First Business News Portal in English from Nepal
KATHMANDU: Nepal Rastra Bank (NRB) has instructed commercial banks not to open letter of credit (LC) to industries and businesses for import of non-essential items, including vehicles.
NRB on Monday summoned CEOs and representatives of commercial banks to discuss the issue as the country’s currency reserves are depleting and the economy is in crisis.
NRB has also given strict instructions to banks not to open LCs. At present, the foreign exchange reserves are not in a position to support the import of goods and services for six months. At present, there is a huge demand for vehicles and people have to wait for six months for electric vehicles.
According to NRB officials, over Rs 70 billion worth of vehicles and spare parts have been imported during the current fiscal year. On the one hand, the banks have said that they have not agreed to open the import of smuggled goods including betel nut and on the other hand, to stop the opening of LCs for the import of non-essential goods.
Meanwhile, Prakash Kumar Shrestha, director of NRB and head of the economic research department, said that informal discussions have been held with the CEOs of commercial banks about the latest situation. He said that discussions were held as the situation was a bit serious.
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