Hire Purchase Company Registration Process in Nepal

This guide provides the procedure, requirements, documentation requirements, NRB Approval and Compliances for Hire-Purchase Company Registration in Nepal.

A Hire Purchase Company in Nepal is a specialized financial institution that provides goods to customers through hire purchase agreements. These agreements allow customers to use goods while making deferred payments over time. The company must register with the Office of the Company Registrar and obtain approval from Nepal Rastra Bank.

The registration process requires a minimum paid-up capital of NPR 300 million. The company operates under strict regulatory guidelines set by Nepal Rastra Bank. It cannot accept deposits or provide unauthorized credit services.

The establishment process involves multiple steps including documentation, capital verification, and regulatory approval. The entire process takes approximately four months for decision-making by the regulatory authority.

Step-By-Step Process for Registering Hire-Purchase Company

Step 1: Register the company with the Office of the Company Registrar under the Companies Act. Submit the Memorandum of Association and Articles of Association. Ensure the company objectives explicitly mention hire purchase activities. Obtain the Certificate of Incorporation and PAN certificate. Complete all company registration formalities as per prevailing laws.

Step 2: Arrange the minimum paid-up capital of NPR 300 million. Deposit the capital in a designated bank account. Obtain a certificate from the bank confirming the paid-up capital. Ensure all shareholders contribute their respective shares. Maintain proper documentation of capital contribution by each shareholder.

Step 3: Prepare all required documents including shareholder profiles, director credentials, and organizational structure. Draft the hire purchase operational policy document. Secure a lease agreement for the business premises. Obtain tax clearance certificates for the company and all shareholders. Collect non-blacklist certifications for all shareholders.

Step 4: Calculate and pay the non-refundable application fee of 0.2% of paid-up capital. For NPR 300 million capital, pay NPR 600,000 as application fee. Submit the fee payment receipt with the application. Ensure the payment is made through proper banking channels.

Step 5: Submit the complete application to Nepal Rastra Bank with all supporting documents. Include the application fee payment receipt. Attach all required certificates and policy documents. Ensure all documents are properly certified and authenticated. Submit the application through authorized channels.

Step 6: Wait for Nepal Rastra Bank’s decision within 120 days. Respond to any queries or requests for additional information promptly. Upon approval, receive the license from Nepal Rastra Bank. Commence operations within six months of license issuance. Ensure full compliance with all regulatory requirements before starting operations.

What Is a Hire Purchase Company in Nepal?

A Hire Purchase Company in Nepal is a financial institution that provides goods to customers under legally binding hire purchase agreements. These companies operate under the supervision and regulation of Nepal Rastra Bank. The company allows customers to obtain possession and use of goods while making payments over an agreed period.

The hire purchase agreement is a contract between the company and the customer. The customer gets immediate possession of the goods. The ownership transfers to the customer only after full payment. The company charges interest on the deferred payment amount. This business model helps customers acquire expensive goods without immediate full payment.

These companies must maintain strict compliance with financial regulations. They cannot accept deposits from the public. They operate solely on their own capital and borrowed funds. The borrowed amount cannot exceed ten times their net worth. They must maintain transparent accounting and financial reporting systems.

Where To Register a Hire Purchase Company in Nepal?

The registration process for a Hire Purchase Company involves two primary government offices. The first registration occurs at the Office of the Company Registrar (OCR). The second approval comes from Nepal Rastra Bank, which is the central regulatory authority.

The Office of the Company Registrar handles the initial company incorporation. This office operates under the Ministry of Industry, Commerce and Supplies. You must visit the OCR office located in Tripureshwor, Kathmandu. The office accepts applications for company registration under the Companies Act. You can access their services through the official website at https://www.ocr.gov.np. The OCR issues the Certificate of Incorporation after verifying all documents.

Nepal Rastra Bank provides the operational license for hire purchase activities. The Bank and Financial Institution Regulation Department handles these applications. This department is located at the Nepal Rastra Bank headquarters in Baluwatar, Kathmandu. You must submit your application with all required documents to this department. The official website https://www.nrb.org.np provides detailed guidelines and application forms. Nepal Rastra Bank evaluates the application based on regulatory requirements and market conditions.

What Are the Requirements for Hire Purchase Company Registration?

