NADA Automobiles Association Appeals for Eased Loan Procedures in Nepal's Auto Sector

The NADA Automobiles Association of Nepal has made a formal request to the government to simplify the process of obtaining bank loans for vehicle purchases.

A delegation led by NADA President Dhurba Bahadur Thapa recently met with Finance Minister Dr. Prakash Sharan Mahat to address various concerns within the automobile industry.

During their discussion, NADA Thapa urged the implementation of a loan rescheduling system to stimulate the sluggish market. Additionally, he emphasized the need to reduce the risk burden associated with hire purchase loans, a significant deterrent for banks and financial institutions investing in the automobile sector, to 75 percent.

Thapa also called on Finance Minister Mahat to consider raising the current loan-to-value ratio limit from 50 percent to 75 percent for loans disbursed by banks for the hire purchase of private vehicles.

Furthermore, NADA highlighted the importance of maintaining realistic pricing by promptly consulting with relevant agencies regarding the reference price list, which has been a recurring issue.

NADA also requested Finance Minister Mahat to amend the new loan classification regulations issued by Nepal Rastra Bank concerning current capital loans, as these regulations are expected to exacerbate problems in the sector.

Thapa pointed out that if one borrower within a group defaults on a loan, classifying it as non-performing, the loans of other borrowers in the same group should not automatically be classified as non-performing as well.

NADA contends that classifying any loan as non-performing and withholding an upgrade to the good credit category for six months will discourage private sector participation.

Furthermore, NADA urged Finance Minister Mahat to categorize automobile industries as special sectors, offering concessional loans to encourage their growth and development.

The association also called upon the Finance Minister to allocate funds in the budget for the construction of an international-level exhibition center in the Kathmandu Valley and to initiate steps for its construction.