Hospitals too get permits to borrow in foreign currency
September 1, 2018 08:09 AM NPT
KATHMANDU, Sep 1: Nepal Rastra Bank (NRB) has paved the way for hospitals, which make earnings also in foreign currency, to acquire loans in foreign currency from banking institutions.
Issuing a circular on Friday, the central bank told commercial banks that they can now extend loans in foreign currency to hospitals for the purpose of import.
The decision of the central bank to ease the stricter foreign exchange regime comes in the wake of demands from the hospitals that they should be allowed to borrow in foreign currency to import equipment, software, and other services.
Hospitals, however, would not be allowed to use the foreign currency loans except for the payment of imports that they require.
The banks were previously allowed to float foreign currency loans to manufacturing industries that export their products, hydropower companies, and hospitality and tourism industry among other businesses that earn in foreign currency.
“The circular allowing banks to float loans to hospitals in convertible foreign currencies will provide a relief for hospitals that were facing difficulty financing their imports of goods and equipment,” said Bhisma Raj Dhungana, executive director at the NRB.
“This will make it easier for hospitals to get loans and repay them from their foreign exchange earnings,” added Dhungana, who also heads the NRB’s Foreign Exchange Department.
Some newly established big hospitals have been providing healthcare services to foreign citizens who pay in foreign currency. Though the exact figure is not available at the moment, NRB officials say that the foreign currency earning of hospitals is on a gradual rise.
According to Dhungana, only those hospitals that have got the license from the NRB to carry out foreign exchange transactions can borrow in foreign currency from the banks.
There are three hospitals that have acquired license from the central bank for the foreign exchange service, enabling them to accept foreign currency from their clients against healthcare services.
The new circular states that the repayment of principal and interest of foreign currency loans should be made from their foreign currency accounts. Similarly, banking institutions have been allowed to lend foreign currency to hospitals from the fund that they have borrowed from international banking institutions in convertible currencies.
The NRB has recently permitted commercial banks to get loans from foreign banking and financial institutions in convertible currencies as well as in Indian rupees as part of efforts to address the shortage of lendable fund in the banking system. Either way, banking institutions can get the foreign exchange service from the central bank to float loans in convertible currencies to hospitals, tourism businesses and export-oriented industries that earn foreign currency.