KATHMANDU: Nepal Rastra Bank (NRB) has introduced stricter regulations on loan investment by hire purchase companies.
On Monday, the central bank announced the Fifth Amendment to the “Policy and Procedural Guidelines for Approving Hire Purchase Loan Companies, 2070.” With this update, the loan-to-value (LTV) ratio for vehicle purchases has been revised.
As per the new rule, hire purchase companies can now provide only up to 60% of the total vehicle cost as a loan.
Earlier, they were allowed to finance up to 80% of the vehicle’s value.
The revised LTV ratio will apply to all types of electric vehicles (EVs) as well as internal combustion engine (ICE) vehicles intended for private use, according to the central bank.
The policy change could affect demand in the market, especially for electric vehicles, which have been gaining popularity due to rising fuel prices and government support.
This change has benefited ICE vehicles, which will now be eligible for up to 60% financing, an increase from the previous 50%.
