AI Meets NFRS: The Next Frontier in Financial Reporting in Nepal
1st July 2025, Kathmandu
Nepal’s financial ecosystem is evolving—and fast. With the adoption of Nepal Financial Reporting Standards (NFRS), financial institutions are entering a new era of accountability, transparency, and global alignment.
AI Meets NFRS
But as compliance becomes more technical and demanding, banks and insurance companies need more than spreadsheets. They need smart, automated, AI-powered platforms. That’s where AI360 Studio from DLytica comes in.
What is NFRS and Why Does It Matter?
Nepal Financial Reporting Standards (NFRS) are national accounting standards derived from the globally recognized International Financial Reporting Standards (IFRS). These standards aim to bring consistency, transparency, and comparability to financial reporting in Nepal.
Unlike IFRS, which is directly adopted by over 140 countries, NFRS is tailored to suit Nepal’s unique economic, legal, and regulatory frameworks. By aligning with international norms while addressing local needs, NFRS helps elevate Nepal’s financial credibility and investor confidence.
A Shift Toward Global Standards
Nepal formally adopted NFRS in 2013, and by Fiscal Year 2015/16, commercial banks were mandated to fully implement these standards. The objective? To ensure modern, high-quality corporate reporting—especially in sectors like banking and insurance, which are critical to economic stability.
The key NFRS standards financial institutions are expected to follow include:
NFRS 9 – Financial Instruments
NFRS 15 – Revenue Recognition
NFRS 16 – Leases
NFRS 17 – Insurance Contracts
However, these new standards come with challenges, especially for institutions still relying on manual systems and disconnected data silos.
Challenges in NFRS Compliance for Banks
Despite progress, many institutions face significant hurdles:
Inconsistencies between NFRS and NRB (Nepal Rastra Bank) guidelines
Manual Expected Credit Loss (ECL) calculations that are time-consuming and error-prone
Difficulties in loan staging and impairment measurement under NFRS 9
Limited audit-readiness and data transparency
Outdated infrastructure unable to meet real-time compliance and reporting demands
The Smart Solution: AI360 Studio by DLytica
DLytica’s AI360 Studio is an intelligent, end-to-end financial reporting and risk analytics platform. Built with Nepal’s financial compliance landscape in mind, it automates the complex tasks required by NFRS standards—especially NFRS 9 and NFRS 17.
Here’s how AI360 Studio is changing the game:
ECL Automation Using AI
AI360 uses predictive models such as Probability of Default (PD), Loss Given Default (LGD), and Exposure at Default (EAD) to calculate ECL in real-time. This ensures accurate loan staging (Stage 1, 2, 3) and provisioning, in line with both NRB guidelines and NFRS 9.
AI-Based Risk-Based Pricing
With built-in AI algorithms, AI360 adjusts loan pricing based on borrower creditworthiness. This helps reduce default risk while maximizing profitability.
Early Warning System
AI360 monitors macroeconomic indicators and borrower behavior patterns. This enables proactive default detection, allowing CFOs to act before financial shocks hit.
Intelligent Customer Staging
New customers are automatically classified into correct default stages using AI. This balances risk exposure while maintaining business opportunities.
Full Audit Trail
Whether for internal audit, NRB compliance, or board review, AI360 offers transparent, traceable data. Every provisioning decision is backed by documentation and audit-ready logs.
Instant NFRS Reports
From Statements of Financial Position to Segment Reporting, Lease Disclosures, and Insurance Contract Notes, AI360 auto-generates all your reports. No more Excel bottlenecks. Just fast, accurate, and regulation-compliant reporting.
Why Finance Leaders Must Act Now?
With the rollout of NFRS 17 and increasing regulatory pressure from Nepal Rastra Bank, financial institutions must move beyond minimal compliance. Today’s CFOs need:
Confidence in models and outputs
Faster decision-making and reporting
Total data transparency for governance
Scalability for future regulatory changes
AI360 Studio offers exactly that. By integrating AI, big data, and automation into a single, intuitive platform, finance teams gain complete control over compliance while freeing up time for strategic planning.
The Future of Financial Reporting in Nepal
The road ahead is clear. The future of financial compliance in Nepal won’t be managed through manual spreadsheets and legacy systems. It will be powered by AI-driven, connected, real-time platforms like AI360 Studio.
Finance leaders across Nepal are already beginning their digital transformation with AI360. Are you ready to join them?
Book a Free Demo
Want to learn how AI360 can streamline your compliance and make your financial reporting audit-ready?
Book a free 15-minute session with the DLytica team today.
Visit: AI Meets NFRS
