October 5: Nepal Rastra Bank has started doing homework to make arrangements for bringing Foreign Direct Investments (FDI) directly into the bank accounts without its approval. The central bank has begun the homework in order to meet the demands of investors to allow the money from FDI to be brought directly into the bank accounts.

Nepal Rastra Bank says that the implementation of this arrangement will end the obligation of getting the mandatory approval from the governing body. The monetary policy of the current Fiscal Year has made provision that certain amount of foreign currency from FDI can be brought in through the automatic route of banks and financial institutions under the specific terms and conditions. Necessary arrangements are being made to allow the FDI money within the specified threshold to be brought in without requiring the approval from the central bank. Bam Bahadur Mishra, executive director of the foreign exchange management department of NRB informs that the necessary homework is being done to bring the investments directly into the account in commercial banks without needing an approval from the Nepal Rastra Bank. However, he adds that the implementation of this provision may take time due to the coronavirus pandemic.

Implementation of this provision will save the time spent getting an approval from the central bank before bringing in the FDI. Depending upon the investment amount, the investor will have to get approval only from the Investment Board, Department of Industry and the concerned ministry. Guruprasad Poudel, director of the Department of Foreign Exchange, said that there may be some delay as it is not justifiable to implement the system with the lack of an immediate environment for foreign investments.

“Decisions haven’t been made about the kind of project, the threshold of the FDI, and about the process for opening a bank account. Everything is being processed now. We are formulating procedures as per the monetary policy. The board meetings have also been reduced due to the pandemic,” he told New Business Age, adding, “It seems that the Foreign Investment and Technology Act will need to be amended to bring this arrangement.”

He says that they are working hard to complete the preparations during the coronavirus crisis. Director Poudel said that the concerned bank should verify the source of money after the investor's money reaches the commercial bank even though it does not have to get approval from the central bank.

According to him, the Reserve Bank of India (RBI) has also made arrangements to bring foreign money directly into the bank accounts.  He said that Nepal Rastra Bank may also adopt a similar modality.

Investors, who have been complaining about having to go to various departments and the ministry before bringing in the FDI, say that this arrangement should be implemented soon. In order to simplify the process of bringing in the foreign investment, the central bank has started a single point service center in the Department of Industry from Jestha, 2076 BS. The central bank informed that a tentative amount of Rs 16 billion has been sanctioned for foreign investment since the inception of the center.

Satish Kumar Mor, president of the Confederation of Nepalese Industries, says that the new system will save time in collecting documents and completing the process for bringing in the investments. He adds that it would take months to visit all the necessary departments and that this new provision would create an investment-friendly environment to some extent. "If the central bank reduces the cumbersome process in such investments, it will create investment opportunities," he said, “This will primarily help in saving time. It is also a motivation for entrepreneurs.”

Pawan Kumar Golyan, president of the Confederation of Banks and Financial Institutions, also expressed happiness over the speedy fulfillment of the request made for the inflow of foreign direct investment (FDI) directly in the bank account. He said, "We have been asking for an easier way to bring FDI directly in the bank for some time. Work is being done on this currently.”