Two per cent of Nepali population is third gender, yet they face social and legal discrimination. The support and compassion for third gender is generally low and many people frown upon them. Some are disowned by their families while others have a hard time finding jobs. Everyday tasks such as standing in queue, choosing toilets, attending schools and health check-ups are challenging for the third gender due to heterosexual matrix through which society looks at them.

Although organizations such as Blue Diamond Society and Naulo Bihani have helped sexual minorities gain more visibility and acceptance, the situation is still not favorable. As a result, sexual minorities are forced to conceal their identities in an attempt to lead 'normal' lives. Some are even forced into marriages which have resulted in tragedy due to emotional and psychological dissatisfaction.

One of the greatest difficulties for third gendered people has been gaining citizenship. Complications arise when the sex specified on a third gendered person's birth certificate does not match with her/his outward appearance and behaviors. In 2064 the Supreme Court ordered third gender to be recognized as a new category and to grant citizenship to third gendered people on this basis. 3 people gained citizenship under this provision. However, soon afterwards the Home Ministry, under Krishna Bahadur Mahar, issued a circular that ended this practice.

Sunil Babu Pant, acting director of Blue Diamond Society, who was also a member of the Constituent Assembly, says that they are in the process of filing a case against the government. After being put under pressure from various rights groups, the government has set up a committee which will study issues related to third gender and homosexuals and make recommendations.