Nepal Rastra Bank (NRB) has raised the gold import quota for commercial banks to 25kg per day from existing 15kg, citing growing demand for the precious yellow metal.

The new provision comes into effect Monday. “The hike in the gold import quota, however, is temporary, and will be valid until mid-March,” said Bhisma Raj Dhungana, executive director at NRB’s Foreign Exchange Management Department.

The central bank took the decision after a meeting with bullion traders here on Sunday.

Mani Ratna Shakya, past president of Federation of Nepal Gold and Silver Dealers Association, welcomed the central bank’s move. “Although the revised quantity is still not sufficient to meet the market demand, it will, however, help ease the shortage,” he said.

According to traders, the demand for the yellow metal currently stands at 35kg per day due to the wedding season. “The demand is likely to increase further next month,” said Shakya, adding the traders have been unable to accept orders from customers due to gold shortage.

Shakya said many traders were buying smuggled gold after not being able to get adequate quantity through the formal channel. “As a result, customers are being charged high,” he said.

NRB introduced the quota system for bullion imports in 2009 following a Balance of Payments (BoP).

Since last July, the government has also prohibited individuals from importing gold and silver bars, cracking down on growing trend of traders making inbound passengers carriers of the precious metals.

Earlier, a person visiting abroad could import gold bar or ornaments weighing up to 50gm and silver bars weighing up to 500gm by paying customs duty.

Shakya demanded the government raise the import quota as it has barred individuals from importing bullion. “The shortage can be solved permanently if the quota is raised to 30kg daily throughout the year,” he said.