The central bank today imposed a monthly limit on the amount of Indian Currency (IC) Nepalis can spend in India as the balance of payments (BoP) position of the country has been slipping into deficit for the last few months.
A visiting Nepali would not be able to spend more than Rs 100,000 IC every month while paying for goods and services in India, the central bank said, adding that it will help deal with the current account deficit situation.
Issuing a circular today, the central bank has barred class ‘A’ commercial banks and class ‘B’ development banks from allowing electronic payments of above Rs 100,000 IC per month from a bank account primarily to ease the foreign exchange reserve pressure of the country.
It is the first time that Nepal has enforced a limit on electronic payments for Nepali nationals in India. The policy applicable to prepaid, credit and debit cards of Nepali banks came into effect from today.
Currently, the central bank has set the cash withdrawal limit through cards in India at Rs 15,000 IC per day and a maximum withdrawal amount of Rs 100,000 IC per month. Apart from that, a Nepali national can also get Indian currency of up to Rs 25,000 IC while travelling to India.
The central bank move is a part of the policy adjustments that the economy was making to overcome economic crisis in multiple fronts, according to the central bank spokesperson Narayan Poudel. "The decision is taken to deal with the growing problem of current account deficit and the balance of payment crisis," he said, adding that the measure would however exempt payment in hospitals and pharmacies in India. "Similarly, the Rs 100,000 IC per month electronic payment cap also exempts the current cash withdrawal limit that Nepalis have been enjoying in Indian market."
Chief of the Foreign Exchange Management Department at the Nepal Rastra Bank (NRB) Bhisma Raj Dhungana said that NRB took the step to control capital flight that emerged due to the spending trends of Nepali citizens in India.
Apart from impacting the spending trends of Nepali consumers and tourists in India, the move is also expected to influence trade in the India-Nepal border areas where Nepali businessmen usually pay in Indian Currency.
Apartfrom the BoP deficit, the country has also been witnessing depletion in foreign exchange reserves forcing the central bank to impose a number of currency exchange controls.
Earlier in November, NRB had lowered the foreign exchange facility to $1,500 per passport for outbound Nepali travelers from the earlier ceiling of $2,500. The NRB had also reduced the limit on payments through Telegraphic Transfer (TT) to $30,000 from an earlier limit of $40,000.
According to the central bank, the BoP slipped into a deficit of Rs 57.33 billion in the last four months of the current fiscal year 2018-19, compared to a surplus of Rs 2.4 billion in the same period last fiscal year. Likewise, forex reserves have also dropped to $9.43 billion as of mid-November 2018 from $10.08 billion in the same period last year.
A visiting Nepali would not be able to spend more than Rs 100,000 IC every month while paying for goods and services in India, the central bank said, adding that it will help deal with the current account deficit situation.
Issuing a circular today, the central bank has barred class ‘A’ commercial banks and class ‘B’ development banks from allowing electronic payments of above Rs 100,000 IC per month from a bank account primarily to ease the foreign exchange reserve pressure of the country.
It is the first time that Nepal has enforced a limit on electronic payments for Nepali nationals in India. The policy applicable to prepaid, credit and debit cards of Nepali banks came into effect from today.
Currently, the central bank has set the cash withdrawal limit through cards in India at Rs 15,000 IC per day and a maximum withdrawal amount of Rs 100,000 IC per month. Apart from that, a Nepali national can also get Indian currency of up to Rs 25,000 IC while travelling to India.
The central bank move is a part of the policy adjustments that the economy was making to overcome economic crisis in multiple fronts, according to the central bank spokesperson Narayan Poudel. "The decision is taken to deal with the growing problem of current account deficit and the balance of payment crisis," he said, adding that the measure would however exempt payment in hospitals and pharmacies in India. "Similarly, the Rs 100,000 IC per month electronic payment cap also exempts the current cash withdrawal limit that Nepalis have been enjoying in Indian market."
Chief of the Foreign Exchange Management Department at the Nepal Rastra Bank (NRB) Bhisma Raj Dhungana said that NRB took the step to control capital flight that emerged due to the spending trends of Nepali citizens in India.
Apart from impacting the spending trends of Nepali consumers and tourists in India, the move is also expected to influence trade in the India-Nepal border areas where Nepali businessmen usually pay in Indian Currency.
Apartfrom the BoP deficit, the country has also been witnessing depletion in foreign exchange reserves forcing the central bank to impose a number of currency exchange controls.
Earlier in November, NRB had lowered the foreign exchange facility to $1,500 per passport for outbound Nepali travelers from the earlier ceiling of $2,500. The NRB had also reduced the limit on payments through Telegraphic Transfer (TT) to $30,000 from an earlier limit of $40,000.
According to the central bank, the BoP slipped into a deficit of Rs 57.33 billion in the last four months of the current fiscal year 2018-19, compared to a surplus of Rs 2.4 billion in the same period last fiscal year. Likewise, forex reserves have also dropped to $9.43 billion as of mid-November 2018 from $10.08 billion in the same period last year.
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