The registration of a Hire Purchase Company in Nepal requires compliance with the following requirements:

• The entity must be incorporated under the Companies Act through the Office of the Company Registrar
• The company objectives must explicitly include hire purchase-related activities in the Memorandum of Association
• Minimum paid-up capital of NPR 300 million (NPR 30 Crore) must be maintained
• Non-refundable application fee of 0.2% of paid-up capital must be submitted
• All shareholders must be non-blacklisted individuals or entities
• The company must have a physical office premises with a valid lease agreement
• Detailed organizational structure with qualified management personnel must be established
• Chief Executive Officer must meet the qualification criteria set by Nepal Rastra Bank
• Comprehensive hire purchase operational policy must be prepared
• Security arrangements and insurance coverage policies must be documented
• All shareholders and directors must provide complete personal profiles and credentials
• The company must demonstrate contribution to a healthy and competitive financial market

How To Register a Hire Purchase Company in Nepal?

Step 1: Incorporate the Company with Office of the Company Registrar

Step 2: Arrange Minimum Paid-Up Capital

Step 3: Prepare Required Documentation for NRB

Step 4: Calculate and Pay Application Fee at NRB

Step 5: Submit Application to Nepal Rastra Bank

Step 6: Obtain License and Commence Operations

Step 1: Incorporate the Company with Office of the Company Registrar

Begin the registration process by incorporating your company with the Office of the Company Registrar. Prepare the Memorandum of Association and Articles of Association with explicit mention of hire purchase activities. Submit the incorporation application along with required documents.

Pay the prescribed registration fees to the OCR. Obtain the Certificate of Incorporation and Permanent Account Number certificate. Ensure all founding shareholders sign the incorporation documents. Complete the company registration formalities as per the Companies Act.

Visit https://www.ocr.gov.np for detailed incorporation procedures. The incorporation process typically takes two to three weeks. Maintain copies of all incorporation documents for future submissions.

Step 2: Arrange Minimum Paid-Up Capital

Arrange the minimum paid-up capital of NPR 300 million as required by regulations. Open a company bank account in a licensed commercial bank. Ensure all shareholders deposit their respective capital contributions. Obtain a certificate from the bank confirming the paid-up capital amount.

Maintain proper documentation of each shareholder’s capital contribution. The capital must be in cash or equivalent liquid assets. Ensure the capital remains unencumbered and available for business operations. Keep the bank certificate updated and valid for submission.

The capital requirement is strictly enforced by Nepal Rastra Bank. Any shortfall in capital will result in application rejection.

Step 3: Prepare Required Documentation

Compile all required documents as per the Nepal Rastra Bank checklist. Prepare detailed profiles of all shareholders including their financial background. Create comprehensive credentials of all directors with their qualifications and experience.

Draft a detailed organizational structure chart showing all departments and positions. Prepare the profile of the proposed Chief Executive Officer with relevant experience. Develop a comprehensive hire purchase operational policy document. Secure a lease agreement for the business premises with proper legal documentation.

Obtain tax clearance certificates for the company and all shareholders. Collect non-blacklist certifications from relevant authorities. Prepare security arrangements and insurance coverage policy documents. Ensure all documents are properly certified and authenticated.

Step 4: Calculate and Pay Application Fee

Calculate the non-refundable application fee at 0.2% of the paid-up capital. For NPR 300 million capital, the application fee amounts to NPR 600,000. Make the payment through proper banking channels to Nepal Rastra Bank. Obtain an official payment receipt from the bank.

Attach the payment receipt with your application submission. Ensure the payment is made in the name of Nepal Rastra Bank. The application fee is non-refundable regardless of approval or rejection. Keep multiple copies of the payment receipt for your records.

The application will not be processed without proper fee payment. Verify the current fee structure from https://www.nrb.org.np before payment.

Step 5: Submit Application to Nepal Rastra Bank

Submit the complete application to the Bank and Financial Institution Regulation Department of Nepal Rastra Bank. Include all required documents in the prescribed format. Attach the application fee payment receipt. Ensure all documents are properly organized and indexed.

Submit the application through authorized channels only. Obtain an acknowledgment receipt with application number. Maintain regular follow-up with the department regarding application status. Respond promptly to any queries or requests for additional information.

The department may conduct site visits and verification procedures. Cooperate fully with all regulatory inspections and inquiries. Keep copies of all submitted documents for reference.

