Central bank tightens local companies, individuals to open accounts in foreign banks

The central bank has tightened local companies including financial institutions and individuals to open accounts in foreign banks.
A registered company including development bank and commercial bank can open a Nostro account but they have to apply with detailed information like foreign currency, name of the bank, its address and credit rating before opening the Nostro account and keep on reporting to the central bank regularly, the Nepal Rastra Bank said.
A bank account held in a foreign country by a domestic bank, denominated in the currency of that country is called Nostro account that is used to facilitate settlement of foreign exchange and trade transactions.The central bank has asked the financial institution to inform Foreign Exchange Department after opening the account.
The financial institutions can held the balance in any of the currency according to their need but they can neither hold more than necessary nor buy Indian currency, the central bank said, adding that the banks have to deposit Indian Currency in the current account, if they have more than necessary. But the central bank has not elaborated on how to measure the necessity.
The central bank has, but, allowed interbank transaction of the IC from the current account. "And the financial institution can even lend to individuals," it said, adding that the central bank has to be informed transaction details regularly. "The banks can however, not take overdraft or borrow."
Similarly, central bank-licenced remitters, registered agencies selling their goods and services abroad, and exhibitors can also open Nostro account but they have to send the details of their accounts regularly to the central bank.
The remitters can open foreign currency account in the country to hold the transferred remittance, NRB added.
However, individuals can also open the account till one is in the foreign land. In case of one's return, such account should be closed within 35 days, or if anyone wants to continue to hold accounts, the central bank has to be informed.