KATHMANDU: The Nepal Rastra Bank (NRB), the central bank of Nepal, has amended it’s regulations which removed prior approval for foreign investment. The NRB has issued ‘Foreign Investment and Foreign Loan Regulations 2078 BS’ which has removed a condition for prior approval for investing in Nepal.
The NRB had made this proposal last January/February, but the regulations was approved by NRB on Tuesday.
Likewise, it will no longer be mandatory for foreign investors to obtain prior approval from the NRB to send or remit foreign currency to Nepal after obtaining foreign investment approval from the foreign investment sanctioning body.
However, after the foreign investment is approved, written information must be given before entering or sending foreign currency. As mentioned in the regulations, the amount of foreign investment entering Nepal will be deposited by the bank and financial institution in the account of the concerned company or industry after verifying the documents as per schedule-3.
NRB, on the other hand, has said that prior approval of NRB is required to send or remit foreign currency to Nepal due to change of share ownership. For this purpose, the foreign invested industry / company or foreign investor will have to submit an application to the unit along with the documents mentioned in Schedule-4.
It is mentioned in the regulations that the foreign currency for foreign investment approved by the NRB should be credited to the account of the concerned industry / company by the bank and financial institution.
Prior approval of NRB or approval of NRB will not be mandatory for foreign investors interested in sending / receiving foreign currency through banking system for feasibility study expenses including registration of companies and industries with foreign investment and pre-operating expenses.
The bank says, expenditure shall be calculated in the foreign investment as certified by the auditor so as not to exceed 3% of the paid up capital of the foreign invested company and its accounting shall be done in accordance with Regulation 5. However, in case of non-receipt of foreign investment or if the amount is more than the amount calculated in foreign investment, such amount cannot be refunded.
It will not be mandatory for the foreign investor to obtain prior approval from the NRB to send or import foreign currency to Nepal after obtaining the foreign investment approval from the foreign investment sanctioning body.
Prior approval of NRB will be required to send or remit foreign currency to Nepal for foreign investment made by changing share ownership. Thus, the foreign exchange for foreign investment approved by NRB will be credited by the bank and financial institution to the account of the concerned industry / company.
In order to account for the amount of foreign investment in Nepal and foreign investment in accordance with the prevailing law, the company / industry with foreign investment or foreign investor has to submit the tender within 6 months of foreign currency inflow or foreign investment by enclosing the prescribed documents.
The amount received from the sale of shares of foreign investment, the amount of profit or dividend received from foreign investment, the amount remaining after the liquidation of the industry or company in liquidation or liquidation, the amount remaining after paying the entire liability, the amount received as profit (royalty) under technology transfer agreement And foreign currency exchange approval will be provided to take back the earned amount.
The foreign exchange facility required for the payment of capital and interest mentioned in the payment schedule approved by the bank and accounted with the NRB as per regulation 8 may be obtained from the banks and financial institutions. NRB approval is not required for the adjoining facility.
For the foreign currency exchange facility required for repayment of foreign loan, the concerned borrower will have to submit the application to the bank and financial institution by enclosing the prescribed documents. Within seven working days from the date of receipt of the application, the bank and financial institution shall make a decision in this regard and inform the applicant in writing.