Step 6: Obtain License and Commence Operations

Wait for Nepal Rastra Bank’s decision within the statutory period of 120 days. Upon approval, receive the official license from Nepal Rastra Bank. Complete any additional formalities required by the regulatory authority. Commence operations within six months of license issuance as mandated.

Establish all operational systems and procedures before starting business. Hire qualified staff and management personnel. Set up accounting and reporting systems as per regulatory requirements. Ensure full compliance with all operational guidelines. Register with the Department of Inland Revenue for tax purposes at https://www.ird.gov.np.

Begin hire purchase operations in accordance with approved policies and regulations.

What Documents Are Required for Registration?

As per Nepal Rastra Bank Directives, the key documents required for Hire-Purchase Company Registration are:

• Certified copy of Certificate of Incorporation from Office of the Company Registrar
• Certified copy of Memorandum of Association (MOA)
• Certified copy of Articles of Association (AOA)
• Certified copy of Permanent Account Number (PAN) Certificate
• Detailed description of business premises with complete address
• Duly executed house rent or lease agreement for office premises
• Personal profiles of all shareholders with financial background
• Credentials and qualifications of all directors
• Detailed organizational structure chart of the company
• Profile and credentials of proposed Chief Executive Officer
• Profiles of other key managerial personnel
• Comprehensive hire purchase operational policy document
• Certificate evidencing minimum paid-up capital of NPR 300 million
• Bank certificate confirming capital deposit
• Security arrangements policy document
• Insurance coverage policy document
• Power of Attorney for authorized representatives
• Board resolution authorizing establishment of hire purchase business
• Non-blacklist certification for all shareholders
• Tax clearance certificate of the company
• Tax clearance certificates of all shareholders
• Application fee payment receipt of 0.2% of paid-up capital
• Citizenship certificates of all Nepali shareholders
• Passport copies of foreign shareholders (if any)
• Photographs of all shareholders and directors

Capital and Shareholding Structure

The capital and shareholding structure of a Hire Purchase Company must comply with strict regulatory requirements. The following table presents the detailed capital requirements and shareholding provisions:

Particulars	Requirements	Details
Minimum Paid-Up Capital	NPR 300 Million	Mandatory requirement for all hire purchase companies
Capital Contribution	Cash or Equivalent	Must be deposited in a licensed commercial bank
Shareholding Pattern	As per Companies Act	Must comply with company law provisions
Foreign Investment	As per FDI Policy	Subject to approval from Department of Industry
Promoter Shareholding	Minimum 51%	Promoters must hold majority stake initially
Public Shareholding	As per regulations	May be required after a certain period of operation
Share Transfer	Restricted	Requires prior approval from Nepal Rastra Bank
Capital Adequacy	As per NRB norms	Must maintain prescribed capital adequacy ratio
Reserve Requirements	As per regulations	Must maintain statutory reserves from profits
Capital Verification	Bank Certificate	Must be verified by a licensed commercial bank
Capital Utilization	Business Operations	Cannot be used for non-business purposes
Additional Capital	May be required	Based on business expansion and regulatory changes

How Long Does the Registration Process Take?

The registration process for a Hire Purchase Company in Nepal involves multiple stages with specific timelines. The following timeline provides a realistic estimate of the entire process:

• Company incorporation at Office of the Company Registrar takes approximately 15 to 20 working days
• Capital arrangement and bank certificate issuance requires 7 to 10 working days
• Document preparation and compilation takes approximately 20 to 30 working days
• Application submission and acknowledgment is completed in 1 to 2 working days
• Nepal Rastra Bank’s initial review and verification takes 30 to 45 working days
• Site inspection and due diligence process requires 15 to 20 working days
• Nepal Rastra Bank’s final decision must be made within 120 days from application submission
• License issuance after approval takes 5 to 7 working days
• Post-license formalities and system setup require 30 to 45 working days
• Operations must commence within 6 months of license issuance
• Total estimated time from incorporation to license is approximately 5 to 6 months
• Delays may occur due to incomplete documentation or additional information requests
• Professional assistance can help expedite the process and avoid delays

What Are the Costs Involved in Registration?

