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Kathmandu Sunday January 27, 2002 Magh 14, 2058.
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Nepal Rastra Bank amends LC directives
Sets a new ceiling for BCI
By Milan Mani Sharma
KATHMANDU, Jan 26:
Under intense pressure from the business community, the Nepal Rastra Bank (NRB) has
amended its earlier directive that required importers opening Letters of Credit (LC) of
over US $ 15 thousand to submit Business Credibility Information (BCI).
The NRB has raised the ceiling from US $ 15 thousand to US $ 50 thousand for the mandatory
submission of BCI. The decision regarding the same was reached on Friday and comes into
effect Monday, said highly placed NRB sources.
Dr Tilak Rawal, Governor of the NRB talking to The Kathmandu Post said that the central
bank
has revised the earlier directives. "The decision regarding the same will be made
public on
Monday," he added.
Meanwhile, sources at the NRB said that the central bank has also increased the validity
period
of the CBI submitted to the commercial banks. The latest change has raised the validity
period of
the CBI for a year. Earlier directives had provisioned to validate the BCI for three
months period
from the date of its submission.
The decision has come as a part of "flexibility" over the earlier directives as
promised by Dr
Rawal. Very few LCs valued over US $ 15 thousand were opened after the imposition of the
directives.
According to the reviewed directives the BCI provided by the corresponding foreign bank
dealing
with the LCs will also be validated by the commercial banks and accepted for opening the
LCs.
The central bank has also decided that the BCI would not be required while opening the
back to
back LC and Usagence LC.
The decision has also lain off export LC from its effect. "If there is no discrepancy
seen in the
export LC it would not come into the bracket of the BCI requirement," said the
source.
The amended directives further states that official senior to the official responsible for
opening LCs
can grant permission for opening of the LCs in case the BCI rating is "high
risk" or "no
information".
The source further added that the governor has shown willingness to revise the latest
decision as
well if required.
The central bank’s decision has come in the wake of business community urging the
central bank
to review it. FNCCI and Nepal Chamber of Commerce had submitted letters to the central
bank
suggesting the flexibility measures.
A four-member committee of the business community led by Rajendra Khetan Second Vice
Chairman of the Federation of Nepalese Chamber of Commerce and Industry (FNCCI) had dealt
the matter with four-member NRB team led by the Governor on Monday and Wednesday. Talking
to The Kathmandu Post, Khetan said that the current decision will ensure that 85 percent
of the
LCs opened during the last fiscal year will not come into the effect of the directives. 30
thousand
LCs were opened during the last fiscal year. This decision is expected to facilitate the
small and
medium entrepreneurs and will effect the large importers only, Khetan added.
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