Kathmandu, March 1 -- and-a-half decade after digital payment services began operating in Nepal, the government has initiated a process to formally define the sector by amending Nepal Rastra Bank Act 2002.

A bill drafted to amend the Act, recently published for public consultation, proposes expanding the definition of 'financial institution' to include payment system operators (PSOs) and payment service providers (PSPs). The move has generated cautious optimism among digital payment stakeholders, alongside concerns about possible legal ambiguities and tax implications.

At present, banks and financial institutions are regulated under the Banks and Financial Institutions Act 2017 (BAFIA), while PSOs and PSPs operate under the Payment and ...