Nepal Rastra Bank extends Rs 382m export refinancing this fiscal year

KATHMANDU, FEB 15 -

Exporters have finally been able to get increased refinancing from the Nepal Rastra Bank (NRB) after the latter eased procedures for getting the funds at cheaper rates.

Exporters get refinance at 4.5 percent interest rate through banks and financial institutions (BFIs), for which the central bank provides refinancing to the BFIs at 1.5 percent.

According to NRB, a total of Rs 382 million refinancing has been made available to export ers as of Thursday this fiscal year.

“It is a significant amount of refinancing as such refinancing was almost non-existent until last fiscal year despite the central bank has long been offering the facility through the monetary policy,” said an NRB official.

According to NRB officials, after central bank opened the door for export ers dealing with India to get export refinancing and eased procedures to get the funds, the demand for such refinance surged this fiscal.

Earlier, only the export ers dealing with countries other than India were eligible to get the export refinance facility. Exporters also had to produce letters of credit along with other necessary export documents to be eligible to get the service.

Now, the NRB has allowed getting the funds even if export is made against draft or T/T. Usually, export to India takes place through draft and T/T.

The central bank has also eased the provision that required the approval of BFIs’ boards for the acceptance of documents. Now, signatures of chief executives of BFIs will suffice.

Both the producers of export able goods and export traders have been made eligible to get such refinance. If a single firm is involved in both production and export s, refinancing will be made available only for one task, according to the NRB directive.

BFIs were earlier reluctant to entertain export ers’ request for refinance, citing complicated procedure. “Cooperation of BFIs is must to ensure that export ers get this facility,” said the NRB official.

As per the central bank’s circular, BFIs should monitor whether foreign exchange was received after export s.

Exporters have to pay the principal and interest of such refinancing to the central bank within four days after receiving foreign exchange from export ers. The NRB made such a provision to increase export s which has remained poor compared to huge imports, resulting in huge trade deficit.

As of the last fiscal year, the country’s trade deficit stood at Rs 387.41 billion.

Source: The Kathmandu Post