Withdrawal Issues

eKantipur.com reported this morning that even though the tourist arrival has increased this year the overall tourist spending has gone down. I do not know what the reason for this is --it could be the economic slowdown that the rest of the world has suffered, it could be that more students came to Nepal as opposed to families on vacation--it could be a number of things. However, there is one thing that I can say for sure (from my own experience) is hurting tourist spending-- withdrawal limits at ATMs. 

I was in Nepal this summer with a group of American tourists and saw the negative impact of this limit on tourist spending first hand.  Most banks' ATMs around Kathmandu had a limit of NRS10, 000 with a few exceptions (ATM near City Center) of NRS 15, 000 per withdrawal on foreign cards. This means that every time an American, say with a CHASE debit card, withdraws money in Nepal, CHASE charges $5 per transaction. This may not seem like a lot, however, no one wants to pay such high fees. I can tell you that this amount was enough to deter me and many of my group members from multiple withdrawals. This in turn made us go around Kathmandu--Pokhara--Chitwan on a "pseudo budget," reducing our discretionary spending.

I do not know why the banks (may be NRB) would have such a limit on foreign cards--it makes no economic sense! Increasing the limit, or better yet, removing it, will increase the amount that tourists will withdraw and spend, not to mention have a positive impact on the nation's foreign reserves.