KATHMANDU: In a bid to restore consumer confidence shaken by the recent Gen Z protests, the government is preparing to ease auto loan provisions by reducing the mandatory down payment to 20% of a vehicle’s price.
The Nepal Rastra Bank (NRB) is preparing to issue a new circular that allows buyers, whether of combustion engine cars or electric vehicles (EVs), to secure up to 80% financing on their purchase.
Until last fiscal year, EV buyers had to pay 20% upfront, while those purchasing internal combustion engine (ICE) vehicles were required to make a down payment of 50%. However, the provision was changed in March, setting a flat 40% down payment for both categories.
Industry groups, such as NADA and NAIMA, had long been pressing for easier credit provisions to revive demand in the sluggish automobile sector.
“The Ministry of Finance has instructed the central bank to take steps that send a positive message to the market. The NRB will soon issue a circular raising the auto loan limit to 80% of the purchase value,” a finance ministry source said.
Industry groups, such as the Nepal Automobile Dealers’ Association (NADA) and the Nepal Automobile Importers and Manufacturers’ Association (NAIMA), had long been pressing for easier credit provisions to revive demand in the sluggish automobile sector.
NRB sources say detailed discussions are underway between the central bank and the finance ministry on how to best adapt to shifting market conditions. While they did not provide an exact date, they hinted that the announcement could come ahead of the Dashain festival season.
The new directive will apply uniformly to all categories of vehicles—EVs, petrol and diesel alike—making them eligible for up to 80% bank financing.
