Nepal, though the only Hindu Kingdom in the world, nonetheless is a nation in which numerous Buddhist communities co-exist in tranquility with their Hindu neighbours. The Newars, the numerically dominant ethnic community of the Kathmandu Valley, and a people justly famed for their remarkable artistic achievements in sculpture, painting and architecture, offer a microcosm of this peaceful coexistence as internally they are composed of Hindu and Buddhist sections. The existence of these two separate yet interrelated religious traditions is of extreme interest as it is one of the few remaining examples of the situation found in India from the inception of Buddhism through its demise. In recent years there has been much speculation based upon textual analysis concerning the nature of the relationship between Hinduism and Buddhism. Nepal, particularly the Kathmandu Valley, is an area in which a study of the actual dynamics of the mutual interactions of Hinduism and Buddhism may be made. Moreover, an examination of Newar religious organization permits investigation of how an actual Buddhist community has come to terms with the Hindu caste structure. Once again, this is a subject on which there has been a great deal of speculation. While passages in various Buddhist texts can be found which attack the Brahmanical view of how society should be organized, nevertheless little is known about how, in fact, Buddhists related to their Hindu neighbours. Lastly, the Newars who have replaced the usual Buddhist monastic structure with a married clergy offer an opportunity of examining the precise nature of the relationship between Buddhism and asceticism.