NAIMA expresses disappointment at monetary policy for FY 2025/26

KATHMANDU: Nepal Automobile Importers and Manufacturers Association (NAIMA) has expressed disappointment at monetary policy for fiscal year 2025/26, unveiled by Nepal Rastra Bank (NRB) on Friday, after its sector-specific recommendations were omitted.

In a press statement, NAIMA said it had submitted timely proposals to support long-term growth in the automotive market but found no trace of them in the central bank’s new framework.

For the long-term improvement and balanced development of the automobile sector, NAIMA had specifically requested a review of the loan-to-value (LTV) ratio, aligning it with international standards, the nature of vehicles and market demand. It had stated that an 80–20% LTV ratio should be maintained for all vehicle types. However, no such provision has been included. Although the policy aims to increase overall credit supply, it does not contain any clear and targeted measures to expand access to auto loans, which were necessary for the improvement of automobile market. While policies for other sectors, such as real estate, the share market and other industries, are clearly set out, the automobile sector appears to have been neglected.

NAIMA also called for permission to open letters of credit (LCs) in Chinese yuan when importing vehicles produced and shipped from China, regardless of the beneficiary’s country of registration. It said this adjustment is vital for tripartite trade agreements and would reduce currency-exchange friction for importers.

In addition, the association proposed reducing the risk-weighted asset ratio on vehicle loans from 100% to 75%. By treating auto finance as secured lending, NAIMA believes banks could extend more credit to buyers, strengthening sales and broadening consumer choice.

While the monetary policy outlines targeted measures for sectors such as real estate and capital markets, the automobile sector has received no dedicated interventions. NAIMA described this omission as a missed opportunity to expand auto-loan access, even as the policy seeks to boost overall credit supply.

NAIMA has, however, welcomed the general push to increase lending but urged the central bank to reconsider and incorporate its three proposals before implementation. The association warned that, without these adjustments, the automobile sector may struggle to fulfil its potential contribution to Nepal’s economic development.

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