For two and a half months, the commercial bank prohibited the importation of gold.

In Nepal, the official avenues for importing gold have been closed for about two and a half months. Since the start of the new fiscal year, commercial banks—which are in charge of importing gold for use in commercial transactions—have not done so.

According to Anil Sharma, the CEO of the Nepal Bankers Association, the banks did not import gold because the businesspeople did not make a demand.

The quantity of gold imported into the nation fell by about 80 percent when commercial banks stopped doing so. In the first two months of the current fiscal year, barely 100 kg of gold were imported, according to figures from the customs department. This equals an average of 1.67 kilograms every day. This import is the amount that Nepalis traveling overseas personally brought with them. In the first two months of the previous year, Nepal imported 511 kg of gold. This translates to an average of 8.52 kilograms every day.

Three primary factors, according to bankers and businesspeople, account for Nepal's low demand for gold. First off, this is not the time of year in Nepal to demand gold. The wedding season, which begins after Dasai Tihar, is when gold is most in demand. Therefore, making such a demand at this time is not appropriate.

The price increase of gold is the second, and most significant, factor contributing to the dearth of demand for the metal. Gold is currently breaking records every day. When the price rises in this way, there is a voluntary desire for gold, although it is currently essentially nonexistent. The price of gold has a significant impact on the voluntary demand for jewelry, particularly during Teej and Dasain Tihar. This time, there is less demand and a price hike.

The worldwide market determines the price of gold; domestic supply and demand have no bearing on this. The rise in worldwide demand and the fall in central bank interest rates are influencing the international market.

Nations seeking to curtail their reliance on the dollar as a medium of exchange, such as China and India, are presently augmenting their gold reserves. Moreover, Russia has been using gold rather than foreign money for international dealings. As a result, the price of gold is rising.

The US central bank recently lowered interest rates, which increased price pressure. For the past four days, the price has thus been setting new records. Manikaratna Shakya, outgoing president of the Nepal Gold and Silver Traders Federation, says that even those who wanted to acquire gold stopped buying when the price climbed.

The recent decrease in customs duties on gold imports by India is the third major factor contributing to the local market's decline in demand for gold. With the current fiscal year's budget, India lowered the gold customs rate from 14.35 percent to 5.35 percent. As a result, gold is now more affordable in the border Indian market. CEO Sharma claims that because of this, there is now less of a market for gold in Nepal due to increased smuggling. The current customs charge on gold in Nepal is twenty percent.

Regarding the overall amount of gold stock owned by gold traders in Nepal, there is no official and comprehensive statistics available. Currently, commercial banks own more than 100 kilograms of gold. Based on current demand, the market's daily need is only one or two kilograms, therefore the banks' stock can meet demand for months.

According to Sharma, the CEO of the Nepal Bankers' Association, banks will only import gold if there is a market demand for it. According to him, banks will import gold as well as market demand for it begins.

Some businessmen claim that smuggling grew even more on the eve of Dasain when the import of gold was halted. According to businessman Narendra Kumar Gupta, the import has been halted in order to facilitate market syndication for gold and silver. According to Gupta, "The ban on gold import on the eve of Dasain may lead to illegal activities like gold smuggling" . He claims that despite the fact that he has spoken out against the syndicate that has been operating in gold for some time, it is still unsubstantiated.

Effect of gold on revenue and imports

The entire value of gold imports in the first two months of this year has been capped at 1.4 billion rupees due to the drop in gold imports. Revenue totaling 20 million rupees has been gathered from this.

The Customs Department reports that at the same time last year, gold worth Rs 3.65 billion was imported and Rs 43.43 million in revenue was brought in. Based on statistical data, there has been a minor increase in Nepal's total import during the first two months of the current fiscal year. The primary cause of this is the drop in the price of petroleum products, however the import of gold also appears to have played a significant influence.