Nepalis are not allowed to acquire USD cards unless they already hold USD accounts. This prevents common people from availing Internet-based services, especially those requiring payments to be made, as the only medium for payment for online transactions is through cards.[break]
“Prepaid USD card will facilitate people to pay for services and products like subscription of magazines, newspapers, online news, software download of small values, exam fee payments, hotel booking confirmation,” said a member of Nepal Bankers Association (NBA).
In its recommendation for the new Monetary Policy, NBA said NRB can easily develop cross-verification mechanism to make sure that the facility is not misused.
NBA has also advised NRB to increase foreign exchange facility against passport. The facility is currently limited to USD 4,000 per annum.
But this is inadequate for frequent fliers like top executives and businessmen, NBA has argued and pushed NRB to allow such regular fliers cash in USD up to $2,000 on each visit against travel documents.
Apart from that, bankers have asked the central bank to allow them purchase Indian Currency (IC) directly from Indian banks with prior written information to NRB.
“This will ease both banks and NRB to manage the intense pressure seen on IC demand in the market,” NBA has said. As for the control, it said NRB can always develop some mechanism to prevent possible misuse of the facility.
As for the liquidity management, NBA has recommended the central bank to open repo and reverse repo window every day with the fixed interest to better manage liquidity.
NBA Demands:
- Relax income disclosure provision
- Provide interest on CRR
- Allow banks to purchase IC directly
- Slash penal rate to 3 pc
Apart from that, it has also called for the use of new financial instruments like outright purchase to manage liquidity problems.
Likewise, bankers have asked NRB to relax the provision that seeks depositors to declare the source of fund categorically (like salary, sale of asset and business income) if they deposit more than Rs 1 million.
“Our suggestion is that they should be allowed to deposit the money by only declaring that the source is not illegal,” said a banker, adding that such relaxation was very important if NRB wants to bring in more money in the formal financial system.
The bankers have also demanded the central bank to slash penal rate on standing liquidity facility to 2 percent from existing 3 percent of over 91-day Treasury Bill rate or bank rate whichever is higher.
The bankers have asked NRB to allow them treat investments in the hydropower sector up to 1 MW as Deprived Sector Lending. “This will encourage investments in the sector which can help ease the current shortage of power in the country,” NBA said.
In order to motivate banks and financial institutions (BFIs) to open more branches in rural areas, NBA has requested NRB to regard accounts maintained by BFIs in local BFIs for daily cash and liquidity management as balance maintained with NRB.
That is not all. They have asked NRB to recognise such accounts as well as cash in vault and cash in ATM for calculation of cash reserve ratio (CRR), which banks need to maintain at NRB.
Bankers have even urged the central bank to provide interest on balances maintained by the BFIs with NRB for CRR purpose. “It will at least help narrow interest spread between borrowers and depositors,” NBA has argued.
Bankers have also asked NRB to allow Nepali banks to open branches in foreign countries as a subsidiary, and called for enactment of necessary regulations for this. So far, they are not allowed to open their branches in foreign countries.
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