Nepal Rastra Bank (NRB) has enforced stringent policy on hire-purchase loans by capping penal amounts and barring companies concerned to take service charges on such credit.
Through the fourth amendment to the policy and procedural measures related to hire-purchase loans, the NRB has asked the companies involved in hire-purchase not to take penal interest of more than two percent in case the payment of equal monthly installment (EMI) is delayed. From now on, such companies cannot charge service fees from their clients while rendering the services.
The hire-purchase companies are those non-banking finance companies which facilitate individuals for buying goods on installment basis. In Nepal, a large number of automobiles dealers and importers have been providing this service to their clients.
In the new provision, the central bank has made it mandatory to have a personal account number for the recipient of the facility that is worth over Rs 2.5 million. The companies concerned will have to clearly mention Hire-purchase Ltd on their signboard.
As of now, the NRB has licensed 10 companies to carry out the function of hire-purchase. The companies offering the service must have a minimum paid-up capital of Rs 300 million.
