Issuance of LCs dropped by 50%

Kathmandu December 7- With a slump in imports as a result of India-imposed trade embargo and Tarai unrest, issuance of letters of credit (LCs) by banks has dropped by more than 50 percent. The monthly LC volume has come down to Rs5-6 billion from Rs14-15 billion over the period, according to the Nepal Rastra Bank (NRB).

LCs amounting to $1.24 billion was opened for the import of goods until November 6 this fiscal year, according to the government’s white paper on the state of economy unveiled recently. The figure was at $1.92 billion as of mid-November last fiscal year. The values of LCs opened for the import of medicine, petroleum items, MS Billet and electronics have dropped by 56 percent, 55 percent, 58 percent and 63 percent, respectively, the white paper stated.

According to NRB statistics, imports through all major customs points, including Birgunj, Bhairahawa, Biratnagar, Tribhuvan International Airport, Sirsiya Dry Port, Nepalgunj, Mechi and Tatopani, have dropped sharply. Birgunj customs point has witnessed the highest fall in the imports—down 46.2 percent in the first quarter.

“LCs are being opened to bring goods through Biratnagar, Sirsiya Dry Port and other border points where disruptions are relatively low,” said Rajan Amatya, deputy general manager at Nepal Investment Bank Limited. “We are also focusing on LCs for importing goods via air.”
 

According to the bankers, LC issuance dropped after Nepal’s Consulate General in Kolkata wrote to the Commerce Ministry and the NRB in the last week of September to discourage the issuance amid a large number of Nepal-bound containers stuck at Kolkata Port. Source: TKP