KATHMANDU: Ten tonnes of gold were imported during the first five months of the present fiscal year — mid-July to mid-December. According to Nepal Gold and Silver Dealers’ Association (NEGOSIDA), previously there used to be around annually six tonnes of gold consumption in the domestic market but it has now increased to 10 tonnes in just five months with a value of Rs 25 billion. NEGOSIA president Tej Ratna Shakya said, “There are no checks or any control mechanism in the import of gold, and the import of gold in the domestic market has increased hugely causing shortage of dollars.” He added, “The share market is down and most of the gold is used for holding, thus increasing the import quantity.”

Nepal Rastra Bank (NRB) has introduced new measures for importing gold in Nepal. The decision was taken to reduce the import of gold so that the nation will not have to face shortage of dollars. Along with four banks — Standard Chartered, NIC Bank Ltd, NMB Bank Ltd and Nabil Bank Ltd — there are 20 private importers in the market. The major suppliers of gold are Australia, Hong Kong and Dubai.

NRB has introduced the provision of 40 per cent guarantee in the import of gold. As per the new regulation, an importer of gold must deposit

40 per cent cash for getting

the standby letter of credit

(LC) from Friday onwards. Banks can open LCs after

depositing 40 per cent of the total LC amount.

According to Shakya, it was easier to draw gold through bank guarantee but now the importer has to make 40 per cent self capital investment. “The decision made by NRB is quite appreciable as it will check and control the heavy import of gold and loss of dollars,” said Shakya.

To discourage investment in unproductive sectors, NRB has brought the provision of controlling import of gold into Nepal. Nepalis are importing gold worth over Rs 35 billion a year. Last year, the total gold import in Nepal was worth Rs 35 billion and the rate is increasing. As per NRB data, gold worth around Rs 60 billion is likely to be imported this year. Nepali financial institutions imported gold worth Rs 15 billion in the first quarter of the fiscal year 2009-10.

NRB is seriously working to resolve the liquidity crunch caused by real estate, remittance and investment in other non-productive sectors this year.