Nepal Rastra Bank Allows Issuance of Prepaid Cards Equivalent to USD 3,000 for IT Service Purchases

Nepal Rastra Bank has permitted banks and financial institutions to issue prepaid cards with a maximum annual limit equivalent to USD 3,000 for the purchase of information technology services. IT industries generating foreign currency earnings are granted the facility to make foreign currency payments up to USD 100,000 annually for online software and related service acquisitions. The central bank has also authorized the conversion of foreign currency loans into Nepalese rupees, though extension of the loan repayment period is not allowed. (22 Chaitra, Kathmandu)

Banks and financial institutions can now issue prepaid cards specifically for the procurement of IT-related services. The directive issued by Nepal Rastra Bank on Sunday enables these institutions to provide prepaid cards valued at up to USD 3,000 or its equivalent in convertible foreign currency. Industries operating on the basis of information technology, communication technology, and information dissemination may use these cards to purchase software and related IT services online within the specified annual limits.

For IT industries earning foreign currency through service exports, the total annual limit for net currency transactions, combining foreign currency earned and the prepaid card amount, is set at USD 5,000 or its equivalent. For visa-related foreign travel, ‘A’ category banks and national ‘B’ category development banks can issue electronic cards under various conditions to provide currency exchange facilities upon demand for visa deposit guarantees. Applicants must submit a verified application along with proof of the deposit demand issued by the visa authority of the concerned country.

Applicants requesting convertible foreign currency in excess of USD 5,000 are required to provide a permanent account number (PAN) as per the central bank’s regulation. Nepalese citizens earning foreign currency online may use banking instruments to make payments in other foreign currencies up to USD 25,000 annually for IT service purchases. Only IT industries or businesses generating foreign currency income are allowed to acquire IT services, including software, online up to USD 100,000 annually in other foreign currencies.

If a loan in convertible foreign currency is held by a borrower who, for any reason, does not wish to maintain it in foreign currency, the lending bank, upon being confident, may convert such loans into Nepalese rupees at the prevailing exchange rate. However, the loan repayment period cannot be extended due to this conversion. The interest rate on the converted loan will be determined through mutual agreement between the two parties in accordance with applicable legal provisions.