NRB allows opening yuan bank accounts

Individuals and firms in Nepal having foreign exchange earnings can open Chinese yuan accounts in commercial and development banks, the Nepal Rastra Bank (NRB) said on Sunday.

Issuing a directive to A and B class banks and financial institutions, the central bank lifted the ban on banking in the Chinese currency, which is expected to help people doing transactions with Chinese nationals and firms.

The government had been imposing restriction on opening accounts in Indian and Chinese currencies. And, the restriction on opening Indian currency (IC) accounts remains. International agencies, including diplomatic ones, foreign firms and their agents, manpower agencies, those employed in foreign land, international and national non-govenrment organisations, foreigners working in Nepal, various companies involved in foreign currency transactions such as travel agencies, hotels and money changers and the contractors selected through global tender, among others, can open such accounts.

Even though yuan accounts have been permitted, NRB has placed certain restrictions on exchanging Chinese currency with other convertible currencies without its approval. There is no restriction on converting yuan into another currency for payment and opening another account after such an exchange.

This measure has been taken in line with the agreement signed with the People’s Bank of China during NRB Governor Yubaraj Khatiwada’s recent visit to China. “The agreement signed with the Chinese central bank has opened the way to allowing Nepali’s to open yuan accounts in Nepali banks,” said Bhisma Raj Dhungana, acting executive director of NRB. “Now Chinese currency will be treated like other convertible foreign currencies such as the US dollar.”

He added that as the Nepali rupee was pegged to the Indian rupee, the central bank could not allow people to open Indian currency accounts here. “One cannot covert IC into US dollars because of the pegging,” he added.

Following the accord with the Chinese central bank enabling the increased use of Chinese currency in bilateral trade and payment, NRB had recently allowed Nepali banks to open accounts in Chinese currency in any Chinese commercial bank.

The latest directive has also allowed them to open Chinese yuan accounts in Chinese banks by selling other convertible currencies. Likewise, NRB has permitted the use of Chinese currency for payment and adjustment of transactions.

Dhungana said the latest NRB measures would help internationalize Chinese currency besides boosting Chinese arrivals and investment in the country. “Chinese tourists can now visit Nepal by carrying their own domestic currency, and that will help boost arrivals,” he said.

Source: ekantipur