This arrangement made through the half-yearly review of monetary policy on February 13 will be implemented after two months for companies that provide hire purchase loans.
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For the purchase of personal and electric vehicles (private and public) running on petrol and diesel, the hire purchase loan companies will now be allowed to give loans up to 60 percent of the price. The provision made by the National Bank through the semi-annual review of the monetary policy issued on February 13 was already implemented in the case of banks and financial institutions within a week.
But two months after the release of the review, on Monday, the National Bank has implemented the same arrangement for companies providing higher purchase loans.
The National Bank has said that the policy and procedural arrangement for approving Harrier Purchase loan companies has been implemented through the fifth amendment of 2070. "When the hire purchase company grants a loan to purchase a vehicle, the loan-to-value ratio of the vehicle must be maintained up to a maximum of 60 percent," the directive says, "This arrangement will be applicable for all-purpose electric vehicles and other personal vehicles for private purposes."
Earlier, these companies used to give loans up to a maximum of 80 percent of the mortgage value. The National Bank has not removed this provision and in the same directive added that when providing loans for the purchase of vehicles, the ratio of the loan value of the vehicle should be maintained to a maximum of 60 percent.
Hire purchase loan means a loan or loan granted to any person, firm, company or organization for agricultural, industrial, commercial or private purposes to purchase vehicles, machinery, tools and equipment in installments and the ownership is transferred after the entire installment is paid.
At present, Rashtra Bank has granted licenses to 10 companies namely Omni Hire Purchase, Hulas Finserv Hire Purchase, Sipradi Hire Purchase, MAW Hire Purchase, Batas Hire Purchase, Syakar Hire Purchase, Jagdamba Hire Purchase, Venture Hire Purchase, Manokamana Hire Purchase and Agni Hire Purchase Pvt.
These companies must have a permanent account number (PAN) with the borrower while disbursing the loan. But the National Bank has stated that it is not mandatory to get a permanent account number from a person who has given a loan of 25 lakhs or less. The limit of credit that the company can provide to a single customer, firm, company or group has been fixed at a maximum of 30 percent of the net worth of the previous quarter.
Rastra Bank, through the semi-annual review of the monetary policy issued in the second week of February, provided that up to 60 percent loan can be taken on all electric vehicles.
While there was a provision to give up to 50% loan for the purchase of personal vehicles with petrol and diesel (IC engine), this has been increased to 60% through the semi-annual review.
In the case of public vehicles running on petrol and diesel, banks and financial institutions and hire purchase companies are allowed to give loans up to 100 percent. Through the
review, the National Bank seems to want to discourage electric vehicles and encourage other vehicles. The businessmen have different arguments about the strict loan flow for the purchase of electric vehicles and the flexible arrangement for other vehicles. But NADA Automobiles Association of Nepal has been protesting that the National Bank has discouraged electric vehicles by reducing the loan-to-value ratio of electric vehicles.
Until now, the government has been encouraging electric vehicles. It was necessary to encourage electric vehicles to increase electric consumption in Nepal and reduce the import of petroleum products. But NADA says that the National Bank has introduced a policy to discourage electric vehicles. According to NADA, 70 percent of the total vehicle market is electric and the remaining 30 percent is other vehicles.
