NAIMA Expresses Disappointment Over FY2082/83 Monetary Policy, Calls for Auto Sector Inclusion

The Nepal Rastra Bank’s recently unveiled Monetary Policy for Fiscal Year 2082/83 has left the country’s automobile industry dissatisfied. The Nepal Automobile Importers and Manufacturers Association (NAIMA) has voiced concerns that key recommendations intended to revive and support the auto sector have been overlooked—despite the policy’s broader goal of enhancing credit access in the economy.

One of NAIMA’s core demands was a revision of the loan-to-value (LTV) ratio for vehicle financing. The association proposed reinstating a uniform 80:20 ratio (loan:down payment) across all vehicle categories to make auto loans more accessible to consumers. This, NAIMA argued, would help stimulate market growth and bring Nepal's credit policies in line with international norms.

However, the new monetary policy does not mention any changes to the existing auto loan guidelines. This omission stands in stark contrast to the attention given to other sectors such as real estate, the stock market, and manufacturing—suggesting a lack of priority given to the automobile industry.

Another important area NAIMA has highlighted involves the current limitations on opening Letters of Credit (LC) in Chinese Yuan. Presently, Nepal Rastra Bank only permits LCs in Yuan if the beneficiary company is located in China.

However, in today’s global trade environment, it is common for transactions to involve multiple parties across different countries—including manufacturers, logistics providers, and financial intermediaries. NAIMA has therefore requested that importers be allowed to open LCs in Chinese Yuan for vehicles manufactured and shipped from China, regardless of the beneficiary company’s country of registration. This policy change would align with modern business practices and facilitate smoother import processes. Unfortunately, this recommendation was not addressed in the monetary policy.

NAIMA had also suggested reducing the Risk-Weighted Asset (RWA) ratio for auto loans from 100% to 75%. This change would have allowed banks to extend credit for vehicle purchases more easily, helping to revive demand and expand market reach. While the policy speaks broadly about boosting credit flow, it lacks any specific provisions that would directly benefit the automobile sector.

Despite its significant contribution to Nepal’s economy—in terms of revenue, employment, and infrastructure—the automobile sector continues to face policy neglect. NAIMA believes that real economic recovery and consumer confidence will require targeted support for all sectors, including automotive.

The association urges Nepal Rastra Bank to re-evaluate its monetary policy and consider incorporating specific measures that reflect the realities of the automobile industry and today’s global trade ecosystem.