The registration of a Hire Purchase Company involves various costs at different stages. The following table provides a detailed breakdown of all costs:

Cost Component	Amount	Payable To	Stage
Company Registration Fee	NPR 75,000	Office of Company Registrar	Incorporation
Minimum Paid-Up Capital	NPR 300,000,000	Company Bank Account	Before Application
Application Fee (0.2% of capital)	NPR 600,000	Nepal Rastra Bank	Application Stage
Ward Registration Fee	As per agreement value	Inland Revenue Department	Premises Setup
Insurance Premium	As per coverage	Insurance Company	Pre-Operation

What are the Regulations to be Followed by Hire Purchase Companies?

A Hire Purchase Company must comply with ongoing renewal and regulatory requirements to maintain its operational license. The following requirements must be fulfilled:

1. The company must submit an annual license renewal application to Nepal Rastra Bank before the expiry of its existing license and pay the prescribed renewal fee every year.
2. The company must prepare audited financial statements and annual reports and submit them to Nepal Rastra Bank within six months after the end of each fiscal year.
3. The company must submit quarterly financial reports to the regulatory authority in accordance with applicable rules and deadlines.
4. The company must maintain the required capital adequacy ratio and statutory reserves at all times as prescribed by Nepal Rastra Bank.
5. The company must obtain prior approval from Nepal Rastra Bank for any change in shareholding pattern, key management personnel, or major ownership structure.
6. The company must report any change in the board of directors to Nepal Rastra Bank within fifteen days from the date of such change.
7. The company must conduct its annual general meeting in accordance with the Companies Act and applicable corporate laws.
8. The company must file annual tax returns and obtain tax clearance certificates from the Inland Revenue Department within the prescribed time limits.
9. The company must maintain effective internal control systems, conduct regular internal audits, and submit compliance certificates from statutory auditors every year.
10. The company must ensure continuous compliance with anti-money laundering laws, maintain customer complaint handling systems, renew insurance coverage annually, and update operational and security policies when required.

What Laws Govern Hire Purchase Companies in Nepal?

The operation of Hire Purchase Companies in Nepal is governed by multiple laws and regulations. Understanding these legal frameworks is essential for compliance:

• Companies Act – Governs the incorporation, management, and dissolution of companies
• Money Laundering Prevention Act – Requires compliance with anti-money laundering provisions
• Nepal Rastra Bank Directives – Specific operational guidelines issued by the central bank
• Unified Directives for Banks and Financial Institutions – Comprehensive regulatory framework
• Social Security Act – Requires compliance with social security provisions for employees

READ MORE: REPATRIATION OF PROFITS THROUGH LOCAL BANK APPROVAL IN NEPAL

What Types of Hire Purchase Companies Exist?

Different types of hire purchase companies operate in Nepal based on their business models and target markets. The following table describes various types:

Type	Description	Target Market	Typical Products
Vehicle Hire Purchase	Specializes in vehicle financing	Individual and corporate customers	Cars, motorcycles, commercial vehicles
Equipment Hire Purchase	Focuses on machinery and equipment	Industrial and commercial clients	Manufacturing equipment, construction machinery
Consumer Goods Hire Purchase	Deals with household items	Individual consumers	Electronics, furniture, appliances
Agricultural Equipment	Specializes in farming equipment	Farmers and agricultural businesses	Tractors, harvesters, irrigation equipment
Medical Equipment	Focuses on healthcare equipment	Hospitals and clinics	Medical devices, diagnostic equipment
IT Equipment Hire Purchase	Specializes in technology products	Businesses and individuals	Computers, servers, networking equipment
General Hire Purchase	Offers diverse product financing	Mixed customer base	Various goods and equipment

What Benefits Does a Hire Purchase Company Provide?

The Benefits provided by Hire Purchase Companies are:

1. Hire purchase provides customers with access to goods through affordable installment payments, enabling usage before full payment is made and supporting financial inclusion.
2. It generates steady income for companies and returns for shareholders while contributing to government revenue through taxes and fees.
3. Hire purchase supports businesses by expanding their customer base, facilitating asset acquisition for small and medium enterprises, and promoting entrepreneurship through equipment financing.
4. It creates employment opportunities, develops the financial services sector, and encourages business expansion and diversification across sectors such as automotive, agriculture, and manufacturing.
5. The system provides a regulated and secure framework, protects consumer rights, promotes responsible lending and borrowing, and builds long-term customer loyalty.

Frequently Asked Questions