NADA Releases Statement on Monetary Policy 2082/83: Calls for Caution and Balanced Financial Measures

The NADA Automobiles Association of Nepal has issued an official statement in response to the recently announced Monetary Policy for the fiscal year 2082/83.

The association acknowledges that the Nepal Rastra Bank has crafted the policy following a comprehensive assessment of the nation’s economic landscape. While the financial sector remains under pressure, the central bank aims to uphold macroeconomic stability and promote sustainable growth through a measured and disciplined approach.

According to NADA, although certain financial institutions are currently under strain, the situation has not developed into a systemic crisis. Nepal Rastra Bank has taken a proactive stance, closely monitoring these institutions and implementing corrective measures to preserve financial discipline. The policy notes that credit growth in productive sectors has slowed, but lending to speculative or high-risk areas such as real estate, margin lending, and personal hire purchase has not surged significantly. Nevertheless, there are concerns that some of the credit may be diverted into unproductive sectors.

NADA also draws attention to the continued flow of credit into luxury real estate and premium vehicle imports—sectors that offer minimal contribution to the broader economy. These lending patterns have raised questions about the long-term direction of financial allocation. In response, the central bank has reaffirmed its commitment to stricter oversight, including enhanced enforcement of the Fit and Proper Test for board members and executives of financial institutions.

In a key policy move, the Loan-to-Value (LTV) ratios for loans against real estate and vehicles have been revised. Contrary to lobbying efforts for relaxation, the central bank has maintained a firm stance, citing the need to prevent speculative bubbles and maintain financial health. Despite rising imports of luxury vehicles and growing pressure from vested interests, no leniency has been granted.

The statement also highlights NADA’s concern regarding the cooperative sector. While some cooperatives are experiencing financial stress, the central bank has refrained from direct intervention. Instead, it has emphasized the importance of good governance, financial discipline, and raising public awareness. No special refinancing packages or regulatory exemptions have been extended to cooperatives.

Additionally, the policy reiterates the central bank’s commitment to expanding financial access in rural and underserved regions. However, it does not provide targeted incentives for cooperatives to boost their outreach. The long-term objective remains focused on inclusive, well-regulated financial development.

In conclusion, NADA urges that future financial decisions be approached with caution, keeping in mind the broader economic context and the unique challenges facing Nepal’s automotive sector. The association emphasizes the need for a balanced financial environment that supports both economic growth and institutional stability.