For the past eight months, the government has imposed a ban on the import of private cars, jeeps and vans that run on petroleum products. Along with the import ban, the unfriendly policies brought by Nepal Rastra Bank (NRB) in matters related to the automobile businesses, such as a 50 percent limit on hire purchase loans, increase in risk weight, increase in securities margin, etc, have further added to the woes of the industry.

Along with this, due to the increase in working capital loans and interest and premium rates of banks, the Nepalese automobile sector has collapsed. Hundreds of automobile showrooms have been closed and more are in the process of being closed. Due to this situation, thousands of employees dependent on this business have become unemployed.

Nepal’s automobile sector has contributed 21 percent to the government’s revenue, providing employment to one lakh people directly and nearly ten lakh people indirectly. Similarly, this sector has been contributing 40 percent to Nepal’s advertising market and 50 percent to the total revenue of non-life insurance. Although the automobile sector has been contributing a lot to the revenues of the government, the government has not only classified this sector as unproductive but has imposed a correspondingly high tariff with the aim of discouraging this business.

NADA Automobiles Association of Nepal (NADA), the umbrella organization of automobile dealers in the country, has been continuously requesting related ministries and Nepal Rastra Bank through formal and informal means to remove those policy obstacles and create a business-friendly environment, but to no avail. Hence, the organization has been forced to announce a protest movement with the following policy demands. The protest program will be an organized demonstration of disapproval of the government’s recent course of action.

NADA’s demands and suggestions

• The ban on the import of private cars, jeep vans and two-wheelers above 150cc for the past 8 months should be lifted immediately.
• The Current Capital Credit Guidelines (2079) issued by Nepal Rastra Bank should be postponed for the time being and should be implemented with the necessary modifications at the appropriate time.
• The provision of issuing a letter of credit (LoC) with a 100% cash margin and 50% cash margin should be scrapped.
• The financial bodies of Nepal have decided to increase the interest rate on loans effective from the 1st of Kartik 2079. This has seriously affected the entire industry and businesses including the automobile sector of Nepal. Hence, necessary arrangements should be made to control the current interest and premium rates immediately.
• The risk weight in auto loan hire purchase loans should be brought down from 150 percent to 75 percent.
• To ease the lack of liquidity of the banks, the CD ratio should be reviewed.
• The payment period for the delivery order after the approval of the hire purchase loan from the banks should be made within a week.
• Similarly, in the process of issuing a loan for private vehicles from the banks, the current limit of the loan amount should be increased to 70 percent from the current 50 percent.
• The deadline for renewal of the full loan should be extended for one year.
• For the revival of the automobile business, which has been stalled for a long time due to covid and the import ban, arrangements should be made for rescheduling loans and special concessions on interest rates.