• Directive aims to stop flight of capital
• Violators to face strict action
Kathmandu, January 31
In a move aimed at curbing international payments made through illegal and informal channels, Nepal Rastra Bank today directed all companies and agencies using social media platforms for advertising to use formal banking channels for such transactions.
Amid increasing trend of making and receiving payments of advertisements published on social networking sites such as Facebook, Twitter, Instagram and YouTube through hundi, illegal cards and other illegal means, the central bank has stated that legal action will be taken against companies and agencies which make payments for social media advertisements illegally.
NRB today published a notice stating that such illegal modes of payments for social media advertisements would promote foreign currency misappropriation and directed all advertisers on social media to make transactions only through banking channels.
The central bank is learnt to have issued the directive primarily to curb payments released from Nepal. A study conducted by the bank found several companies and agencies in Nepal using informal channels to send money meant for payments for social media advertisements to foreign countries where the platforms are headquartered. Some of the multinational companies, especially in the consumer goods sector, were found to have encouraged and actively spearheaded this trend.
“The trend of making social media advertisement payments through hundi and other informal means is on the rise, which is illegal. In case payments for advertisements on social media are found to be made outside the banking channels, action will be taken under the Foreign Exchange Act, 2019,” Bam Bahadur Mishra, executive director at the Foreign Exchange Management Division of NRB, told THT. He added that the apex bank would soon announce a regulatory framework to systematise payments for advertisements on social media.
Reacting to the development, some advertisers admitted that the NRB’s latest move would certainly affect digital marketing.
“The NRB move seems to bring all advertisement-related transactions under the tax net, which is good. However, necessary policies should be introduced to regulate advertising on digital platform,” said Santosh Shrestha, former president of Advertising Association of Nepal.
A version of this article appears in print on February 01, 2020 of The Himalayan Times.