KATHMANDU, Dec 21: Nepal Rastra Bank (NRB) has asked importers of selected luxury items to maintain cent percent cash margin to open letter of credit (LC) accounts, targeting to tighten the noose on the import of such products.
In a bid to check the drain out of foreign currencies amid growing pressure on the country’s foreign currency reserves, the country’s central bank has taken the measure. Revising the unified directive on Monday, NRB has asked the importers to maintain cent percent cash margin on imports of dozens of goods, which fall under the 18 harmonic codes.
Nepal bans import of luxury items amid depleting forex reserves
With the new provision in place, importers 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 will have to maintain 100 percent cash margin in their LC accounts. This means the importers need to maintain money, equivalent to the cost of import of these goods, as bank guarantee.
Likewise, the central bank has also asked the importers of automobiles to maintain 50 percent of their cost in margin. Previously, importers had to maintain only up to 15 percent as the cash margin on selected goods while opening the LC accounts for imports.
With heavy outflow of foreign currencies amid slow growth in the country’s earnings from abroad, Nepal’s foreign exchange reserves declined 10.9 percent to US $ 10.47 billion during the first four months of the current fiscal year. The amount now allows the landlocked country to fund imports for only 7.9 months.
