Mid-Term Monetary Policy Review Slows Auto Imports Amid Record-Breaking Trend

The Nepal Rastra Bank’s (NRB) mid-term monetary policy review has tightened auto loan regulations, dampening the possibility of vehicle imports surpassing Rs 100 billion this fiscal year. The move comes at a time when auto traders and customs officials had anticipated record-breaking import figures, largely driven by the rising demand for electric vehicles (EVs).

According to the Nepal Automobile Dealers Association (NADA), the NRB’s revised policy has restricted bank loans for EV purchases, discouraging their business. "The new rules contradict the government’s policy to promote EVs," said NADA General Secretary Surendra Kumar Upreti. "The previous provision should be maintained to protect investments in the sector and support the transition to green energy."

NADA had been urging the NRB to raise the loan-to-value (LTV) ratio for petrol and diesel vehicles from 50% to 75% to revitalize Nepal’s sluggish auto industry. However, the monetary policy review set a uniform LTV ratio of 60% for all personal vehicles, including EVs. While this benefits fuel-powered vehicle buyers, it significantly impacts EV sales, according to NADA.

“The government has prioritized green energy and offered incentives for EVs, but the NRB’s new policy contradicts these efforts,” NADA stated in a press release on Thursday.

Import Figures and Policy Impact

Data from the Department of Customs shows that vehicle imports reached Rs 55.21 billion in the first seven months of the fiscal year (mid-July 2024 to mid-February 2025), an increase of Rs 13.2 billion compared to the same period last year. In the previous fiscal year, total vehicle and spare parts imports stood at Rs 85.74 billion. Based on current trends, imports were expected to exceed Rs 100 billion this year.

While both EV and fuel-powered vehicle imports have risen, two-wheeler imports have surged significantly. However, customs officials now anticipate a slowdown following the NRB’s stricter auto loan policy.

Under the revised regulations, banks and financial institutions can finance only 60% of an EV’s value, down from the previous 80%, requiring buyers to pay the remaining 40% upfront. Auto industry stakeholders fear this will reduce demand and hinder Nepal’s shift toward electric mobility.