Kathmandu, July 28: Automobile entrepreneurs are unhappy with the monetary policy of the fiscal year 2024/25 brought by the Nepal Rastra Bank (NRB). According to the NADA Automobiles Association of Nepal, the overall automobile market has declined by up to 68 per cent as the entire sector is in a crisis due to the lack of automobile sector-friendly policies along with the economic slowdown.
The NADA Automobiles Association of Nepal issued a press release stating that their suggestions have not been implemented. If the monetary policy for FY 2024/25 does not improve, the situation will become worse and entrepreneurs will have no choice but to flee.
Article 79 (B) of the monetary policy states that construction businesses will not be blacklisted solely based on fraudulent cheques until further provisions regarding credit information are established. Entrepreneurs are puzzled by this policy. It is also mentioned that businesses like heavy equipment, trucks, tipper parts, lubricants, tyres, and batteries that are often sold on credit will be affected and such loans will be converted into bad loans, the automobile entrepreneurs say. Therefore, they add, the construction entrepreneurs should be blacklisted if they issue fraudulent checks.
NADA has called for reforms in the monetary policy introduced by the NRB. It has also recommended increasing the loan-to-value ratio from 50 percent to 75 percent for issuing higher purchase loans from banks for vehicles powered by petrol and diesel.
Similarly, vehicles for private purposes and of commercial importance running on petrol, diesel and electric power should be separated clearly and bank investment should be facilitated accordingly.
The NADA Automobile Association has stated that action taken against blacklisted individuals and companies has been too lenient, as they continue to operate their businesses through other banks. The NRB has encouraged banks to support investment in private and commercial vehicles powered by petrol, diesel, and electricity.
In determining the ability to repay an auto loan, the income of the entire household should generally be taken into consideration. This includes the income of both partners in the household.
For the purchase of real estate, the required loan payment income ratio has been increased from 50 per cent to 70 per cent. Proof of ability to meet the increased ratio should be provided when seeking a real estate loan.
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