The central bank has directed banks to provide cash incentives to exporters according to the amended 'Cash Incentives Regulation 2070 BS' that was approved by the cabinet a month ago.
"Class 'A' banks should follow the amended regulation and provide cash incentives to exporters of third country in foreign currency," it directed, asking exporters to claim their cash incentives — minimum of one per cent and maximum of two per cent on the basis of value addition — from the same bank through which they have exported.
The government had brought a cash incentive scheme to promote exports from fiscal year 2010-11. However, exports have not been encouraging also due to the lethargic process of claiming cash incentives.
After complaints from exporters, the government had simplified the cash incentive process and brought an amended regulation a month back.
The amended cash incentive regulation has listed 10 products — processed coffee, semi-processed leather, handicrafts and wooden crafts, crust, handmade paper and its products, refined honey, tea, carpet and woolen products, pashmina and fibre products, and refined herbs — that can claim two per cent cash incentive, but some two dozen products — including flowers, herbs, large cardamom, and carpet — can claim one per cent cash incentive only.
The government can, however, revise the list, whenever it deems necessary.
"Exporters have to submit proof of export document, Department of Industry's recommendation stating the value addition per cent, and documents with a received date of foreign currency in the importer's bank account to claim the cash incentive," according to the amendment.
Exporters can get the cash incentive within seven days, if the Finance Ministry has already provided the fund for them, Nepal Rastra Bank (NRB) said, adding that the central bank has cancelled the earlier regulation.
Despite the government's policy to promote exports through cash incentives, exports have not been encouraging as the country has exported only Rs 1.92 billion more, amounting to Rs 57.16 billion in the nine months of the current fiscal year as compared to Rs 55.24 billion in the same period last fiscal year.
The new regulation also mentions that export houses must provide 50 per cent of the cash incentive to producers. "Exports in Indian currency (IC) will not get any cash incentive," it stated, adding that export houses and industries exporting to a third country in foreign currency will get cash incentive.