rejected for bank mortgages |
| National Economic Impact | Builds national forex reserves for imports | Funds smuggling and gold laundering | Formal banking strengthens the nation |
Under the Foreign Exchange Regulation Act 2019, carrying or transferring money through unauthorized Hundi operators carries draconian penalties: confiscation of the entire principal plus up to 300% fines and imprisonment. To incentivize formal transfers, the Securities Board of Nepal (SEBON) introduced the landmark 10% IPO reservation for foreign-employed Nepalis in 2022. This policy has turned hundreds of thousands of migrant workers into profitable co-owners of hydropower, hotel, and industrial assets in Nepal.
Chandra previously remitted money through local Hundi agents because they offered 50 paisa higher exchange rates. His family spent the cash immediately with zero savings to show after 5 years abroad.
Chandra switched to formal banking remittances: he opened a Remittance Bank Account and Remittance Demat on MeroShare. Over 3 years, he applied for every reserved 10% foreign employment IPO (getting allotted 10 to 50 shares in almost every issue) and placed NPR 50,000/month into a Remittance FD at 1% extra interest. His portfolio grew to NPR 28 Lakh, providing his family true financial independence.
Goal & Dilemma: Remitting NPR 100,000 equivalent from Qatar to his family in Jhapa.
Foreign currencies and gold held by NRB and commercial banks.
Average monthly trade outflow in USD.
Gross Forex Reserves = USD 14.0 Billion. Average Monthly Import Bill = USD 1.2 Billion. Import Cover = 14.0 / 1.2 = 11.66 Months. Since 11.66 > 7.0 months (NRB minimum threshold), Nepal's macro economy is robust and secure against currency crises!
Using illegal Hundi operators for a marginally higher exchange rate (30-50 paisa).
Always use formal banking rails; Hundi deprives you of IPO quotas and risks police seizure.
Allowing 100% of remittance to be consumed by family consumer spending.
Divert at least 25% of each remittance installment into high-yield FDs or mutual fund SIPs.
Failing to renew official Labor Permits (श्रम स्वीकृति) while working abroad.
Keep your Department of Foreign Employment labor permit active to maintain IPO quota eligibility.
You need: (1) An active valid government labor permit (श्रम स्वीकृति), (2) A designated Remittance Savings Account in a Nepali bank, (3) A linked Remittance Demat/MeroShare account with CRN, and (4) Proof of remitting funds through banking channels.
Yes. NRB directives mandate that licensed commercial banks provide at least 1.0% (100 basis points) higher interest on Remittance Fixed Deposits and Remittance Savings accounts compared to standard domestic rates.
Under the Foreign Exchange Regulation Act, the entire confiscated sum is forfeited to the state treasury, and both the sender, receiver, and agent face fines up to 3 times the amount plus imprisonment.
Under SEBON regulations, all corporate entities issuing public IPOs must reserve exactly 10% of their total general public shares exclusively for Nepali citizens working abroad with valid government labor permits.
Hundi operates outside the formal banking system, bypasses national foreign exchange reserves, enables black money laundering and tax evasion, and carries harsh criminal penalties under the Foreign Exchange Regulation Act 2019.