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Morang Automobiles Dealers Association, an institutional member of Nepal Automobiles Association of Nepal (NADA) from Province no. 1, has organized a peaceful protest program at Biratnagar's Mahendra Chowk NRB The event which was organized under the leadership of Sanjay Kumar Shrestha, President of Morang Automobiles Dealers Association, brought together businessmen related to various automobiles sector operating in Province 1 including Biratnagar.
Morang Automobiles Dealers Association, Province no.1 and NADA Automobiles Association of Nepal held a joint protest in Kathmandu and Biratnagar last Thursday. During the protest, the automobile businessmen held a peaceful protest program at Biratnagar's Mahendra Chowk carrying black bands, black banners and placards.
"The automobile sector cannot function without the support from Banks and Financial Institutions (BFI), so BFIs taking advantage of it, have increased the interest rate from 7.5 percent to 16.5 percent", pointed out the participants at the program. They said that it is unfortunate that the banking sector is making billions of profits while the main economic sector of the country is suffering from a serious meltdown.
Talking to the media, Sanjay Kumar Shrestha, added, "Nepal Rastra Bank should review the monetary policy more thoroughly and ensure investable funds by maintaining the interest rate of institutional deposits at 4 percent. Although the import of vehicles for policy purposes such as cars, jeeps and vans is open, the margin should be removed as the 50 percent cash margin is still maintained when the LC is opened. This in turn has hampered the automobile business."
Similarly, Suwash Acharya, Central Vice President of NADA, expressed his concern that no one will be able to save the economy if Nepal Rastra Bank does not improve its monetary policy. He informed that a general revision in the spread rate was made only to quell the opposition from industrialists. Nepal Rastra Bank, in its first review of monetary policy, has said that even if the spread rate was maintained from 4.4 percent to 4 percent, it would not solve the problem. He is of the opinion that the spread rate should be kept at least 3 percent.
He added that 30 percent of the country's businessmen are listed as bad debtors because of the high-interest rates of banks. It was also claimed that 70 percent of industrialists who remain in the same situation will be listed as bad debtors and the economic sector of the country will become even more disastrous.
Likewise, Manoj Vikram Shahjee, secretary of the association, said that even if the government decides to allow the import of vehicles, all the regulations that have been currently implemented should be removed. He complains that even though the government has opened up the import of cars, no one will buy a car at the current bank interest rate. Secretary Shah said that the interest rate is high and if there is only 50 percent financing, the vehicle will not be sold. He said that even though the import is open, it is not possible to bring the vehicle immediately.
The businessmen present at the protest program demanded that the current capital loan guidance issued by Nepal Rastra Bank, 2079 should be suspended for the time being. Similarly, the system of opening the letter of credit with a 100 percent cash margin and 50 percent cash margin should be restored, and the CD ratio should be reviewed to ease the lack of liquidity of banks, etc.
In the process of disbursing hire purchase loans from banks, the current limit of loan-to-value ratio should be increased from 50 percent to 70 percent. They demanded that the deadline for re-loan renewal should be extended by one year, rescheduling of loans and special concessions on interest rates should be arranged for the revival of the automobile business, which has been stalled for a long time due to covid and import restrictions.
