Issuance of LCs more than halvesIssuance of Letters of Credit (LCs) by banks has dropped significantly amid restrictions imposed by India on Nepal-bound cargos.
Issuance of Letters of Credit (LCs) by banks has dropped significantly amid restrictions imposed by India on Nepal-bound cargos.
Businessmen import industrial raw materials and other commercial goods from third countries through India’s Kolkata port. The goods then arrive in Birgunj Dry Port via Raxual, Bihar.
Clearance of imported goods at Raxaul customs has largely stopped for the past two months, resulting in a 20km queue of 4,000 Nepal-bound trucks on the Indian side of the border.
Bankers said LC issuance by commercial banks has dropped by 60 percent. A branch manager of a commercial bank in Birgunj said very few traders were opening LC to import industrial raw materials, goods meant for upcoming festivals and edibles like spices, crude oil, pulse, peas and gram.
Pradeep Kedia, president of Birgunj Chamber of Commerce and Industry, said around 1,000 Nepal-bound trucks have been stuck at Kolkota Port, while thousands of others are stranded at border points. “Traders are not willing to import goods in such a situation,” he said, adding the traders have been forced to pay heavy demurrage charges.
Nepal’s Consulate General Office in Kolkata recently requested the Nepal Rastra Bank and the Ministry of Commerce asking them to discourage the opening new LCs. The central bank has forwarded the letter to the businessmen.
As per the Consulate General Office’s letter, transporting goods through trucks and rail will take time as a huge number of containers have been stuck at entry points to Nepal.
Usually, seven-nine rail racks and 200-300 trucks leave Kolkata for Nepal every week, according to the letter. But railway movement has not taken place, while enough trucks have not been available Sept 22, according to the letter.