Nepal Rastra Bank Signals Policy Reforms in Auto and Stock Markets

Deputy Governor of Nepal Rastra Bank, Bambahadur Mishra, has stated that the bank's policy measures have shown positive signs in the automobile and stock markets. Speaking at a program organized by the Economic Media Association Nepal (IMAN) on the "Direction of Monetary Policy, Loan Expansion, and Auto Business," Mishra expressed the bank's willingness to review its policies.

Deputy Governor Mishra said, "The increase in Non-Performing Assets (NPA) is currently seen as a problem; even in real estate, if some money goes there, it also decreases. If the internal combustion engine (ICE) business becomes significantly impacted, the central bank will review its policies." He also mentioned that both the government and the central bank prioritize electric vehicles (EVs).

Priority to EVs, Tax Issues for ICE Vehicles

Karan Kumar Chaudhary, President of the Nepal Automobile Dealers Association (NADA), accused the government of neglecting petroleum vehicles (ICE) in favor of prioritizing electric vehicles (EVs). "The market for EVs has grown significantly, but the ICE business is nearly stagnant," he said. Chaudhary demanded tax concessions for ICE vehicles.

Perspectives from the Banking Sector

Sunil KC, President of the Nepal Bankers' Association and CEO of NMB Bank, expressed confidence that the increasing import and sale of electric vehicles would support the energy sector. "Banks have disbursed loans exceeding NPR 350 billion in the energy sector," KC stated. Development Bankers Association President Sahayog Shrestha also emphasized that no specific sector can develop unless the overall economy improves.

Growing Demand for Electric Vehicles

The program highlighted that around 95% of the stalls were for electric vehicles. "The demand for electric vehicles has increased significantly at the NADA Auto Show 2024," said CEO Sahayog Shrestha. He added that the growing popularity of electric vehicles supports Nepal's environmental goals.

Impact on Foreign Currency and Revenue

Ashok Khadka, Secretary General of the Nepal Insurance Association, noted that a significant amount of money has gone abroad due to EVs, leading to less-than-expected revenue generation. "It is essential to account for how much foreign currency is going out and how much revenue is being collected," he stressed.

The program presented an in-depth discussion on the current state of Nepal's automobile and financial sectors, with various stakeholders providing suggestions for reforms.