Trademark as Collateral in Nepal: What Lenders Look at Before They Lend
Using a trademark as collateral in Nepal: what lenders check on the register, how security is structured, valuation basics, and what discounts a brand.
A Nepalese business asking its bank for credit eventually hears the question: what do you actually own? For brand-led businesses — the restaurant group, the packaged-food maker, the apparel label — the honest answer includes the registered trademark, and the follow-up question is whether a mark can stand behind a loan.
It can, with the right paperwork and a register that looks after itself. This guide walks both sides: what a lender examines, and what an owner fixes before the meeting.
In short
Using a trademark as collateral in Nepal starts with the register: lenders examine the owner of record, renewal currency across the 7-year cycle, remaining term, use evidence against the one-year non-use rule, and any recorded licences or encumbrances. Current practice structures the security contractually — Nepal's trademark register carries no dedicated security entry — while a recorded licence (NPR 2,000) is the register-visible layer. Value rests on the brand's income, and the risks that discount it are all calendar risks: lapsed renewals, silent marks, stale records.
Using a trademark as collateral in Nepal starts with value
A lender lends against cash flow, and a registered mark has a measurable one: the royalties the owner avoids by owning rather than licensing — the relief-from-royalty logic that underpins brand valuation — or the premium the brand earns on every unit sold. Licences the mark generates are the most bankable evidence there is: recorded licence agreements with actual payment history turn 'the brand is valuable' into arithmetic.
Nepal's trademark structure actually helps here: the 7-year term is renewable indefinitely, so a maintained mark is a perpetual asset — provided the maintenance is visible on the register.
The register check a lender actually runs
| Item checked | Red flag |
|---|---|
| Owner of record | Name or address mismatches the borrowing entity — stale recordals |
| Renewal status | A renewal inside or near the 35-day window, or a mark riding the 6-month grace with its NPR 1,000 fine |
| Remaining term | Each 7-year term renews — but the calendar must show it, class by class |
| Use evidence | A mark unused within one year of registration is vulnerable to cancellation under Section 18C |
| Recorded licences | Licences that reduce the owner's exclusivity — real, but they must be visible to be priced |
| Class coverage | Protection that misses the products the revenue actually comes from |
How the security is structured today
The structural fact to plan around: Nepal's trademark register, under the 1965 Act, has no dedicated 'security recorded here' entry in current practice. Security over the mark is therefore structured through the parties' documentation — the security agreement the lender's own framework uses, over an asset whose existence and ownership are proven by the DOI register extract and certificate. Where a licence is part of the structure — the brand licensed to the operating company, the licence pledged — the licence recordal at the DOI (NPR 2,000) is the layer the register does show.
Treat that as current practice rather than settled doctrine: confirm the structure with the lender and your advisor before the facility is documented, and expect the proposed Industrial Property Bill's register modernisation to make security interests more visible over time.
The risks that discount a mark as security
Notice the pattern: every discount is a calendar or hygiene failure, not a valuation argument. Marks die of administration, and lenders know it.
- Renewal lapse: beyond the grace period, cancellation is automatic — the collateral simply ceases to exist
- The one-year use rule: a registration without use is one year from vulnerability, which no lender prices well
- Single-class scope: a mark registered only for the product line, not the retail or adjacent classes the business actually spans
- Stale records: an owner of record that no longer matches the corporate structure turns enforcement against the collateral into a dispute about standing
Making a mark bankable before the meeting
Clean the register entry
Record every name, address and ownership change — NPR 1,000 per record change in current practice — so the register matches the borrower exactly.
Renew early, always
Filing before the anniversary removes the 35-day window's drama from the facility's life. The renewal calendar should outlive the loan.
Build the use file
Dated evidence of the mark in trade: sales by brand, packaging, advertising, the licence payments. This is the file that answers both the valuation question and Section 18C.
Record the licences
A recorded licence (NPR 2,000) is the register-visible structure — and its royalty history is the valuation's best input.
If the loan fails: what happens to the mark
Enforcement against the collateral runs through the security documents, and the register-facing step is familiar: the mark transfers by assignment, recorded at the DOI at NPR 2,000, to the lender or a successor the lender directs. The mechanics work only if the record was clean on the way in — which is the whole argument for the hygiene list above. A mark offered as collateral is a promise to keep a register entry alive for years; the businesses that keep that promise find the brand is bankable collateral, and the ones that do not find the register has already answered the lender's question.
Want this handled for your brand?
IP Watch monitors new trademark publications in Nepal and alerts you to potentially conflicting marks — with the context needed to review them.
This article is general information, not legal advice.