NRB allows foreign-invested companies to borrow more from abroad

This undated image shows the building of Nepal Rastra Bank in Kathmandu. Photo courtesy: NRB

KATHMANDU: Nepal Rastra Bank (NRB) has allowed companies with foreign investments to borrow up to cent per cent of their net worth from their parent companies and others.

“As the domestic resources are limited to help foreign-invested companies to expand their businesses in Nepal, we increased the limit of borrowing they can make from their parent companies or a group of companies,” Gunakar Bhatta, Spokesperson of NRB, said on Monday.

“We are increasingly making it easier for foreign investors to mobilise resources to invest in Nepal,” he added.

Companies involving foreign investments could borrow no more than 60% of their net worth before the central bank amended a set of bylaws on foreign direct investment and loan management.

Under the new rules, companies with foreign investments can also borrow from foreign banks and other financial institutions after getting approval from the Ministry of Industry, Commerce and Supplies.

The moves came at a time when the country’s banking system is facing a shortage of loanable funds and the forex reserves have been depleting fast amid rising imports and declining remittances.

Nepal’s forex reserves fell by 14.7% to $10.03 billion during the first five months of the current fiscal year starting in mid-July last year, according to NRB.


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