'The Effect of Double Restriction on Loans, Vehicles Piled up at Birgunj Customs'

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 'The Effect of Double Restriction on Loans, Vehicles Piled up at Birgunj Customs'

The government's austerity measures and lack of liquidity to reduce the pressure on foreign exchange reserves have had an impact on vehicle imports. Commercial banks have stopped issuing letters of credit for new vehicles, and importers have not been able to release vehicles that have already arrived at the customs.

The import of luxury vehicles has been tightened. The government has banned the import of vehicles worth more than Rs 5 million. However, banks have stopped investing in vehicles worth less than Rs 5 million due to lack of liquidity.

Even the vehicles that have entered Birgunj, which is considered as the main gateway for importing vehicles, have not passed the inspection. "On the one hand, the government has stopped imports by setting price limits. On the other hand, banks have stopped lending to all types of vehicles. Due to this, the number of vehicles released from the customs has become very low," said Harihar Poudel, Chief Customs Officer of Birgunj Customs.

The importers have not even released the vehicles that have entered the customs due to non-investment of loans by the banks. The importers have said that they could not get rid of the vehicle as they did not even have money to pay the revenue. Bankers say they have not invested in car loans in the current financial crisis.

"The government has tightened imports of luxury goods to ease the pressure on foreign exchange reserves. As even cars are on the list of luxury items, banks have controlled investment in them," said a banker.

Nepal Rastra Bank has directed the commercial banks to keep the CD ratio within 90 percent. Due to the pressure to maintain the CD ratio within this limit within the current Fiscal Year 2078/79, the banks have now controlled the credit investment. As the ratio of some banks is above 90 percent, those banks are now under pressure. A banker said that this has also affected car loans.

Chief Customs Officer Poudel informed that only 4-5 vehicles are released from the customs on a daily basis compared to an average of 20 to 30 vehicles before the tightening of import and vehicle loans. At present, about 350 light vehicles (jeep cars) and chassis of more than 1000 trucks and buses are parked at the Birgunj customs premises.

More vehicles are parked at the warehouse in the bordering Indian city of Raxaul. Importers have rented land in Indian territory and built warehouses to avoid high parking charges at customs.

Vehicles entering the customs must pay a parking fee of Rs 1,500 per day. At present, even the warehouses in Indian territory are full and vehicles are being brought to the customs.

 As the time limit for refund of Goods and Services Tax (GST) in India is 90 days, the importer has to enter Nepal within that time. Vehicles exported from India are not subject to GST. However, there is a rule that proof of crossing the border must be submitted within 90 days of the sale. The customs premises have become a parking area for vehicles as importers bring in vehicles but do not pass the inspection.

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