The Nepal Rastra Bank (NRB)’s decision to allow Ncell to repatriate dividend has landed in controversy after two different authorities that were overlooking the case declined to verify claims made by the central bank.

The NRB on Monday defended its move to allow Ncell to repatriate dividend, saying the telecom company established through foreign investment had fulfilled all due processes before remitting the profit earned in Nepal.

In between mid-August and mid-September, the NRB allowed Ncell to repatriate profit of Rs8.36 billion earned in the fiscal year 2011-12.

“The permission was given after the Nepal Telecommunications Authority (NTA), the telecom sector regulatory body, on July 11, wrote to the NRB, informing that foreign exchange facility could be extended to Ncell to remit the profit if the company has submitted documents on revised shareholding structure, tax clearance certificate, audit report and a copy of decision taken by the annual general meeting on dividend distribution,” NRB Spokesperson Narayan Prasad Paudel told a press meet on Monday. “The NTA had also enclosed a letter issued by the Department of Industry (DoI), which stated the same thing. So, we followed all due processes while allowing Ncell to remit the profit.”

However, a senior NTA official told the Post that the telecom sector regulator had not issued such a letter as claimed by the NRB. The Post could not contact NTA Chairman Digambar Jha despite repeated attempts.

The DoI, on the other hand, said it had only explained the process of dividend repatriation in a letter written to the NTA.

“We never gave the permission or a no-objection letter to remit the profit earned by Ncell,” DoI Director General Maheshwor Neupane told the Post. “We are surprised by NRB’s latest move as it cannot allow a company established with foreign investment to repatriate dividend without seeking our permission.”

The DoI in a letter written on August 28, according to Neupane, had reminded the NRB that it must not allow foreign investors to remit profit earned here without getting its nod. The DoI,

said Neupane, wrote the letter as per the provision incorporated in the Foreign Investment and Technology Transfer Act.

However, the NRB says it need not seek permission of any authority prior to allowing foreign investors to repatriate dividend.

“Despite this, we sought NTA’s view on Ncell dividend repatriation case as it was a sensitive matter,” NRB Spokesperson Paudel said. Neupane, on the other hand, said the NRB should have contacted the DoI and not the NTA on this issue, as the DoI is the concerned authority that oversees matters related to dividend repatriation.

Companies like Ncell established through foreign investment are entitled to repatriate profit earned in Nepal and this right has been enshrined through the Foreign Investment and Technology Transfer Act. Based on this provision, companies established through foreign investment have been transferring profit earned in Nepal.

Earlier in March 2013 also, Ncell had sought permission to repatriate 80 percent of Rs11 billion it earned in profit—or Rs8.80 billion (before deducting taxes)—in 2011-12. However, the NRB could not process Ncell’s application after it came to light that the telecom company had not been maintaining the said paid-up capital.

Ncell had initially said its paid-up capital stood at Rs100 million, of which Rs80 million belonged to foreign investors and the rest Rs20 million belonged to local investors.

However, documents showed that of the Rs80 million in capital that belonged to foreign investors, only Rs58 million had entered the country through formal channel.

Ncell could not substantiate the origin of the Rs22 million in capital injected into the company.

This was the main reason NRB had not allowed Ncell to repatriate dividend earlier.

“Ncell furnished documents on entry of Rs22 million through the formal channel only in January 2016,” said NRB’s Deputy Spokesperson Rajendra Pandit. “This paved the way for us to allow the company to repatriate its dividend.”

Earlier in June, the Parliamentary Finance Committee had directed the Ministry of Industry and the Ministry of Finance to entertain Ncell’s proposals to raise paid-up capital and launch commercial schemes only after the telecom company settled the capital gains tax issue.

“We are not against the practice of remittance of dividend as this is the right of foreign companies operating here. But those companies should follow due processes and not cut corners while repatriating profit earned here,” Parliamentary Finance Committee Chair Prakash Jwala told the Post.