Advertising agencies say some of their clients have cut back on social media advertising expenses after the central bank’s notice in February.
Nepal Rastra Bank is considering licensing companies that deal with payments of social media advertisements from Nepal in order to bring the informal transactions to a formal channel, officials at the central bank and advertising agencies say.
Most advertising agencies are making payments of advertisements posted on social media such as Facebook, Instagram, Twitter and YouTube through foreign currency cards held by their relatives and friends abroad while reimbursing the amount to the families of the card holders back home.
Finding that a large amount of foreign currency is being siphoned off through informal channels, the central bank in February had directed companies involved in sending foreign currency abroad to route all such payments through the local banking channel.
According to the notice, such payment would be deemed illegal and punishable as per the Foreign Exchange Regulation Act. In response, advertising agencies have demanded a specific policy on how to make payments for the foreign services.
“We are discussing the option of allowing licensed institutions to make payments for advertisements placed from Nepal on social media sites,” a senior official at the central bank told the Post on condition of anonymity because the official is not authorised to speak to the media. “They can get licences from the central bank like money transfer agencies.”
The official said that the idea is still in the conceptual phase and has not taken any concrete form.
The Nepal Rastra Bank has also conveyed the same idea to advertising agencies.
“The central bank has floated the idea of licensing certain agencies that would facilitate payment for social media advertisements,'' said Raju Kuinkel, general secretary at the Advertising Agency Association of Nepal, a grouping of advertising agencies. “I heard that some companies have already approached the central bank for a licence.” ...
