March 8: The halt in import of goods from China following the coronavirus (COVID-19) outbreak has resulted in a decline in number of customers opening Letter of Credit (LC) at commercial banks.

According to Nepal Rastra Bank, registration of LCs reduced by 20 percent as of mid-February. This has also affected revenue collection from the customs points.

Data show that goods worth Rs 6 billion were imported in Nepal through LCs opened at 27 commercial banks within the last three months. The import of goods through LCs during the corresponding period of last year was worth Rs 12 billion.

Analysts say the effects of reduction in the number of LCs will be seen six months later when there will be a decline in import of goods.  

However, LCs are not the only medium through which businessmen make payment for goods imported from China.

The halt in import of goods from China has affected the income of banks, informed Himlal Poudel, spokesperson of Agriculture Development Bank.

“Payment through LCs has stopped due to a halt in import. Coronavirus has affected economic activities, which finally affects the banking sector,” said Poudel.