KATHMANDU: Nepal Rastra Bank (NRB) has implemented a provision by whereby companies disbursing hire purchase loans will not be able to charge anything else other than the interest rate.
NRB recently amended the Approved Policy and Procedural Framework 2013 — a guiding set of regulations for companies providing hire purchase loans — for the third time.
Earlier, companies providing hire purchase loans used to charge from 0.75 percent up to 3 percent as service fee or processing fee.
With the recent amendment, companies cannot levy any charge/fee except the fixed interest rate. Similarly, such companies will also not be allowed to collect any type of deposits.
According to the new arrangement, NRB can adjust interest rates of such companies through policy intervention if it deems such action necessary.
Likewise, hire purchase loan companies will not be allowed to borrow more than 10 times of their own assets and will have to disburse loan up to a maximum of 80 percent of the collateral.
Companies investing in hire purchase loans will also not be able to give out any other type of loan than hire purchase and would not be able to do any other business undertakings.
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