Kathmandu — Nepal has taken a significant step toward connecting itself with the global financial system through a high-level financial dialogue organized in Kathmandu by Cross River Bank, one of the leading institutions involved in building advanced financial infrastructure in the United States.
Senior officials from Cross River Bank, along with chief executive officers of Nepal’s leading commercial banks, private equity and venture capital investors, hydropower developers, fintech entrepreneurs, non-resident Nepali investors, and former ambassadors, gathered at the Marriott Hotel in Naxal, Kathmandu, for a special roundtable discussion.
The discussion focused on Nepal’s potential to attract international investment, the financial environment required to support such investment, and how Nepal can create a stronger connection with global institutional investors.
The central question of the discussion was: “The question is not whether Nepal is capable of attracting international investment; the real question is why global institutional investors should choose Nepal as their investment destination and what kind of financial ecosystem Nepal needs to build to make that decision easier.”
The special interaction was jointly organized by AmCham Nepal and Cross River Bank. The discussion was conducted under the Chatham House Rule, providing participants with an open and independent platform to share their views and perspectives.
The event was considered a significant milestone for Nepal as it brought together top leadership from the banking, investment, and private sectors on a single platform for the first time to discuss how Nepal can be more effectively connected with global capital markets.
The discussion was led by Pravesh Rijal, Executive Vice President of Cross River Bank, a senior Nepali-origin leader established in the American financial sector, and Henry Pinel, Head of Investment Banking at Cross River Bank, who traveled to Kathmandu from New York.
The message delivered by Cross River Bank was not limited to traditional development assistance or remittance-based economic models. The representatives emphasized that Nepal is at a stage where it has a historic opportunity to connect with the global financial system in a new way. They expressed their willingness to become a long-term partner in developing financial infrastructure, investment instruments, and mechanisms for capital mobilization.
Nepal’s Biggest Challenge: Not Lack of Capital, But Capital Mobilization
A key point repeatedly highlighted during the discussion was: Nepal does not lack capital; the challenge lies in creating an effective financial system to mobilize that capital.
Nepal currently has foreign exchange reserves worth around USD 23 billion. The country’s banking system holds a significant amount of deposits, while provident funds, pension funds, and insurance companies collectively manage more than USD 13 billion in capital, much of which remains parked in fixed deposits with limited returns.
Despite having such financial resources, Nepal has not been able to attract foreign direct investment (FDI) at the level of its potential.
Participants highlighted that, according to the data presented during the discussion, only around 39 percent of committed foreign investment has been implemented
The common conclusion among participants was that Nepal’s problem is not the availability of capital, but the absence of a financial system capable of effectively channeling capital, pricing risks appropriately, ensuring investor exit opportunities, and attracting long-term investment.
Nepal still needs further development of a strong bond market, risk-based pricing mechanisms, and capital market structures that meet the expectations of international investors.
In simple terms, Nepal has resources, opportunities, and savings; however, the country still needs to build the financial foundation required to translate those strengths into a language understood by global investors.
Energy Sector: Nepal’s Biggest Opportunity and Greatest Challenge
The most significant discussion during the event focused on Nepal’s hydropower and energy sector.
The world is rapidly moving toward electrification and an economy driven by artificial intelligence and advanced technology. In many parts of the United States, Europe, and Australia, new data centers are facing long waiting periods due to the need for large-scale electricity connections.
In contrast, Nepal is gradually emerging as a country with the potential to generate surplus electricity. Participants viewed the energy sector as one of Nepal’s biggest opportunities to attract global investment.
However, significant challenges remain.
Energy developers highlighted that the Government of Nepal has set a 17 percent equity internal rate of return (IRR) limit for hydropower projects. For foreign investors, this return translates to approximately 11 percent in US dollar terms**.
Additionally, the continuous depreciation of the Nepali rupee against the US dollar reduces the actual returns for international investors. During the discussion, an example was presented showing that the exchange rate had moved from around NPR 110 to NPR 150 per US dollar over recent years.
As a result, participants argued that evaluating a single hydropower project alone may not provide a sufficiently attractive risk-adjusted return for global institutional investors.
One energy developer stated: “When viewed based on a single project, Nepal’s risk-adjusted return is still not competitive enough according to the expectations of global investors.”
This raised another important question: If a single project is not attractive enough, how can Nepal make its projects more valuable and competitive for world-class investors?
Finding answers to this question was one of the key purposes behind Cross River Bank’s visit to Kathmandu.
The discussion concluded with a clear message: Nepal is no longer only an economy dependent on development assistance and remittances. With stronger financial structures, policy improvements, and international partnerships, Nepal has the potential to become a new destination for global capital.
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