IC exchange limit fixed at IRs 3m for importers
KATHMANDU, AUG 30 -
The central bank has placed a limit on the amount of Indian currency (IC) that can be exchanged by importers in a bid to control misappropriation. Nepal Rastra Bank (NRB) has allowed banks and financial institutions (BFIs) to provide exchange facility of up to IRs 3 million at a time for importing goods or services from India.
The new provision has made it mandatory for firms to get prior approval from NRB if they want to exchange more than the limit.
According to NRB, this provision was brought to control misappropriation of IC which is rampant in the country at present. “Earlier, there was no limit, but a large number of cases of IC misappropriation have forced us to issue such a directive,” said Lila Prakash Sitaula, executive director of NRB. “However, this directive will not bar genuine importers from getting larger amounts if can produce the proper paperwork.”
NRB said that the directive would not only control misuse of IC, but also help the central bank to assess its requirement more precisely. “Implementation of this directive will also help us to know about the stock of IC in our financial system,” said Sitaula.
Industrialists, however, are not very happy at the latest move by the central bank. “We should be allowed to get the desired amount of IC from BFIs upon producing genuine documents,” said Sahil Agrawal, joint director of the Shankar Group.
“Now, NRB has already brought the directive. So the process of getting approval should be hassle free.”
But there is some good news for importers. The central bank has allowed them to import goods from sole distributors and agents while importing goods from India against convertible currency. Earlier, goods could be imported only from the producers. The foreign exchange department of NRB issued the directive to facilitate imports, according to a senior NRB official. “Importers were facing problems when importing products like special automobile parts and special construction equipment as they are not exported by the producers directly,” said Sitaula. “For some goods, it was almost impossible to import them and it was necessary to create such a rule.”
According to NRB, the earlier policy allowing imports only from the producers was implemented to combat possible misappropriation of foreign currency. “When importing from other parties, there was a possibility of irregularities in pricing,” said Sitaula. “But these days there is a provision whereby exporters in India have to fill ARE1 forms for export clearance.” He added that such a provision had made it easier to know the exact price and had minimized possible irregularities.
Industrialists welcomed the NRB decision and said that it would be very helpful to them. “Not all the producers in India are involved in trading. Instead, they appoint authorised distributors,” said Agrawal. “This decision by NRB will contribute to streamlining imports of certain products.”
Recently, NRB also increased the limit on imports in convertible currency which are done through draft or telegraphic transfer.
Source: The Kathmandu Post
