Nepal Rastra Bank has strongly instructed commercial banks not to open letters of credit (LC) for the purpose of importing non-essential items.

The central bank gave such strict instructions in an emergency meeting held with the CEOs of 27 commercial banks.

The central bank gave strict instructions as a brute force way to combat the deficit in the balance of payments. The balance of payments of a country, also known as the balance of international payments, is the difference between all money flowing into the country in a particular period of time and the outflow of money to the rest of the world.

The letter of credit, or “credit letter,” is a letter from a bank guaranteeing that a buyer’s payment to a seller…


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