No trading company has applied for permission to operate a hire-purchase loan company, although it has been more than a month since the central bank introduced the guidelines.
Back in February-end, Nepal Rastra Bank (NRB) had allowed dealers of two-wheelers, cars, electronic appliances and gadgets to provide hire-purchase loans to buyers directly by establishing their own hire-purchase company.
“We have not received any formal application for a licence to start a hire-purchase loan company yet,” said Bhaskar Mani Gnawali, spokesperson for NRB.
The central bank had issued the Hire Purchase Company Approval Procedure 2014, lifting the ban placed on such hire-purchase loans being provided by dealers. A hire-purchase company can provide loans to consumers to purchase movable properties and repay the loan in instalments after obtaining licence from NRB.
“NRB had opened hire-purchase loans for traders and dealers only after assessing their requests,” he added.
Many automobile dealers, and electronic appliances and gadgets suppliers used similar instalment schemes to make sales. However, in September 2012, NRB forbade such traders to forward loans to aid sales.The move was criticised by many such dealers who were involved in the practice. At that time, some
automobile dealers were offering car exchange facilities at minimal interest rate but had to abandon the campaign following the ban imposed by the central bank.
“Interested companies might be preparing necessary documents required to obtain licence for hire-purchase loan company, so it’s taking them a bit more time,” he pointed out.
According to the regulation, a hire-purchase company needs to have paid up capital of Rs 100 million and has to maintain net worth of Rs 100 million. In addition, the company can only lend up to 10 times the net worth. By getting licensed by NRB, the hire-purchase companies will fall under the regulatory ambit of the central bank.
Hire-purchase loans made up Rs 60 billion — approximately 5.6 per cent — of the total loans floated by financial institutions until mid-February. Although, there is a chance that banks might lose their clients to hire-purchase lenders, banks are not complaining.
“Of course, it will be more convenient for clients to deal with the seller directly, but those sellers will also have to borrow to supply the goods. Hence, we will lose scattered customers, but gain large ones,” said Upendra Poudyal, vice president of Nepal Bankers’ Association.
source: the himalayan times,2 april 2014
LINK
Back in February-end, Nepal Rastra Bank (NRB) had allowed dealers of two-wheelers, cars, electronic appliances and gadgets to provide hire-purchase loans to buyers directly by establishing their own hire-purchase company.
“We have not received any formal application for a licence to start a hire-purchase loan company yet,” said Bhaskar Mani Gnawali, spokesperson for NRB.
The central bank had issued the Hire Purchase Company Approval Procedure 2014, lifting the ban placed on such hire-purchase loans being provided by dealers. A hire-purchase company can provide loans to consumers to purchase movable properties and repay the loan in instalments after obtaining licence from NRB.
“NRB had opened hire-purchase loans for traders and dealers only after assessing their requests,” he added.
Many automobile dealers, and electronic appliances and gadgets suppliers used similar instalment schemes to make sales. However, in September 2012, NRB forbade such traders to forward loans to aid sales.The move was criticised by many such dealers who were involved in the practice. At that time, some
automobile dealers were offering car exchange facilities at minimal interest rate but had to abandon the campaign following the ban imposed by the central bank.
“Interested companies might be preparing necessary documents required to obtain licence for hire-purchase loan company, so it’s taking them a bit more time,” he pointed out.
According to the regulation, a hire-purchase company needs to have paid up capital of Rs 100 million and has to maintain net worth of Rs 100 million. In addition, the company can only lend up to 10 times the net worth. By getting licensed by NRB, the hire-purchase companies will fall under the regulatory ambit of the central bank.
Hire-purchase loans made up Rs 60 billion — approximately 5.6 per cent — of the total loans floated by financial institutions until mid-February. Although, there is a chance that banks might lose their clients to hire-purchase lenders, banks are not complaining.
“Of course, it will be more convenient for clients to deal with the seller directly, but those sellers will also have to borrow to supply the goods. Hence, we will lose scattered customers, but gain large ones,” said Upendra Poudyal, vice president of Nepal Bankers’ Association.
source: the himalayan times,2 april 2014
LINK
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