The bullion market is low on silver due to a restriction on imports, said traders. Silver imports dropped 71.3 percent in the first four months of the fiscal year, according to the Trade and Export Promotion Centre (TEPC).

Nepal imported Rs3.08 billion worth of the metal during the review period, down from Rs10.73 billion during the same period last year. In fiscal 2014-15, silver imports stood at Rs24.7 billion.

The slowdown in silver imports follows instructions by Nepal Rastra Bank (NRB) to commercial banks to stop buying the precious metal due to concerns over high levels of imports in recent years.

“As there has not been a formal decision on allowing banks to import silver, we have asked them to stop importing it verbally,” said Basu Adhikari, director of NRB. “The instruction was issued amid complaints about massive imports of silver in recent years.”

Although the government has imposed a quota on the import of gold, no limit has been set for silver imports. Handicraft makers said that they had not been able to produce adequate quantities of silver jewellery and handicrafts due to a shortage of silver and other raw materials. Nepal’s silver handicrafts are in high demand in the international market and domestic demand has been soaring, said traders.

Although demand for silver has slowed from last week with the end of the marriage season, sales are expected to rebound in a few weeks as the next marriage season starts in mid-January.

“However, commercial banks have not been importing silver as per NRB’s directive,” said Mani Ratna Shakya, president of the Federation of Nepal Gold and Silver Dealers Association (Fenegosida). He added that there would be rampant black marketing if the restrictions were not eased in a few days.

“The restriction on silver imports will hamper handicraft exports in the coming days as there is high demand for traditional silver jewellery in the international market,” he said. “The decision to impose import restrictions was taken in response to imports of the last fiscal year, but it has started affecting local jewellers and exporters,” added Shakya.

Silver jewellery exports to third countries jumped 70.2 percent to Rs61.4 million in the first four months of 2015-16, according to NRB. The daily requirement of silver stands at 300-400 kg, Fenegosida said. As per the data of the last fiscal year, an average of 1,300 kg of the metal was imported daily.

Traders said that demand had also swelled due to the increasing trend of making household and ritual objects of silver. Moreover, people have been buying silver as an investment, Shakya said.

Meanwhile, traders have complained that there will be a shortage of gold too as NRB has slashed the daily import quota to 15 kg from 20 kg for the next six months.

“As the marriage season will start in mid-January, the current quota will not be sufficient to meet the local demand,” said Shakya. NRB had raised the gold import quota by 5 kg per day for six months in anticipation of a boost in demand during the Teej, Dashain and Tihar festivals.