NADA Urges NRB To Reconsider Loan Margin And Interest Rate

Automobile importers including spare parts dealers in the country are currently maintaining a 50 percent margin when opening the letter of credit (LC). This guideline by Nepal Rastra Bank is expected to limit the availability of spare parts and increase the price of essential spare parts.Hence, NADA Automobile Association of Nepal (NADA) has requested the central bank to maintain the minimum margin as per the previous guidelines. In case, if this is not possible, the governing body of automobile dealers in the country has requested the central bank for the arrangement of paying interest by the banks and financial institutions on the deposit amount kept by the businessmen for margin.Also, banks and financial institutions in Nepal have recently decided to raise interest rates on deposits. Banks and financial institutions will naturally raise interest rates along with interest rates on deposits, so, NADA has also requested the central bank  for reconsideration.When financial institutions raise interest rates, the industrial and commercial sector, which is just recovering from the pandemic, will be hit hard. It is certain that such a policy will not only bring more problems but also will not solve the current liquidity problem as the government is expected to help in bringing the industry and business in full swing.NADA Automobile Association of Nepal (NADA) has requested the Nepal Rastra Bank (NRB) to reconsider its policy of raising interest rates on loans as it would further endanger Nepal's economy.