NRB caps penalties and bans service charges in latest policy amendment

development bond, NRB

KATHMANDU: Nepal Rastra Bank (NRB) has implemented a more rigorous policy regarding hire-purchase loans, placing restrictions on penalty amounts and prohibiting companies from levying service charges on such credit.

In the latest amendment to the policy and procedural measures governing hire-purchase loans, NRB has directed companies engaged in hire-purchase transactions not to impose penal interest exceeding two percent in case of delayed payments of equal monthly installments (EMIs). Additionally, these companies are now prohibited from charging service fees for the services provided.

Hire-purchase companies, typically non-banking finance entities that facilitate individuals in acquiring goods through installment plans, play a significant role in Nepal. Numerous automobile dealers and importers in the country offer this service to their clientele.

Under the new regulations, the central bank has mandated that individuals receiving facilities exceeding Rs 2.5 million must possess a personal account number. Furthermore, companies engaged in hire-purchase activities are required to prominently display “Hire-purchase Ltd” on their signboards.

Currently, the NRB has granted licenses to 10 companies to conduct hire-purchase transactions, with a stipulation that these companies must maintain a minimum paid-up capital of Rs 300 million.

Fiscal Nepal |
Wednesday November 29, 2023, 10:06:57 AM |

Leave a Reply

Your email address will not be published. Required fields are marked *