As per the new rules introduced by the Himalayan nation's government, foreign investors can register investment companies in Nepal but under certain strict conditions. "Foreign investments in the form of loans, bonds and debenture won't be entertained to establish an investment company in Nepal," said the notice.

Foreigners who want to register an investment company in Nepal can bring foreign investments only in the form of share capital, according to the notice published by the Ministry of Industry, Commerce and Supplies. Jiblal Bhusal, director general at the Department of Industry said that such a provision was made to control the outflow of foreign exchanges on a large scale. "If the investment comes in the form of debt - borrowings from foreign banks, bonds or debenture, that shall be repaid along with interests leading to a possible outflow of foreign exchanges in large amount," he said.

Under the new rules, foreign investors planning investment companies need to state that their investments would be made only in different sectors of Nepal, and they should also disclose the ultimate beneficiaries of their investments. As Nepal is heavily reliant on remittances for foreign exchange earnings, its foreign exchange reserve is vulnerable to the external environment.

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