June 9: Nepal Rastra Bank (NRB) has removed the mandatory provision of obtaining pre-approval from it while bringing in Foreign Direct Investment (FDI) to Nepal. The central bank made such arrangement with the implementation of the Nepal Rastra Bank Foreign Investment and Debt Management Regulation-2021 effective from June 8.
Earlier, approval from NRB was mandatory to bring in FDI in the country. With the implementation of this regulation, approval from the Department of Industry and the Investment Board would be sufficient to bring in FDI. However, NRB needs to be notified before bringing foreign currency or sending out the currency from Nepal.
The new regulation mentions that the foreign companies looking to invest up to US$ 1 million need not submit any audit report to the central bank. But stakeholders need to maintain a record of the investment amount at the central bank.
The inflow of foreign currency must be recorded at NRB within six months.
The new regulation states that the central bank’s prior approval is not needed to remit or to send money from the prospective foreign investors for feasibility study and pre-operation costs of the industries and firms to be established in Nepal.
The regulation has also facilitated foreign investors from taking back dividends to the respective country. The process of foreign exchange service has also been made easier.
NRB has said that the recent changes will save investors’ time by at least ten days by providing services related to foreign investment.
Publishing the regulation virtually, Ramu Poudel, executive director of the Foreign Exchange Management Department of NRB, said that regulation is expected to improve the country's position in the Doing Business report.
NRB Governor Maha Prasad Adhikari says that the regulation has been issued by bringing all the previous provisions together to make the process quick, easy and transparent. After preparing the draft of the regulation, NRB had taken suggestions from the stakeholders. Stakeholders have complained that the central bank did not include all the suggestions.
However, Satish Kumar Mor, President of the Confederation of Nepalese Industries, said that the regulation has incorporated their suggestions.
Earlier, most of the stakeholders had complained that the process was time consuming due to bureaucratic hassles.
"But now the new regulation has set a time limit,'' he said, adding, “The new provisions are investment-friendly." Mor added that the regulation has also made it easier for the companies to take away their dividends back.