Kathmandu, December 23
Nepal Rastra Bank (NRB) has clarified the reason for making the arrangement of depositing cashin the bank before opening the letter of credit to stop the rising import.
Some businessmen have protested after the central bank gave such instructions to financial
institutions. Speaking at an interaction program on Wednesday, NRB Governor Maha Prasad
Adhikari said that such an arrangement should be made to stop the practice of stockpiling
unwanted goods immediately.
“Even importing non-esse ntial items has led to huge outflows,” he said.”This arrangement willdefinitely reduce the practice of stockpiling goods.” The central bank has made provision for keeping 100 percent cash margin on imports of certain items and 50 percent on imports of others.
50 percent cash margin on car and motorcycle imports and marble, toilet and kitchen material, silver, wrought iron furniture, chocolate, chewing gum, energy drink, cigarette, perfume, cosmetics, shampoo, hair oil, wood products, furniture, shoes, Provision has been made to keep 100% cash margin in the bank while importing items like hats, umbrellas, artificial flowers, plastic furniture, liquor and gold. As the balance of payments deficit continues to rise, experts have been emphasizing the need to discourage rising imports.
The official said that due to high imports, the balance of payments deficit has increased and
there is a problem of lack of liquidity. “In order to solve both these problems, we have to be strict on imports,” he said. “We have to use some of our assets while doing business.” He said that investment of businessmen is also needed in import.
He said he did not agree with the argument that the tightening of import regulations would
lead to higher prices and loss of employment. Stating that the state of foreign exchange
reserves was better than before the Corona epidemic, he claimed that there was no need to
panic right now.
Prakash Kumar Shrestha, executive director of the economic research department of NRB, said that the deposits of Pusayata have started improving. He says there is some pressure on liquidity now as the economy is on the path to recovery.
Governor Adhikari said that the refinancing of Rs 92 billion has been sanctioned to alleviate the liquidity crunch. He said that the monthly remittance before Covid ranged from Rs 70 to Rs 73 billion to Rs 80 billion last year, adding that the monthly average remittance of Rs 78 billion in the first four months of the current fiscal year was satisfactory.
He said there were signs of some improvement in remittance inflows after January. NRB
officials also said that the current interest rate should be considered normal.
By Karuna Thapa
