Kathmandu- Nepal Rastra Bank (NRB) has amended the Integrated Foreign Exchange Circular-2082 to simplify foreign exchange transactions and provide greater flexibility for individuals and businesses dealing in foreign currencies.
Under the revised provisions, Nepali citizens traveling abroad for medical treatment can now receive up to USD 30,000 per year for treatment, medicines and medical equipment, double the previous limit of USD 15,000.
The central bank has also increased the foreign currency balance limit on cards used by Nepali IT and online service exporters from USD 5,000 to USD 10,000. It has further expanded foreign loan-related provisions to include IT and energy industries, allowing licensed Class A commercial banks to issue bank guarantees or standby letters of credit for bringing foreign loans into Nepal.
For Nepali airlines, the limit for direct advance payments for importing aircraft engines and spare parts has been increased from USD 100,000 to USD 500,000, based on recommendations from the Civil Aviation Authority of Nepal. The same limit applies when aircraft engines or parts are sent abroad for repair and brought back to Nepal.
The annual limit for direct payments by Nepali telecommunications companies for satellite services has also been increased from USD 100,000 to USD 500,000. The foreign exchange facility for importing services has been raised from USD 15,000 to USD 30,000 per transaction with approval or recommendation from the relevant regulator.
For transactions requiring foreign bank guarantees without a regulator’s recommendation, the limit has also been doubled from USD 15,000 to USD 30,000.
The NRB has increased the limit for direct payments by commercial banks to Indian organizations and companies for services from INR 4 million to INR 6 million. The limit for using foreign currency earnings from exports to make import payments to third countries has been raised from USD 12,000 to USD 30,000, while the corresponding limit for India has increased from INR 3 million to INR 6 million.
For importers seeking foreign exchange facilities, at least 10 percent of the import value must be paid before shipment, while the remaining amount must be paid before customs clearance. Importers making payments through drafts or telegraphic transfers must also submit monthly details of advance payments to the NRB within 15 days after the end of each month.
The central bank has also added rubber processing oil, used as an industrial raw material, to the list of goods eligible for foreign exchange facilities.
For licensed travel and tour agencies purchasing services from foreign agents for international tourists, payments can be made to overseas agents only when the service has been invoiced in foreign currency and the payment has been received through a bank account. The amount paid abroad cannot exceed the foreign currency received.
Meanwhile, banks and financial institutions have been allowed to invest an additional 10 percent of their agency balances in highly liquid foreign government securities issued by countries with at least an AA- international credit rating. The investment limit can reach 50 percent, compared to the previous 40 percent, with a maximum investment period of five years.
Banks and financial institutions may also invest for up to five years in financial instruments used to manage foreign exchange risks in sectors such as IT, energy and agriculture.
The latest amendments are aimed at increasing access to foreign currency for legitimate transactions while making procedures and reporting requirements clearer. The NRB expects the changes to support economic activity, service exports, tourism, aviation and industrial production.
