Central bank allows exchange of foreign funds up to $1000
KATHMANDU, AUG 09 -
Nepalis holding foreign currency without paperwork showing where it came from can now exchange it for Nepali rupees at banks and financial institutions (BFIs) by making a self-declaration.
According to a circular issued by Nepal Rastra Bank (NRB), they can exchange foreign currency worth up to US$ 1,000 at a time by self-declaring its source to A and B class BFIs.
“This provision will help workers in the tourism sector who earn tips from tourists and those who receive money from relatives abroad,” said a senior NRB official.
People possessing foreign currency are required to simply state the type of currency, the number of banknotes, rate of exchange, purpose and source in a specific format designed by the central bank to exchange it.
They have to apply with a photocopy of their ID and sign a pledge that the money will be returned if the foreign banknotes are found to be counterfeit. The central bank has prohibited BFIs from charging more than the rate paid at the time of exchange in such a case.
In the absence of regulations to exchange such income, people earning foreign currency have been making use of the informal market, thereby keeping it out of formal channels.
“The main motive behind creating such a provision is to bring foreign currency into formal channels besides facilitating exchange of foreign funds,” said the NRB official.
According to NRB officials, money changers usually don’t show such foreign exchange earnings and they are usually used for informal trade. Officials suspect that a huge amount has gone out of the country to pay for the import of undervalued goods.
They believe that bringing such foreign exchange earnings into the formal system will also help to augment the country’s foreign exchange reserves. As of the first 11 months of the last fiscal year, Nepal’s foreign currency reserves stood at US$ 3.77 billion which is sufficient for merchandise imports for 8.4 months, according to NRB.
BFIs who collect foreign currency under this provision are required to give an encashment receipt and show it in the documentation of foreign exchange purchase.
Source: Kantipur
Nepalis holding foreign currency without paperwork showing where it came from can now exchange it for Nepali rupees at banks and financial institutions (BFIs) by making a self-declaration.
According to a circular issued by Nepal Rastra Bank (NRB), they can exchange foreign currency worth up to US$ 1,000 at a time by self-declaring its source to A and B class BFIs.
“This provision will help workers in the tourism sector who earn tips from tourists and those who receive money from relatives abroad,” said a senior NRB official.
People possessing foreign currency are required to simply state the type of currency, the number of banknotes, rate of exchange, purpose and source in a specific format designed by the central bank to exchange it.
They have to apply with a photocopy of their ID and sign a pledge that the money will be returned if the foreign banknotes are found to be counterfeit. The central bank has prohibited BFIs from charging more than the rate paid at the time of exchange in such a case.
In the absence of regulations to exchange such income, people earning foreign currency have been making use of the informal market, thereby keeping it out of formal channels.
“The main motive behind creating such a provision is to bring foreign currency into formal channels besides facilitating exchange of foreign funds,” said the NRB official.
According to NRB officials, money changers usually don’t show such foreign exchange earnings and they are usually used for informal trade. Officials suspect that a huge amount has gone out of the country to pay for the import of undervalued goods.
They believe that bringing such foreign exchange earnings into the formal system will also help to augment the country’s foreign exchange reserves. As of the first 11 months of the last fiscal year, Nepal’s foreign currency reserves stood at US$ 3.77 billion which is sufficient for merchandise imports for 8.4 months, according to NRB.
BFIs who collect foreign currency under this provision are required to give an encashment receipt and show it in the documentation of foreign exchange purchase.
Source: Kantipur
