NRB amends foreign exchange regulations to simplify international trade, promote digital payments

KATHMANDU: Nepal Rastra Bank (NRB) has amended its foreign exchange regulations to simplify international trade and promote digital payments.

The central bank issued Circular no. 10/2082–83 through its Foreign Exchange Management Department, revising the existing Integrated Circular 2081 and reducing administrative requirements for importers and banks.

Under the new rules, industrial importers must provide a 1% margin while trading firms are required to provide 3% margin; the central bank has said this will improve liquidity for businesses engaged in cross-border commerce. The bank has also lowered security deposit requirements at customs points where electronic revenue collection is mandatory.

The letter of credit process has been modernised: importers now need to submit two copies of the required foreign exchange forms instead of three, and banks must send real-time updates to the central bank via an electronic LC reporting system. The NRB has expanded the role of the Chobhar dry port, allowing it to handle a wider range of import transactions and to serve as a primary customs point for various payment methods.

To support the aviation sector, banks are permitted to issue advance payments of up to $100,000 for repair of aircraft parts and engines abroad, provided the importer presents recommendations from the Civil Aviation Authority of Nepal (CAAN).

The amendments set rules for unused foreign funds. If a foreign exchange transfer is not used for its intended purpose, banks may refund up to $10,000 or its equivalent to the original sender within 60 days of credit, except where the funds are considered suspicious or linked to illegal activity, in which case refunds are not permitted.

Other provisions require that imports from India exceeding INR 30 million be settled through letters of credit, and permit industrialists to use funded working capital loans to meet margin requirements.

Implemented under the Foreign Exchange Regulation Act and the Nepal Rastra Bank Act, the updates form part of the central bank’s effort to align foreign exchange rules with modern trading needs and the ongoing digitalisation of payment and customs systems.