KATHMANDU, Feb 11: Nepal Rastra Bank (NRB), has asked importers to deposit hard cash in advance to import additional goods that fall in the list of additional 27 harmonic codes.
Extending the cash margin rule that NRB enforced around one and a half months ago on imported goods, the central bank has targeted to curb the import of additional types of goods. The central bank is now facing pressure due to depleting foreign currency reserves.
Issuing a circular on Wednesday, NRB asked the importers concerned to maintain up to 100 percent cash margin on these items. Under pressure from falling foreign currency reserves, the central bank since December 21 has made it mandatory to maintain the cash margin rule on the goods that fall under 20 different harmonic codes.
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With the new provision, the import under 47 harmonic codes will now be incorporated under 50 to 100 percent cash margin. The importers of these selected luxury items will have to maintain cash margin to open letter of credit (LC) accounts.
Of them, goods under 41 different harmonic codes are subjected to 100 percent cash margin while the threshold is 50 percent for the rest falling under six harmonic codes. Previously, importers had to maintain only up to 15 percent as the cash margin on selected goods while opening LC accounts for imports.
With the new provision in place, importers of apparels and textiles, meat and fish products and dry fruits are also needed to maintain cash margins. As of now, the central bank has been imposing the rule of cent percent cash margin on the import of sugar and confectionaries, clove, mineral water, alcoholic beverage, vinegar, energy drinks, cigarette and tobacco products, perfume, cosmetics, wooden items, footwear, cement, ceramic items, marble, umbrella, gold and silver. Likewise, the importers of automobiles need to maintain 50 percent of their cost in margin.
The country faces a heavy outflow of foreign currencies triggered by ballooning imports amid slow growth in the country’s earnings from abroad. According to NRB records, Nepal’s foreign exchange reserves declined 15.9 percent to US $ 9.89 billion as of mid-January this year. The amount now allows the landlocked country to fund imports for only 6.6 months.
