Nepal Rastra Bank reduced risk burden of loans up to 25 lakhs to 100 percent for vehicles purchases

KATHMANDU:Nepal Rastra Bank has reduced the risk burden of loans up to 25 lakhs to 100 percent for hire purchases and vehicle purchases.

The Nepal Rastra Bank  issued integrated directions to banks and financial institutions on Friday to decrease the risk load on personal vehicle purchase and hire purchase loans.

The risk is fixed at 150 percent for loans of more than 25 lakhs. The risk weightages of such loans, which was formerly set at 150 percent, is now determined in two ways by the Nepal Rastra Bank.

In its monetary policy statement last Sunday, the Rastra Bank stated that "the provisions related to the existing risk burden of share securities loans, real estate loans, and hire purchase loans will be reviewed."

After the risk load was increased from 75% to 150% in the prior year, auto executives demanded a reduction in the risk burden, claiming that the business had come to a halt.

Businessmen anticipate that this will bring some relief to their operations because the risk load on loans up to 25 lakhs would be reduced to zero.