Nepal Rastra Bank Relaxes Import Regulations
A Letter of Credit (LC) is a financial instrument used in international trade to ensure a reliable exchange of goods and payments between a buyer and seller. Acting as a guarantee from the buyer's bank, the LC promises payment to the seller upon successful fulfillment of predetermined conditions, such as delivery of goods and submission of required documents. This mechanism offers security to both parties by mitigating risks related to non-payment and non-delivery, making LCs a fundamental tool in facilitating smooth and trustworthy cross-border transactions.
Nepal Rastra Bank has introduced measures to streamline imports, aiming to facilitate smoother trade operations. In a comprehensive circular issued on Monday, the central bank has raised the Letter of Credit (LC) limit for importing goods.
Under the revised regulations, the threshold for opening an LC (Banking Payment System Receipt) for imports from third countries has been increased to USD 60,000 per transaction. This represents an enhancement from the previous cap of USD 50,000 for LCs.
Moreover, the central bank has established an upper limit of 3 crore Indian rupees for imports from India. Additionally, the bank has implemented a provision that permits a similar facility to be availed only after a lapse of 7 days from the initial usage for the same importer and exporter.
In the case of imports executed by industrial entities, a bond is required to be maintained, amounting to 10% of the import value. For commercial organizations, the bond requirement stands at 10%. Notably, for imports routed through customs offices operating an electronic payment system, with customs revenue being collected electronically, the Rastra Bank mandates a 1% bond for imports via customs offices. Commercial organizations, under these circumstances, are obliged to uphold a 3% bond.
These updates to import regulations by Nepal Rastra Bank seek to optimize the import process, foster trade relations, and ensure that the financial aspects of imports are managed effectively. The adjustments are anticipated to contribute positively to the country's overall trade ecosystem.
