‘Cash Transaction Cap Creating Difficulties for Businesses’

Business leaders on Monday, January 26, criticised the Rs 500,000 cap on cash transactions enforced since January 15, saying the measure has created operational difficulties for enterprises.

Speaking at a programme in Kathmandu to mark International Customs Day, they urged the government to revise the rule.

Under new anti-money laundering measures, the Nepal Rastra Bank (NRB) has restricted cash transactions of Rs 500,000 or above for the purchase of goods and services and for firm-related payments.

“Banks and financial institutions must mandatorily make payments of Rs 500,000 or more only through account-payee cheques or by crediting the amount directly to the beneficiary’s account,” read the central bank’s directive to enforce the provision. “Payments of cheques issued in the name of a firm, company, institution or office must also be made through account-payee cheques.”

The Monday’s event was attended by Finance Minister Rameshore Prasad Khanal, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Chandra Prasad Dhakal, President of the Nepal Chamber of Commerce (NCC) Kamalesh Kumar Agrawal, and other stakeholders.

FNCCI President Dhakal, while acknowledging that the policy might have been introduced under international pressure following Nepal’s inclusion on the Financial Action Task Force (FATF) Grey List. However, he noted that the cap has created challenges for businesses, particularly as access to banking services remains uneven across the country.

“This is the right time to revise economic policies to create a more favourable investment climate and strengthen the private sector,” Dhakal said. He urged the government to focus on promoting businesses and enterprises rather than concentrating solely on customs revenue.

NCC President Agrawal highlighted the importance of customs administration in trade facilitation and the national economy. Calling for stronger economic governance, he said the existing Customs Act contains rigid provisions on penalties and fines.

He also stressed the need for multiple value-added tax (VAT) rates and proposed developing Nepal as an attractive wedding destination.

Meanwhile, Prachin Kumar Thaiba, President of the Federation of Customs Agents, emphasised the need to curb illegal trade to support economic growth and revenue mobilisation. He called for transparent, technology-driven, and trade-friendly customs systems to facilitate foreign trade.

(With inputs from RSS)