Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The Nepal Automobile Importers and Manufacturers Association (NAIMA) has formally urged the Nepal Rastra Bank and the Ministry of Finance to raise the loan-to-value (LTV) ratio on vehicle hire-purchase loans to 80 percent, arguing that the current 60 percent cap is a key factor behind the prolonged slowdown in Nepal’s automobile market.
In a press statement issued Sunday, NAIMA said the existing financing ceiling has forced buyers to arrange high upfront payments, making vehicle purchases difficult for many consumers. According to the association, this has not only depressed vehicle sales but also dampened broader economic activity and government revenue collection.
The automobile sector remains one of the largest contributors to state revenue through customs duty, excise tax, and value-added tax. NAIMA argued that a recovery in vehicle sales would have a direct and measurable impact on revenue mobilisation at a time when fiscal pressure remains high.
The association also pointed to the banking system’s current excess liquidity, stating that expanding the LTV ratio for vehicle financing could serve as a practical channel for capital mobilisation. Hire-purchase lending, it noted, is installment-based and backed by collateral security, making it relatively safer compared to other credit segments.
NAIMA further stressed that growth in vehicle sales stimulates multiple linked industries including service centres, spare parts businesses, insurance, transport services, financial intermediation, and technical employment. Policy easing in the automobile sector, it said, would therefore generate both direct and indirect jobs while supporting supply chains across the economy.
Citing these factors, NAIMA has renewed its request for a policy review to allow hire-purchase loans to cover up to 80 percent of vehicle value. The association said it will continue lobbying under its “Mobility for All” mission and remain engaged with authorities to push for regulatory adjustments in the coming months.
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