13th October 2025, Kathmandu
The digital payment landscape in Nepal has been rattled by the news that Prabhu Pay, the popular digital wallet service operated by Prabhu Technology Pvt. Ltd., is ceasing operations.
Prabhu Pay Shuts Down
This monumental decision follows the Nepal Rastra Bank (NRB), the nation’s central bank, officially revoking the company’s operating authorization. The abrupt shutdown leaves hundreds of thousands of users with a pressing and uncertain question: What will happen to the funds currently stored in their Prabhu Pay digital wallets?
Understanding the Regulatory Decision: Why Did NRB Revoke the License?
The closure of Prabhu Pay is not a voluntary decision by the company but a regulatory action mandated by the Nepal Rastra Bank. As of October 13, 2025, the central bank’s Payment Systems Department has confirmed the revocation of the license, which was originally granted to Prabhu Technology Pvt. Ltd. under the provision of a payment service provider.
The official basis for this non-renewal, as cited by the NRB, is the company’s failure to meet the renewal requirements stipulated under Section 13(4) of the Payment and Settlement Act, 2075. While the company boasted a significant user base of over 500,000 downloads, the official statement suggests a failure to maintain the necessary operational and financial standards. Key reasons mentioned for the license denial include:
- Non-renewal Compliance: The core statutory requirement for license renewal was not fulfilled.
- Financial Instability: The company reportedly struggled with continuous financial losses and could not sustain operating expenses in Nepal’s highly competitive digital market.
- Regulatory Lapses: Concerns were raised over the lack of updated financial audits, an inadequate capital structure, and insufficient technological safeguards, all of which are critical for protecting consumer interests in the financial technology sector.
This move by the NRB underscores the central bank’s commitment to maintaining a secure and stable payment ecosystem, even if it means discontinuing the operations of a well-known service provider. It serves as a powerful reminder to all digital payment service providers (PSPs) in Nepal about the strict regulatory compliance necessary for continued operation.
Urgent User Action Required: The 30-Day Window
The most critical information for every Prabhu Pay user is the 30-day contact window mandated by the Nepal Rastra Bank. In its public notice, the NRB has requested that:
All customers and institutions using the payment instruments issued by Prabhu Technology Pvt. Ltd. contact the concerned institution (Prabhu Pay) within 30 days from the date of the public notice regarding any outstanding balances or pending transactions.
This 30-day period is the primary opportunity for users to directly engage with the company to resolve their balances. Users must act swiftly and decisively to recover their funds.
The Mechanism of Fund Recovery in a Wallet Shutdown
Unlike a traditional bank, digital wallets in Nepal (Payment Service Providers or PSPs) like Prabhu Pay are governed by a distinct set of regulations. While the NRB’s notice, as noted in the initial report, did not explicitly detail the exact steps for fund repatriation, the underlying regulatory framework provides a clear path for consumer protection.
1. Digital Wallets and Segregation of Funds
A crucial, though often unstated, consumer protection mechanism for digital wallets lies in the principle of fund segregation. According to the general regulatory directives for PSPs in Nepal, digital wallet companies are typically required to:
- Maintain Escrow Accounts: Customer funds stored in a digital wallet should not be mixed with the company’s operational funds. Instead, they must be held in a segregated settlement or escrow account with an approved commercial bank.
- Safety Net: This regulatory requirement ensures that even if the digital wallet company incurs operational losses or shuts down, the user’s balance—the money they loaded into their wallet—remains secure in the designated bank account, separate from the troubled company’s assets.
Therefore, the remaining balances in Prabhu Pay wallets are legally considered customer liabilities, and the corresponding funds should be held safely under the custodianship of the partnering bank(s).
2. The Role of the Payment and Settlement Act
The overarching legal framework, the Payment and Settlement Act, 2075, and its subsequent bylaws and unified directives, empower the Nepal Rastra Bank with significant oversight and intervention capabilities, including in cases of license revocation or termination. These legal instruments include provisions for:
- Liquidation Procedures: The NRB has the authority to oversee the liquidation procedures of licensed institutions. This procedure is designed to ensure the orderly winding down of operations and, most importantly, the settlement of outstanding obligations, primarily to customers.
- Dispute Settlement: The Act makes provisions for a Dispute Settlement Committee to handle conflicts arising between institutions and potentially with customers regarding payment services. While direct customer claims are typically routed through the company first, the regulatory body stands as the final oversight.
Action Plan: How Prabhu Pay Users Can Secure Their Funds
Given the 30-day deadline, every Prabhu Pay user with a balance should follow this urgent action plan:
- Document Your Balance: Immediately take a screenshot or record the current balance visible in your Prabhu Pay app or web portal. Gather any recent transaction history and load receipts.
- Attempt Immediate Withdrawal/Transfer: The simplest and quickest resolution is often a self-service withdrawal. Try to transfer the entire remaining balance to your linked bank account or spend it on services (like bill payments or mobile top-ups) before the service is fully decommissioned.
- Contact Prabhu Technology Directly: If self-service transactions fail, use the remaining time to formally contact Prabhu Technology Pvt. Ltd. (Prabhu Pay) via their official customer service channels (phone, email, or physical office) to initiate a full refund/transfer request for your balance. This is the explicit directive given by the NRB. Ensure you receive a formal acknowledgment or reference number for your claim.
- Escalation to NRB (If Necessary): If Prabhu Technology fails to process your claim within the specified period, you must then escalate the matter to the Payment Systems Department of the Nepal Rastra Bank. Provide them with all the documentation and proof of your unsuccessful attempt to contact the company.
The revocation of Prabhu Pay’s license signals a necessary, yet challenging, phase for Nepal’s growing fintech sector. While the closure of a service is disruptive, the legal and regulatory framework overseen by the NRB is designed to protect customer funds. The onus is now on the users to actively participate in the recovery process within the stipulated 30-day window.
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