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Following a ruling from the International Centre for Settlement of Investment Disputes (ICSID) in favor of Nepal in the dispute over the determination of capital gains tax (CGT), the Malaysian telecom conglomerate Axiata Group Berhad, the parent company of Ncell, has said that it respects the decision of the tribunal and is consulting its legal advisors in relation to the ruling. Issuing a press statement on Monday, Axiata said further announcements will be made upon material developments arising from the matter and it will continue to engage with the Nepal government ‘in a constructive manner.’ In its ruling on Friday, the ICSID issued a verdict in favor of the Nepal government arguing that Axiata failed to establish its claims that Nepal hasn't treated Axiata fairly and denied justice to the company. The Axiata has further said that Axiata UK or Ncell has no dues payable to the Nepal government. “The tribunal has indicated in the award that Nepal should refrain from demanding any further tax, fees, penalties, or interests in relation to the transaction,” reads the press statement. “Arising from Nepal’s non-adherence to tribunal orders during the early stage of the process, Nepal has also been ordered to pay certain sums to Axiata UK and Ncell, being a sum of approximately $1.4m to Axiata and to reimburse Ncell for the cost of a loan taken out by Ncell. No sums are payable by Axiata UK or Ncell under the award.” On 20 May 2019, Axiata filed a case against the Nepal government in the determination of CGT on the purchase and sale of the company's ownership claiming damages worth $420m (Rs 55.54bn). Axiata claimed that Nepal’s conduct in relation to CGT imposed on Ncell goes against the Bilateral Investment Treaty between Nepal and the United Kingdom. The taxation controversy began with the exit of TeliaSonera, a Swedish-Norwegian company, from Nepal, after it sold 80 percent stakes to Axiata, in April 2016 at Rs 144bn. The buyout deal was done abroad as Axiata Investment (UK) purchased the Reynolds Holding company, registered at Saint Kitts and Nevis, a tax haven, which is the owner of Ncell, from TeliaSonera. The 54th annual report of the Office of the Auditor General became the turning point to drag Ncell into controversy related to tax evasion. The Office of the Auditor General (OAG) of the Nepal government in its report stated that the deal was taxable in Nepal as per Clause 57 of the Income Tax Act and stated that the government needs to raise Rs 32 billion as CGT from the buyout deal worth Rs 144bn for an 80 percent stake. Then, the Large Taxpayers Office of the Nepal government determined Rs 60bn in CGT to Ncell. The Malaysian telecom giant went to the Supreme Court to challenge the decision but the court quashed the petition of Axiata before moving to ICSID.

With the contraction in economic activities, high-volume digital payments have seen a steep decline in the current fiscal year. While the growth of retail digital payments is steady, the high-volume digital payments carried out mainly through the Real Time Gross Settlement (RTGS) are in a decreasing trend. The latest statistics of the Nepal Rastra Bank (NRB) statistics show RTGS payments plummeted by 15.35 percent in the 10 months of FY 2022/23. In the review period, the settlements amounted to Rs 28,553.37bn compared to Rs 33,734.28bn during the same period of the last fiscal year. An RTGS is a funds transfer system in which the transfer of funds between one bank and another takes place in ‘real-time’ and on a ‘gross’—transaction by transaction basis. The NRB data shows RTGS transactions increased in the first three months (Shrawan, Bhadra, and Ashoj) of the current fiscal year, then started to decline gradually. In Baisakh (mid-April to mid-May), RTGS transactions declined by 39.21 percent to Rs 2,429.91bn which was Rs 3997.68bn a year ago. According to Guru Prasad Paudel, Head of the Payment Systems Department of the NRB, the slowdown in economic activities affected the RTGS transactions this year. “There has been a decrease in the payment of large sums of money due to contraction in economic activities,” he said, adding, “The downturn has resulted in a decrease in large financial transactions which has been reflected in the RTGS.” As high volume transactions have declined, NRB said that the decline in RTGS has affected the overall digital payments in this fiscal. However, retail payments through wallets, QR codes, mobile banking, and ConnectIPS surged in the current fiscal year, according to NRB. Digital payments were on an increasing trend till the last fiscal year. This trend has reversed in the current fiscal year. Bankers and experts point out the current economic slowdown for this downtrend. According to them, large businesses are reluctant to spend as market demand for several kinds of goods and services has remained sluggish in the current fiscal year. According to NRB, overall digital payment has declined by 11.79 percent in the 10 months of FY 2022/23. Payments through electronic modes have been gradually declining every month since the start of this fiscal year. The NRB data shows digital payments amounted to Rs 42,226.775bn in the review period compared to Rs 47,873.323bn during the same period of FY 2021/22. Digital transactions in Nepal took a giant leap after the start of the Covid-19 pandemic in early 2020 which forced people to stay inside their homes during the lockdowns. Backed by the increasing use of smartphones, consumers were fast to adopt digital modes of payments and online shopping to buy daily essential items with e-commerce and POS transactions gaining prominence. Post-pandemic, digital platforms including connectIPS, e-wallets, mobile banking, internet banking, QR codes, and bank cards are being used widely as customers can use these instruments in self-service mode.  

