Supreme Court scraps 60% EV loan cap, orders policy review at Nepal Rastra Bank

KATHMANDU: The Supreme Court has overturned Nepal Rastra Bank’s recent policy that reduced the loan limit for electric vehicles (EVs), ruling that the move discouraged the promotion of environment-friendly transport and directing the government to adopt a stable and incentive-based policy framework.

A joint bench of Justices Binod Sharma and Meghraj Pokharel issued the verdict on Poush 30, quashing the central bank’s decision to cut the loan-to-value (LTV) ratio for EVs from 80 percent to 60 percent.

With this ruling, the government and Nepal Rastra Bank (NRB) are now required to review and reformulate EV-friendly credit policies, aligning them with long-term national priorities on clean energy and sustainable transport.

NRB directive nullified

NRB had issued an integrated directive on Poush 29, 2081, reducing the EV loan limit by 20 percentage points. The policy immediately drew criticism from EV importers, consumers, and environmental advocates, who argued that it directly undermined the government’s clean mobility goals.

Advocate Sanjay Adhikari and others had filed a writ petition at the Supreme Court, claiming that the revised LTV cap contradicted national commitments to promote green transportation and reduce fossil fuel dependence.

The court accepted the argument and struck down the directive, ordering authorities to formulate a clear, consistent, and pro-EV financing policy.

Nepal Rastra Bank adopts ‘wait and see’ stance

NRB spokesperson Guru Prasad Paudel said the central bank is awaiting the full text of the verdict before taking formal steps.

“The Supreme Court has made observations regarding EV-related policy, but the full text of the decision has not yet been received. We are in a wait-and-see position,” Paudel said.

He confirmed that although the verdict has been issued, NRB cannot act until the detailed ruling is available.

“Once we receive the full text, we will proceed according to the nature of the court’s directives,” he added.

Full compliance if directive is binding

Paudel stated that NRB will fully comply if the verdict contains mandatory instructions.

“If the court’s order is directive in nature, we will implement it completely. If it includes advisory elements, we will consider them seriously in future policy formulation,” he said.

He stressed that it is not appropriate to reach conclusions without reviewing the spirit and substance of the complete judgment.

“We must move forward strictly in line with the intent of the full verdict. Without seeing it, I cannot comment further,” he added.

Wider implications for credit policy

Although the writ was primarily focused on EV financing, it is understood that the petition also raised broader issues related to the 60/80 loan-to-value framework applied across other lending sectors, including real estate and consumer credit.

This has raised expectations that the verdict could influence wider credit policy debates beyond EV financing alone.

Impact on banking sector and automobile market

The ruling is expected to have direct implications for the credit market and the automobile sector, as EV financing has been a key driver of Nepal’s rapidly expanding electric mobility market.

Since the LTV cap was reduced, dealers and banks reported a slowdown in EV bookings, with higher upfront costs discouraging buyers.

The Supreme Court’s intervention is therefore seen as a significant boost for EV adoption and investor confidence in Nepal’s green transport transition.

Policy direction to be clarified after full verdict

How far the ruling will reshape Nepal Rastra Bank’s upcoming monetary and credit policies will become clearer only after the full text is made public.

Given the direct impact on lending policy, the judgment is being closely watched by bankers, automobile dealers, and policymakers, as it could set a precedent on the balance between financial regulation and national development priorities.