First Business News Portal in English from Nepal
KATHMANDU: In a promising development for car buyers in Nepal, Nepal Rastra Bank is taking proactive steps to ease car financing by reviewing the existing risk weighting arrangements of higher purchase loans through the upcoming monetary policy. The move is aimed at reducing the risk burden associated with hire purchase loans taken for vehicle purchases.
Earlier, the National Bank had increased the risk weight from 75 percent to a daunting 150 percent for loans acquired through hire purchase methods. As a consequence, banks faced significant reluctance in disbursing such loans due to the heightened risk they had to bear while financing vehicle purchases.
Commenting on this matter, Rajanbabu Shrestha, the chief executive officer of Sipradi Trading, the official dealer of Tata vehicles in Nepal, expressed optimism about the potential impact of the forthcoming revision in the risk burden of hire purchase loans on car sales.
He believes that this revision will pave the way for an increase in car sales, as it will make the process of obtaining loans for vehicle purchases more accessible and convenient.
Explaining further, Shrestha elucidated that with the reduction of the risk burden from 175 percent to 100 percent, banks will only bear a 100 percent risk burden for a loan amount of 100.
This substantial change is expected to alleviate the apprehensions banks had in providing loans for car purchases.
The revision in the risk burden of hire purchase loans is set to positively impact car financing, as it will increase the ‘loanable’ amount of banks, making financing options more feasible and attractive for prospective car buyers.
By easing the risk associated with hire purchase loans, Nepal Rastra Bank is poised to facilitate smoother vehicle financing processes and stimulate the automotive sector.
With the improved financing prospects, potential car buyers can now pursue their dream of owning a vehicle with greater ease and confidence.
This initiative by Nepal Rastra Bank aligns with the nation’s vision to promote economic growth and empower its citizens by fostering a favorable environment for investment and consumption.
As the revised monetary policy comes into effect, stakeholders in the automobile industry eagerly await the concrete changes and anticipate a surge in car sales in the foreseeable future.
This move not only bodes well for the automotive sector but also resonates with the broader goals of the nation’s economic development.
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