Customs department amends rule, Removes bank guarantee for EXIM code, boosts trade

KATHMANDU: The Department of Customs has unveiled a major overhaul in trade procedures with the introduction of the 16th amendment to the Customs Regulation 2064, effectively eliminating the mandatory requirement of a bank guarantee for obtaining an Export-Import (EXIM) Code.

This long-awaited change, announced on Friday, marks a significant departure from the previous system where applicants were obligated to provide a substantial bank guarantee amounting to NPR 3 lakh in the department’s name as a prerequisite for securing the EXIM Code, a critical identifier for businesses engaged in international trade.

The amendment, which came into effect immediately, has prompted the Department of Customs to issue a formal directive to all commercial banks across the country. In a letter dispatched on Thursday, the department instructed the banks to release the bank guarantees that had been held against EXIM Code applications, thereby relieving businesses of a longstanding financial commitment. This proactive step is seen as a response to the growing demands from the business community for a more streamlined and cost-effective trade registration process.

The decision to remove the bank guarantee requirement is expected to bring a host of benefits to the trading sector. Firstly, it simplifies the application process by reducing the extensive paperwork and financial scrutiny that businesses previously had to undergo, making it far more accessible for small and medium enterprises (SMEs) to enter the import-export market.

Secondly, the elimination of the NPR 3 lakh guarantee frees up crucial working capital, allowing businesses to allocate these funds towards operational expenses, inventory expansion, or investment in new opportunities, thereby enhancing their financial flexibility.

Moreover, this policy shift is anticipated to give a significant boost to Nepal’s trade ecosystem by encouraging a larger number of entrepreneurs, especially those hesitant due to the earlier financial barrier, to participate in global trade. The increased participation is likely to diversify the country’s export portfolio and strengthen its position in international markets. Additionally, the amendment promises to enhance overall efficiency in the trade registration process.

By removing this bureaucratic hurdle, the time taken to obtain an EXIM Code is expected to decrease considerably, benefiting both new entrants and established traders who can now focus more on their core business activities rather than administrative obligations.

Industry experts have welcomed the amendment, noting that it aligns with global trends towards facilitating trade and reducing unnecessary regulatory burdens. The Department of Customs has indicated that this change is part of a broader initiative to modernize trade practices in Nepal, with potential future amendments aimed at further simplifying compliance requirements.

As the business community adjusts to this new regulation, stakeholders are hopeful that it will pave the way for a more vibrant and competitive trade environment in the country.