Newar caste system is the system by which Newārs, the historical inhabitants of Kathmandu Valley, are divided into groups on the basis of Vedic varna model and divided according to their hereditary occupations. First introduced at the time of the Licchavis, the Newar caste system assumed its present shape during the medieval Malla period. The Newar caste structure resembles more closely to North India and Madheshis than that of the Khas 'Parbatiyas' in that all four Varna and untouchables are represented. The social structure of Newars is unique as it is the last remaining example of a pre-Islamic North Indic civilisation in which Buddhist elements enjoy equal status with the Brahmanic elements.

The Śreṣṭha or is the second largest Newar caste group, occupying around 21% of overall Newar population, or about 1.1% of Nepal’s total population. It is believed that the word Srēṣṭha is derived from the Newar word Śeśyah, which itself is derivation of a Sanskrit word Sista meaning 'noble', although literal meaning of the word also translated to 'best or important.' "Shrestha" itself was later adopted as the specific family surname by members of this high-caste Hindu group, although there are over 50 other recognized surnames of Srēṣṭhas. Despite their numerically low national population, their high-status and socio-economic capital puts Śreṣṭhas amongst the most socio-economically privileged and politically over-represented segments of Nepali population.