The provision limiting banks and financial institutions to provide a maximum of 60% financing for the purchase of both fossil fuel-powered (petrol and diesel) and electric vehicles has come into effect.
This regulation was enforced following a directive (circular) issued by Nepal Rastra Bank (NRB) as part of its monetary policy review. Previously, banks and financial institutions were allowed to provide up to 80% financing for personal electric vehicles and up to 100% for public electric vehicles.
Similarly, the loan ceiling for purchasing personal vehicles powered by internal combustion (IC) engines—petrol and diesel—has been increased from 50% to 60%. However, the provision allowing up to 100% financing for public fossil fuel-powered vehicles remains unchanged. The new policy indicates the central bank’s intent to discourage electric vehicles while promoting other types of vehicles.
According to industry experts, electric vehicles currently hold around 70% of the total automobile market, while the remaining 30% consists of other types of vehicles. They argue that discouraging EV adoption in such a scenario could negatively impact the overall economy. At a time when loan demand in other sectors remains low, banks have been actively providing loans for electric vehicles. With the new policy in place, experts predict a decline in loan demand from this segment as well.
