Hire-purchase association welcomes NRB policy allowing 1 pc service fee, 10-year licences

KATHMANDU: Association of Hire Purchase Companies of Nepal has welcomed the new 'Policy and Procedural Provisions for License Approval of Hire Purchase Companies, 2083', issued by Nepal Rastra Bank (NRB) on July 11, 2026, saying the measures will strengthen the sector's regulatory framework.

Under the guidelines, the central bank permits hire-purchase companies to charge 1% service fee to customers and maintains 10-year renewal tenure for licences, steps the association said will contribute to operational stability and improve the investment climate. The update also addresses concerns about the interest rate spread and is expected to bring long-term benefits to the sector.

Vishnu Kumar Agarwal, President of the Association of Hire Purchase Companies of Nepal, said the sector exists to support people who cannot secure credit from traditional financial institutions. "There was no situation to easily get loans from banks to invest in vehicles, motorcycles, or heavy equipment. Even if loans were obtained from cooperatives, the process was not easy. To address that very situation, the government brought regulations for hire-purchase companies," President Agarwal said.

The association has welcomed the provision allowing hire-purchase firms to establish contact offices in various locations, saying it will help expand financial services to remote regions where banking outreach remains low. By financing commercial drivers, small entrepreneurs and unbanked consumers, the sector continues to support job creation, citizen efficiency and commercial expansion.

Despite the regulatory changes, the association said operational hurdles persist, particularly in loan recovery. It noted there is currently no system to register auctioned vehicles within Gandaki, Bagmati and Lumbini provinces, and urged authorities to permit hire-purchase firms access to the services of the Debt Recovery Tribunal, which comprises experts from the financial sector.

At present, 10 hire-purchase companies operate in Nepal with central bank approval and have been under NRB oversight for the past 12 years. These institutions provide credit across a wide spectrum of purchases, from electronic items and home appliances worth as little as Rs 10,000 to motorcycles, reconditioned vehicles and heavy equipment.

The association said the central bank's new provisions will encourage companies to operate in a more structured, sustainable and service-oriented manner, and reiterated its commitment to expanding financial access, promoting entrepreneurship, creating employment and supporting broader economic growth across Nepal.