Hoteliers seek foreign exchange facility for guests
Kathmandu, April 25
Hoteliers have requested Nepal Rastra Bank (NRB) — the central regulatory and monetary authority — to allow them to provide foreign exchange facility to their guests.
Organising an interaction with central bank authorities here today, Hotel Association Nepal (HAN) — umbrella organisation of tourist standard hotels in the country — said that they should be provided the licence to buy foreign currency from foreign tourists if they seek exchange facility from the hotels they are staying in.
However, the Foreign Exchange Regulation (Act) has granted permission to the hotels only to accept foreign currency on the basis of the bill amount they raise from selling their services. While accepting foreign currency on the bill amount, hotels can fix the exchange rate at two per cent below the exchange rates published by the central bank.
Following the action taken by NRB against Hotel Shankar in the Capital a few months back, hoteliers have been lobbying for permission from NRB to provide exchange facility to foreign tourists.
Chinta Mani Siwakoti, deputy governor of NRB, said that the central bank cannot allow the hotels to work like a money
exchange firm. “It will be a violation of the law. Hotels are only allowed to accept foreign currency against sales of their services,” he said. “This is why the hotels have been enjoying the two per cent margin on published exchange rates while accepting foreign currency for their service bills. If they start buying foreign currency from guests, there will not be a level playing field for banks and money exchange counters.”
Siwakoti also said hotels have to take permission from central bank even to accept foreign currency from their guests. Currently, 135 hotels in Kathmandu Valley and 31 hotels outside Valley have taken permission to accept foreign currency from foreign guests for the bill amount. As per NRB rules, tourism service providers who have taken permission to accept foreign currency against sales of service have to accept payment in foreign currency.
Likewise, hoteliers have sought a provision whereby they can channel the foreign currency that they have to invest abroad. In this regard, the central bank has recently drafted an amendment bill on foreign exchange regulation, which has a provision of capital account convertibility. Some specialised businesses, including hospitality sector, will be provided certain amount of foreign exchange to set up businesses abroad, as per Bhisma Raj Dhungana, executive director of the Foreign Exchange Management Division under NRB.
Hoteliers have also raised concerns on repatriation of salaries of their foreign employees in foreign currency. They need to take approval from NRB every time to pay back interest and principal amount of foreign loans and frequent rise in interest rates of banks are also making their businesses unviable, they stated.
As per Dhungana, the central bank cannot bend the rules on repatriation of salaries and the foreign staffers of the hotels have to spend 25 per cent of their income in Nepal and NRB provides approval for repatriating 75 per cent of the income in foreign currency. Likewise, the central bank’s approval in payment of interest and principal of foreign loans is must, as per Dhungana.
Owing to frequent rise in interest rates, NRB recently issued a circular cutting all penal charges and high service fees in loan operation, as per Narayan Prasad Paudel, executive director of NRB. “Banks and financial institutions have been barred from revising interest rates more than two times in a year.” He suggested the hotels to avail refinancing facility and reap benefits of lower interest rate.