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NRB eases forex facility for export
KATHMANDU, AUG 12 -
Nepal Rastra Bank (NRB) has eased the foreign exchange facility for exporters by asking banks and financial institutions (BFIs) to provide foreign exchange at the London Inter-Bank Offer Rate (LIBOR) plus 2.25 percent interest rate.
The central bank will then provide refinancing to the BFIs at LIBOR plus 0.25 percent interest rate against the collateral of documents on good loans. The LIBOR is changeable rate on a day-to-day basis and the central bank maintains the rate on the day of transactions.
The BFIs will have to recover the loans in foreign exchange including both principal and interest, according to an NRB circular issued on Tuesday.
Earlier, BFIs were providing foreign exchange facility at 6 percent interest, for which the central bank used to provide refinancing at 4 percent interest.
A senior NRB official said such facility is available to all exporters irrespective of whatever means they use for exports.
Earlier, only those exporting through shipments could easily receive this facility, while others would have to face difficulties. “Now, even those exporting through air and ground cargo can avail of this facility,” said the NRB official. “The move was taken to promote exports.”
The central bank has for the first time decided to allow foreign exchange to exporters to open accounts in foreign banks for carrying out promotional activities. They can get foreign exchange of up to 5 percent of the export amount of the previous year.
Even those who were not exporting earlier can get foreign exchange of up to 5 percent on the basis of estimated transactions. With the amount provided, they can work to open branches, contact offices and sales rooms and hold exhibitions.
They have to send back the foreign exchange earned from the sales of goods every three months through the banking channel. For the first time, the central bank is also providing short-term loans or overdraft in foreign exchange to travel,
tours and trekking agents so that they would be able to provide tickets to diplomatic agencies on credit. Diplomatic agencies
pay the fare of tickets to ticketing agencies later with interest included. “Such facility can be provided for a maximum
three months,” the NRB directive said. In another directive, the NRB has allowed BFIs to open agency accounts in foreign countries to the amount equivalent to the foreign currency deposits.
The central bank for the first time has provisioned that the BFIs can keep foreign exchange in agency accounts abroad to the equivalent amount of forward exchange contract they signed with the importers.
Forward exchange contract is an agreement on exchange rate between the BFI and importers which will be maintained for a certain period.
As per the NRB directive, BFIs can use that foreign exchange as call deposits, certificate of deposits and other instruments of securities issued by foreign banks whose maturity period is one year or less.
Posted on: 2010-08-13 07:46
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