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NRB’s move should bring good revenue for the government as the social media generate large amounts of advertisements

The recent directive of Nepal Rastra Bank, the country’s central bank, to have all transactions related to advertising on social media platforms made only through formal banking channels is highly welcome. It has come to light that several companies and agencies in Nepal are using informal channels, such as hundi and illegal cards, to make payments for social media advertisements to such platforms in foreign countries. Hundi is an informal channel for transferring money from one place to another. It is illegal in Nepal as it skips the banking channels and also does not follow the regulations of the central banks of world governments. NRB’s ruling is aimed at curbing capital flight in view of the growing trend of making payments from Nepal through the illegal channels for advertisements posted on social networking sites, such as Facebook, Twitter, Instagram and Youtube. Anyone found making payments outside the banking channels are to be booked under the Foreign Exchange Act, 2019, according to the announcement of the apex bank.

With nearly everyone having access to a mobile phone or a computer these days, advertising on the social media platforms has gained popularity in Nepal – as elsewhere. One has only to open a social networking site, and one is flooded by a stream of advertisements, at times almost to the point of annoyance. At any given time, millions of people, especially youths, are scrolling down a networking site, especially Facebook, and any advertisement posted there is sure to reach its target audience directly and quickly. However, quite unlike the traditional media, no one knows exactly how much money is spent on advertising on the social media platforms or how much money flows out of the country to pay for the advertisements. Since payments have to be made in foreign currency, there are high chances of it being misappropriated when informal channels are used.

Though belated, NRB’s move should help bring all transactions related to the advertisement business on the digital platform under the tax net. This should bring good revenue for the government as the social media generate large amounts of advertisements, may be even more than the traditional media. Definitely, the NRB’s directive will affect digital marketing, as some advertisers have already started whining about. But then it is ver

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