Companies in Nepal established with foreign investment will now be able to borrow loans from their parent companies abroad after the Nepal’s central bank paved the way for such borrowing facility.
Considering foreign investors here may not get loans adequately from the Nepali banks and financial institutions and at the preferable interest rate, the Nepali central bank paved the way for them to receive loans from their own parent companies by issuing a notice last week.
In order to get loans from the parent companies, the companies here need to get approval from their concerned regulatory agencies and other relevant agencies that deal with the foreign investment in Nepal after completing necessary procedure as provisioned in the Foreign Investment and Technology Transfer Act, according to the notice.
Bam Bahadur Misra, chief of foreign exchange management department at Nepal’s central bank, told Xinhua on Saturday that the banking sector regulatory body opened the new avenues for foreign investors here to increase their investment in Nepal.
The borrowing loans from foreign parent companies was allowed as a part of implementing the monetary policy for the current fiscal year 2020-21 that began in mid-July 2020.
The monetary policy states that an arrangement would be made for ongoing foreign financed infrastructure development projects to borrow up to certain times of their capital investment at a specified interest rate from their parent company/group of companies abroad.
“We have capped the maximum amount of loans that can be borrowed and maximum interest rate to be paid so that such facility would not affect the foreign exchange reserves of the country in the future,” said Misra.
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