Issuing the new directives, the central bank made it mandatory for the promoters of new BFIs to deposit 45 percent of the committed investment amount in cash at a category A financial institution within 30 days after its decision to grant letter of intent. [break]
In the past, promoters were allowed to deposit it in the form of bank guarantee as well.
The NRB has also set specific criteria of the category A BFI wherein such deposits are to be made, something which was not specified in the past. “The money should be deposited in a commercial bank having non-performing loans of less than 5 percent and liquid capital of more than 20 percent,” says the directives.
Only after freezing this amount deposited in a commercial bank, NRB would issue the letter of intent for the new BFI. The interest income of such frozen account will be allowed to make expenditures based on receipts registered under VAT and PAN.
NRB has further said that the BFIs should set up the office and infrastructure, and acquire license within a year of the issuance of the letter of intent. If the BFIs fail to start operations within a year, their letter of intent will be automatically scrapped.
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