Forex control measure aimed at shoring up reserves
KATHMANDU, Dec 26: Nepal Rastra Bank (NRB) has set a limit on the payments that a Nepali national can make in India through electronic cards such as credit, debit and prepaid as well as point of sale (PoS).
In a circular to ‘A’ class commercial banks and ‘B’ class development banks on Tuesday, the central bank set a limit of 100,000 Indian rupees (IRS) per month from a given bank account.
The new rule that is in effect from Tuesday will bar a Nepali citizen from making payments for goods and services worth more than Rs 160,000 from a bank account.
This limit, however, will not apply to payments to hotel, hospitals and pharmacies, according to the NRB circular.
“The expenses incurred and payments made by card by Nepalis in India have been rising rapidly in recent years,” said Bhisma Raj Dhungana, an executive director at NRB. “There was no restriction on such payments and the unlimited payment facility was putting pressure on the foreign exchange reserves,” added Dhungana, who heads the foreign exchange reserves department at NRB.
The payment limit is in addition to the cash withdrawal limit through bank cards of up to IRs 15,000 per day or IRs 100,000 a month. Apart from that, a Nepali national can also get Indian currency of up to IRs 25,000 while travelling to India.
The limit on card payments in India is the latest measure taken by NRB in recent months to shore up the foreign exchange reserves.
As the balance of payments position of the country has been slipping into deficit for the last few months on top of depletion in foreign exchange reserves, the central bank has imposed a number of currency exchange controls.
Earlier in November, NRB had lowered the foreign exchange facility to $1,500 per passport for outbound Nepali travelers from the earlier ceiling of $2,500. At the time, NRB also reduced the limit on payments through Telegraphic Transfer to $30,000 from an earlier limit of $40,000.
According to NRB, the BoP slipped into a deficit of Rs 57.33 billion in the last four months of the current fiscal year 2018/19, compared to a surplus of Rs 2.4 billion in the same period last fiscal year. Forex reserves have also dipped to $9.43 billion as of mid-November 2018 from $10.08 billion in the same period last year. Rising imports are being fingered as the major factor responsible.