KATHMANDU: The Central Bank, Nepal Rastra Bank (NRB), has strictly directed Banks and Financial Institutions (BFIs) not to issue letter of credit (LC) to businesses for import of non-essential items.
The central bank gave such a directive at a meeting held with the Chief Executive Officers (CEOs) of 27 commercial banks on Monday. The meeting had lasted about 45 minutes.
Bankers say the NRB directive is aimed at saving the sinking economy as they noted that the balance of payments deficit is in dire straits.
Following the NRB’s directive, imports of non-essential items are likely to come to a standstill. The biggest impact will be felt by car dealers as import of vehicles may be halted for some time to come.
Similarly, NRB also instructed the banks to maintain CD ratio and stop credit expansion. “We have been asked to stop credit expansion as NRB realizes that if things are not controlled now, then things could get out of control,” said a banker, adding that the discussion was meaningful.
Executive Director of NRB’s Regulation Department Dev Kumar Dhakal, Head of Foreign Exchange Department Ramu Poudel and Head of Research Department Dr. Prakash Kumar Shrestha represented the central bank in the meeting today.
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