Nepal Rastra Bank has added new Section 4 to the Circular 18/2076 of Unified Circular 2076 with following provisions to allow Nepalese Class A Banks to open and operate Saving Deposit Accounts in convertible foreign currency.

• Saving accounts in convertible foreign currency can be opened and operated only by Non-resident Nepalese (NRN) and by the institutions situated abroad promoted by NRN.
• Joint account can also be opened in the name of NRNs.
• While opening and operating accounts in the name of NRN, bank shall obtain copy of updated NRN ID Cards issued by the concerned body of Nepal Government. In case of accounts of institutions situated abroad promoted by NRN, copy of updated NRN ID Card issued by the concerned body of Nepal Government shall also be obtained.
• Such saving deposit accounts can be opened in US Dollar, EURO, Pound Sterling, Australian Dollar, Canadian Dollar, Japanese Yen and Chinese Yuan.
• Such accounts must have minimum balance of USD 5,000 or equivalent foreign currency at all times.
• While making repayment from such accounts, amount shall be transferred in the foreign accounts of the account holder in the same currency and to the same country from where such amount have been originally received. However in case the foreign currency is expensed into Nepalese currency, then no such restriction will be there for transfer of the money.
• The amount should be deposited in those accounts through banking channel only and can be repaid only through banking channel.

Nepal Rastra Bank has further revised Section 3 of Circular 18/2076 to facilitate Nepalese Class A Banks to collect and operate fixed deposits in convertible foreign currency. Some of the provisions revised by NRB are given below:

• The maturity period of the fixed deposit shall be minimum one year.
• Such deposit accounts can be opened in US Dollar, EURO, Pound Sterling, Australian Dollar, Canadian Dollar, Japanese Yen and Chinese Yuan.
• The amount should be deposited in those accounts through banking channel only and can be repaid only through banking channel.
• The accrued interest on the deposits shall be paid as per the rules of the concerned bank. However the principal amount can be repaid only after one year. In case of those accounts whose maturity period is more than one year, the deposit holder can premature its deposit after one year and get back the deposit amount.
• Institutional Foreign Depositors and Non-Resident Nepalese can open fixed deposit account with minimum 5,000 USD or equivalent foreign currency.
• While opening and operating the fixed deposit accounts, arrangement shall be made regarding identification of the customer as per prevailing laws. Account opening and customer identification can also be done through electronic medium.

Reanda Biz Serve Comments

It is a very good initiative taken by Nepal Rastra Bank to encourage the Non-Resident Nepalese around the world to open saving accounts in convertible foreign currency in Nepal. This step will give confidence to the NRNs to open saving accounts in Nepal as they can transfer their money to their accounts in the country where they are residing whenever they want. This will also increase the inflow of foreign currency in Nepal in future.

Further, NRB has simplified the requirements to open and operate fixed deposit accounts in FCY which also is a good initiative is taken to attract fixed deposits in convertible foreign currency.

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