NAIMA criticizes NRB’s Monetary Policy for ignoring auto sector reforms, calls for urgent reconsideration

KATHMANDU: The Nepal Automobile Importers and Manufacturers Association (NAIMA) has expressed serious dissatisfaction over the newly unveiled Monetary Policy for FY 2082/83 (2025/26) by Nepal Rastra Bank (NRB), claiming that their sector-specific policy suggestions were completely ignored.

In a strongly worded statement issued following the monetary policy release by Governor Dr. Bishwanath Paudel, NAIMA said that the central bank’s policy lacks any concrete measures to address structural problems and improve credit access in the automobile sector, despite repeated submissions and consultations.

Ignored Recommendations for Long-Term Auto Sector Reforms

NAIMA stated that it had proposed a review of the auto loan-to-value (LTV) ratio, recommending an 80:20 structure for all types of vehicle loans, in line with international standards, government procedures, and market dynamics. However, the monetary policy has failed to incorporate this proposal, which NAIMA called “disappointing and regressive.”

While the policy made notable reforms in real estate, capital markets, and other industries, the auto sector was clearly overlooked, despite its significant contribution to economic activities, employment, and tax revenue, NAIMA said.

Call for Clarity in LC Issuance for China-Manufactured Vehicles

Another key concern raised by the association involves the import of vehicles manufactured in China. NAIMA had requested that banks be allowed to open Letters of Credit (LCs) for Chinese-manufactured vehicles even if the beneficiary company is based in a third country. This, NAIMA argues, is aligned with the realities of modern global supply chains, which are based on multilateral trade agreements and operations.

However, the new monetary policy has failed to provide any clear guidance or policy revision on this issue, making it harder for importers to manage trade operations involving Chinese-made vehicles.

Proposal for Lowering Risk-Weighted Asset (RWA) Ratio Also Ignored

NAIMA also criticized the NRB for ignoring its proposal to lower the risk-weighted asset (RWA) ratio for vehicle loans from the current 100% to 75%. This change would have made auto loans more accessible and less risky for financial institutions, which in turn could stimulate the stagnating automobile market.

The failure to implement this recommendation is seen by NAIMA as a missed opportunity to align credit policies with the goal of expanding auto finance in a liquidity-rich but credit-shy market.

Positive Aspects Acknowledged, But Demand for Immediate Action

Despite its criticisms, NAIMA acknowledged that the overall objective of the monetary policy—to expand credit accessibility and improve liquidity—is a welcome move. If applied fairly across sectors, the policy could help improve auto loan availability, which has been on the decline due to tightening regulations in recent years.

However, NAIMA warned that unless sector-specific barriers are addressed, especially those that directly affect auto imports, vehicle affordability and sales could remain stagnant, undermining the central bank’s broader monetary goals.

NAIMA Urges Immediate Revisions in Coordination with NRB

In conclusion, NAIMA urged the Nepal Rastra Bank to revisit and revise the monetary policy with high-level consultations and a priority focus on the automobile industry. The association emphasized that the automobile sector plays a critical role in Nepal’s macroeconomic framework, and ignoring it could hinder broader economic recovery and growth.