$30m deposit must for foreign banks: NRB

Foreign banks wanting to op- erate branches in Nepal should have deposit $30 million, Nepal Rastra Bank (NRB) governor Bijaya Nath Bhattari has said. They will have to deposit additional $5 million while setting up each new branch from January.

NRB has issued the directives at the contest of full implementation of World Trade Organization (WTO)'s General Agreement on Trade and Services. The agreement seeks no restriction to trade and ser- vices within WTO member countries. Nepal entered WTO on April 23, 2004.

According to NRB, foreign banks should have a good track record for entering the Nepali financial sector. "Credit rating status of BBB/Baa from renowned agencies Moody's, Fitch and Standard & Poor is compulsory for operating in Nepal," it said. Foreign banks can open only one branch in the first phase and NRB will provide extension premise based on their performance.

Foreign banks can do blanket banking including collection and lending services. As per NRB directives, the lending should not be below Rs 300 million and deposit not below Rs 100 million.

The supreme regulatory authority of foreign banks' branches operating here will be NRB. "The banks must follow Nepali financial laws, directives and time-bound orders," NRB said.

A foreign bank shall have the right to transfer profits earned in Nepal to their home countries after permission from NRB which can close down the branch if its parent company is disbanded or liquidated in the country of origin.