Nepalis bought vehicles worth over Rs 800 billion through bank loans in past five years

Published On: September 1, 2021 07:00 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 1: Nepalis purchased automobiles worth more than Rs 800 billion through bank loans in the past five years.

The records with Nepal Rastra Bank (NRB) show that banks and financial institutions (BFIs) sanctioned a total hire-purchase loan of Rs 837.12 billion between fiscal years 2016/17 and 2020/21. Of the total amount, commercial banks issued loans of Rs 679 billion under the heading.

According to NRB, BFIs provided hire-purchase loans of Rs 150.40 billion in 2016/17, which rose to Rs 171 billion and Rs 180 billion in the next two years. Likewise, the loan amounts stood at Rs 174 billion in 2019/20 and Rs 160 billion in 2020/21.

For the first time in fiscal year 2016/17, the central bank fixed the threshold of hire-purchase loans at 50 percent of the valuation of the vehicles. Later, the central bank revised the ceiling to 65 percent in 2017/18, which was reduced again to 50 percent in 2019/20.

As the NRB tightened the ceiling amid the impacts of the COVID-19 pandemic, the total loan issued by BFIs for hire-purchase decreased by Rs 13.40 billion last year, said NRB officials.   

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