The Nepal Bankers' Association, an organization of chief executive officers of commercial banks, has decided to suspend the opening of letter of credit (LC) for a week. When banks do not open LCs, the flow of imports from outside countries will decrease.
A meeting of the association held on Sunday has decided to keep the interest rate of deposits stable from April to May and not to open LC for non-essential items for one week. The outflow of foreign currency has increased due to increasing imports. The NRB has asked not to open LCs for luxury items, saying that declining foreign exchange reserves could lead to economic problems.
"The Nation Bank has been saying for some time not to open the LC of luxury items," said a member of the Bankers' Association.
The union has decided to suspend LCs for at least a week and then decide on the basis of need. NRB had called the CEOs of all the banks a few days ago and verbally instructed them not to open LCs. Although the banks implemented their decision readily, the union on Sunday agreed for the first time to not stamp LCs except for the most urgent ones.
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