Kathmandu, January 22
Following complaints from automobile dealers that the government’s policy that has tightened auto loans has hit their businesses in the recent months, the Nepal Rastra Bank (NRB) is preparing to review the loan-to-value ratio on such loans.
Earlier this week, Nepal Automobile Dealers Association (NADA) — the umbrella body representing automobile dealers — had formally urged the Minister for Finance Yubaraj Khatiwada to relax the cap on auto loans imposed by the central bank.
In response, Khatiwada had assured them that the cap on auto loans would be reviewed.
Following this, the NRB is studying the prospects of reviewing the cap on auto loans.
“We are studying the auto market and the impact of existing cap on auto loans on automobile business. If necessary, we will review the existing loan-to-value ratio on auto loans,” informed Chintamani Siwakoti, deputy governor at NRB.
On November 2018, the central bank had lowered the loan-to-value ratio to 50 per cent from 65 per cent.
This means that automobile purchasers have to currently make a down payment of Rs 1.5 million while purchasing a car whose value is Rs three million. The government’s decision to squeeze financing facilities in the automobile sector was basically to control the growing import of vehicles, especially luxury vehicles, in the recent years.
However, automobile dealers have been constantly putting pressure on the
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