Cash Payments in Insurance Sector End from Today

Kathmandu – Internal cash payment transactions in Nepal’s insurance sector have officially come to an end from today, following a directive issued by the Nepal Insurance Authority (NIA). With effect from Magh 1, 2082 BS, all types of payments must now be made electronically through bank accounts.

According to the Authority, insurance companies are no longer permitted to make cash payments to agents, employees, service providers, or any other parties. All financial transactions must be routed through banks or financial institutions to ensure transparency and accountability.

The NIA clarified that the directive primarily targets internal financial discipline and expense management within insurance companies, rather than claim payments made to policyholders. Previously, practices such as paying agent commissions, field allowances, small claim expenses, surveyor fees, and other service charges through cash or bearer cheques were common.

By making digital payments mandatory, the Authority aims to curb risks associated with cash transactions, including poor record-keeping, double payments, and weakened internal auditing systems. Digital transactions allow for clear tracking of the source, destination, and purpose of funds, strengthening financial oversight.

The directive is in line with the Anti-Money Laundering Directive, 2082, which requires insurers to deposit claim payments directly into the bank or financial institution accounts of recipients, as per policy terms and prevailing laws. Additionally, the Government of Nepal has already implemented provisions mandating that all payments made by public bodies be conducted digitally through the banking system.

Earlier, the Nepal Insurance Authority had also instructed insurance companies to ensure that salaries and wages of permanent, temporary, contractual, and other employees are paid mandatorily through banks or financial institutions.