NRB Removes the Letter of Credit (LC) Margin Imposed on Imports of Goods

The letter of credit (LC) margin imposed on imports has been removed by Nepal Rastra Bank (NRB) under severe pressure from the International Monetary Fund (IMF).

According to the circular released by Rastra Bank on Thursday, "Integrated Circular-2078 issued to licensed companies to undertake foreign exchange transactions" has been cancelled.

The Central Bank has instructed not to open the LC for numerous products due to financial instability and a lack of liquidity in the country earlier this year. Currently, several imported items, including vehicles, have a 50% LC margin. In the remaining cases, it is 100%.

Now, in accordance with the laws, the bank only opens the LC after receiving payment from the customer for the cost of importing the products. Previously, a buffer of 5–10% was maintained depending on the risk. The central bank, however, has eliminated the LC margin in accordance with the amended circulation. As a result, goods can now be imported even without a cash margin being maintained.