Nepal Rastra Bank has made regulations without requiring prior approval for foreign investment.
NRB has issued ‘Foreign Investment and Foreign Debt Regulations 2078’ and provision has been made that prior approval is not required to attract investment in Nepal.
NRB had made this proposal last January. Although regulations were prepared in January, they were not approved. The regulations prepared in January were approved by the National Bank on Tuesday.
At the same time, it will no longer be mandatory for foreign investors to obtain prior approval from the National Bank 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 foreign banks entering Nepal will be credited to 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 a change of share ownership. For this purpose, the industry/company with foreign investment or foreign investors will have to submit the tender 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 NRB should be deposited in the account of the concerned industry / company by the bank and financial institution.
1. For foreign investment, prior approval of foreign investment or approval of NRB will not be mandatory for foreign investors interested in sending / receiving foreign currency to Nepal through the banking system for feasibility study expenses including registration of companies and industries in companies and industries.
2. Expenditure shall be calculated on foreign investment as certified by the auditor so as not to exceed 3% of the paid-up capital of the company and industry with foreign investment and its accounting shall be done as per regulation However, in case of non-availability of foreign investment or if the amount is more than the amount calculated in foreign investment, such amount cannot be refunded.
3. It will not be mandatory for the foreign investor to obtain prior approval from the National Bank to send or import foreign currency of Sobapat to Nepal after obtaining the approval of the foreign investment body.
4. 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 to the account of the concerned industry / company by the banks and financial institutions.
5. In order to account for the amount of foreign investment in Nepal and the foreign investment as per the prevailing law, the company / industry with foreign investment or foreign investor has to submit the tender within six months of attaching the prescribed documents.
6. 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 paying off all liabilities after liquidation or liquidation of the industry or company, the amount received as profit (royalty) under technology transfer agreement. And foreign currency exchange clearance will be provided to take back the earned amount.
7. The foreign exchange facility required for the payment of capital and interest mentioned in the payment schedule approved by the bank and accounted with NRB as per regulation 8 can be obtained from banks and financial institutions. The approval of NRB will not be required for the facility.
8. For the foreign currency exchange facility required for repayment of the foreign loans, the concerned borrower should submit the application to the bank and financial institution by enclosing the prescribed documents. Within seven working days of receiving the application, the bank and financial institution will have to make a decision and inform the applicant in writing.