NRB Eases Rules for Insurance Companies on Specialist Service Payments
Kathmandu — Nepali insurance companies will now be able to make payments for specialist services to individuals in India without prior approval from the Nepal Rastra Bank (NRB). The central bank has introduced this change through significant amendments to the Unified Circular 2081 on Foreign Exchange Management.
Under the revised directive, insurers can obtain foreign exchange facilities for services such as actuarial analysis, surveys, and valuations directly from commercial banks, provided they have a recommendation from the Nepal Insurance Authority (NIA). The updated circular, which is issued under the Foreign Exchange (Regulation) Act, 2019, and the Nepal Rastra Bank Act, 2058 also introduces reforms in other areas of foreign exchange operations.
Changes in Letter of Credit Procedures
Importers opening letters of credit (L/C) must now ensure that payments to foreign beneficiaries are made through their correspondent banks via electronic transfer. In cases where customs duty on imported goods is less than 10% of the import value, importers will be allowed to issue a cheque equivalent to the duty amount, with the remaining deposit refundable upon submission of the required documentation.
Provisions for Exchange Facilities
The directive allows foreign exchange payments to beneficiaries in India, subject to departmental approval when the payment is made to an individual. Banks and financial institutions have also been instructed to adopt stronger risk management mechanisms when purchasing or selling foreign currency, particularly in transactions related to software services.
Furthermore, exchange facilities for purposes such as travel, medical treatment, and higher education will continue to be provided based on necessity and proper justification. All documents issued by foreign institutions must undergo verification before approval.
Interbank Transactions in Foreign Currency
NRB has also permitted licensed commercial banks, development banks, and infrastructure development banks to engage in interbank transactions in convertible foreign currencies for a maximum of seven days.