The Nepal Insurance Authority (NIA) has initiated the process to establish the Insurance Information Center in a bid to control fraudulent activities in the insurance sector. NIA is creating a new body in line with the Credit Information Bureau (CIB) which provides credit information-related services to banks and financial institutions (BFIs). In 2019, the authority had planned for establishing the center but could not set it up since the then Insurance Act, 2049 did not envisage such a body. NIA initiated the process now as the new Insurance Act, 2079, which came into implementation last November, has envisioned the Insurance Information Center. According to the authority, a separate procedure will also be issued for the operation of the center. A separate organization will be established to run the center. The center will function as CIB which takes action against loan defaulters and people committing banking fraud by blacklisting them and barring them from getting loans from BFIs. NIA Executive Director Raju Raman Poudel said once the center is established, it will help to control fraud in the insurance sector. The center, according to Poudel, will blacklist insured persons and persons involved in fraud, forgery, and other crimes, and questionable insurance activities in the insurance sector. Then, the insurance companies will bring a policy of not providing more insurance services to such people. Of late, various types of fraud and criminal activities have been rising in the insurance sector. Many people have been found involved in double claims payment, rampant use of forged documents for claims, and even killing or physically harming the insured to get the money in insurance coverage. Once the center is established, it is expected to help in controlling such activities. Since the center will have information about people involved in fraudulent activities, such individuals will not be able to cheat insurance companies. The center will publish the blacklisted people, making it easier for insurance companies to screen such individuals. The insurance companies will also have to cross-check the person taking insurance services with the center to find out whether he/she has been blacklisted or not. According to the NIA, the Insurance Information Center will be established in collaboration with insurance companies. The center will be set up as a public company where insurance companies will have a stake. Currently, there are 15 life insurance companies, 14 non-life insurance companies, and 2 reinsurance companies operating in Nepal. Besides, seven microinsurance companies are also coming into operation. All these companies will be stakeholders of the center.  

The government and the World Bank jointly launched the $275m (Rs 34.96bn) Accelerating Nepal’s Regional Transport and Trade Connectivity (ACCESS) Project on Sunday. The project is expected to help improve trade and connectivity by reducing trade and transport costs and transit time along selected corridors in Nepal. The project was launched by Minister of Physical Infrastructure and Transport, Prakash Jwala, and the World Bank Vice President for South Asia, Martin Raiser. Speaking on the occasion, Minister Jwala said, “The ACCESS project will help develop resilient infrastructure in Nepal and help unlock Nepal’s economic potential through better connectivity and trade, both between the provinces as well as regionally." The 69-kilometer two-lane section of the Butwal-Gorusinghe-Chanauta road along the East-West Highway will be upgraded to a climate-resilient four-lane highway under the project. With a focus on ensuring better road safety, the project is expected to reduce travel time by 30 percent, thus providing better access to India’s western seaports. According to the World Bank, the project will construct at least three market areas with required internet and trade information facilities along the highway to help enhance economic opportunities, especially for women entrepreneurs and traders. The project will also support advancing Nepal’s preparedness and subsequent implementation of the Motor Vehicle Agreement signed by Bangladesh, Bhutan, India, and Nepal to allow the smooth passage of goods and passenger vehicles in each other’s territories. “Enhanced trade and transport connectivity promotes economic integration and opens larger markets among South Asian countries. The ACCESS Project will help improve regional trade and promote sustainable infrastructure development to support Nepal’s green, resilient, and inclusive development,” said Raiser. The project will be implemented by the Ministry of Physical Infrastructure and Transport, Ministry of Industry, Commerce, and Supplies, and Ministry of Forest and Environment. The government and the World Bank signed the financing agreement for the project in September 2022.