Foreign investors allowed to deposit dividends in Nepali banks
KATHMANDU, AUG 05 -
Nepal Rastra Bank (NRB) has allowed foreign investors to deposit their dividends in fixed deposit accounts at Nepali banks and financial institutions (BFIs) after obtaining approval from the concerned government agency or central bank in their home country.
NRB issued a circular on Thursday opening the way for them to do so with specific conditions as there is no provision regarding depositing such earnings in Nepali BFIs.
“It will help to boost foreign currency reserves in the country and liquidity in the banking system,” said a senior NRB official.
The requirement to obtain an okay from the concerned foreign government agency or central bank has been inserted to prevent suspicions of money laundering during repatriation of such funds.
Foreign investors can repatriate the deposited amount and the interest earned on it with the approval of NRB’s foreign exchange management department. However, the deposit and interest cannot be withdrawn for at least one year. “This provision has been created to ensure that Nepal can assess the liabilities of the country properly and devise appropriate policy,” said the central bank official.
Foreign investors are required to submit details of such deposits and the interest earned to the foreign exchange department of NRB on a half-yearly basis.
Meanwhile, the central bank has given additional relief to BFIs enjoying refinancing and lending under the lender of last resort policy from NRB by freeing them from having to meet the deprived sector lending requirement.
As per the monetary policy for the current fiscal year, commercial banks have to maintain deprived sector loans at 3.5 percent of their total lending. The requirement is 3 percent for development banks and 2.5 percent for finance companies. Deprived sector lending refers to loans that go to benefit the poor.
The central bank has also directed BFIs to give recognition to declarations of income source while making deposits beyond Rs 1 million. This means that they can state that the deposited amount is not related to terrorism, drug transactions, human trafficking or organised crime.
Earlier, the budget for the current fiscal year included a provision of negative declaration given complaints from bankers and businessmen that the source disclosure provision drove away deposits from banks leading to a liquidity crunch in the banking system.
Source: Kantipur
Nepal Rastra Bank (NRB) has allowed foreign investors to deposit their dividends in fixed deposit accounts at Nepali banks and financial institutions (BFIs) after obtaining approval from the concerned government agency or central bank in their home country.
NRB issued a circular on Thursday opening the way for them to do so with specific conditions as there is no provision regarding depositing such earnings in Nepali BFIs.
“It will help to boost foreign currency reserves in the country and liquidity in the banking system,” said a senior NRB official.
The requirement to obtain an okay from the concerned foreign government agency or central bank has been inserted to prevent suspicions of money laundering during repatriation of such funds.
Foreign investors can repatriate the deposited amount and the interest earned on it with the approval of NRB’s foreign exchange management department. However, the deposit and interest cannot be withdrawn for at least one year. “This provision has been created to ensure that Nepal can assess the liabilities of the country properly and devise appropriate policy,” said the central bank official.
Foreign investors are required to submit details of such deposits and the interest earned to the foreign exchange department of NRB on a half-yearly basis.
Meanwhile, the central bank has given additional relief to BFIs enjoying refinancing and lending under the lender of last resort policy from NRB by freeing them from having to meet the deprived sector lending requirement.
As per the monetary policy for the current fiscal year, commercial banks have to maintain deprived sector loans at 3.5 percent of their total lending. The requirement is 3 percent for development banks and 2.5 percent for finance companies. Deprived sector lending refers to loans that go to benefit the poor.
The central bank has also directed BFIs to give recognition to declarations of income source while making deposits beyond Rs 1 million. This means that they can state that the deposited amount is not related to terrorism, drug transactions, human trafficking or organised crime.
Earlier, the budget for the current fiscal year included a provision of negative declaration given complaints from bankers and businessmen that the source disclosure provision drove away deposits from banks leading to a liquidity crunch in the banking system.
Source: Kantipur
