Hoteliers seek foreign currency exchange facility

Published On: April 26, 2017 12:10 AM NPT By: Republica  | @RepublicaNepal

Hotels can only receive payments in foreign currency: NRB
KATHMANDU, April 26: Hoteliers have sought flexibility in allowing exchange of foreign currencies to foreign tourists. They have also said that the recent tightening of foreign currency exchange policy has 'invited serious problems toward providing service to foreign guests'.

While Nepal Rastra Bank (NRB) officials say that hoteliers have been licensed only to receive payments in foreign currency, hoteliers contend that they should be allowed to provide foreign currency exchange facility to foreign tourists.

Speaking at an interaction organized by Hotel Association Nepal (HAN) in Kathmandu on Tuesday, leaders of hotels and hospitality industry said that tourists have to suffer if they are denied foreign currency exchange facility by hotels. “We have been facing problems due to policies introduced by the NRB. Recently, the central bank issued a policy that says hotels cannot provide foreign currency exchange facility. We have been providing the facility for the past many years. It was never a subject of issue till date,” Sunil Sakya, treasurer of HAN, said. “With the new rule coming into effect, we have to tell foreign tourists, who ask for foreign currency exchange to make payment for cab or other services, that we cannot provide exchange facility because we are not allowed to do so by our central bank. He also urged the central bank to allow hotels to buy foreign currency from their guests. “As we have been meeting regulatory compliance and adhering to reporting standards, hotels having foreign exchange license should be allowed to provide foreign exchange service,” he added.

The central bank has issued foreign exchange license to 135 hotels in Kathmandu Valley and 31 outside the valley.

NRB officials, however, say that hotels are bound by laws to accept only payment in foreign currency.

“The central bank has not allowed them to sell foreign currencies to foreigners. You can only receive payment in foreign currency for your services,” Chintamani Shiwakoti, a deputy governor of the NRB, told hoteliers. “The central bank is intensifying monitoring to ensure that the license is not being misused.”

Similarly, Bhisma Raj Dhungana, the chief of Foreign Exchange Department of the NRB, asked the hoteliers not to receive payments in Nepali currency. “Hotels have been found accepting Nepali currency as payment for their services from foreigners. That is illegal. They should receive payments in foreign currency only,” he added.

According to Dhungana, hotels can accept payment in local currency only if tourists present receipts of foreign currency exchange.

Hoteliers rue sudden lending rate hike
Hoteliers have warned that continuous rise in lending rates will make them difficult to survive. 
Speaking at an interaction program organized by Hotel Association Nepal (HAN), they also call for the intervention of the Nepal Rastra Bank (NRB) on 'interest rate cartel' of bank and financial institutions (BFIs). 

“We have experienced a hike of 2 to 4 percentage points in just two to three months,” Sunil Sakya, treasurer of HAN, said at the interaction with central bank officials. “High lending rates and low deposit rates are the serious issues that our industry is dealing at the moment. Where in the world does this happen? How can we assure returns to investors who are pumping in billions of rupees in new hotels?” he wondered.

NRB officials, however, said that they were coming up with a new measure to curb sudden interest rates hike. “We are in the process of restricting BFIs from raising lending rates more than twice a year. The central bank has floated a consultative document with the provision among stakeholders for discussion,” Narayan Prasad Poudel, executive director with the Banks and Financial Institutions Regulation Department of the NRB, said. 

He also said that the aggressive lending practice of BFIs in the wake of rise in credit demands has resulted into the shortage of lendable fund and triggered interest rates hike in recent months.

“Lending rates have gone up not only for tourism and hospitality industry, but for all sectors. This is an exceptional case. You have to shed the mentality that the credit will be such expensive forever,” he told the hoteliers.

Leave A Comment