KHATMANDU: More than 3,000 brand new vehicles imported from India have gathered dust at parking yard of the Birgunj Customs Office, as sales of automobiles have dropped after banks and financial institutions started tightening disbursement of auto loans.
These vehicles, ranging from cars and sports utility vehicles (SUVs) to vans, mostly bound for Kathmandu, have been sitting in the yard for around one and a half months. But no one has come to collect them, according to customs officials.
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Automobile traders often leave the vehicles in the customs yard whenever sales of vehicles take a dip. These traders prefer to pay demurrage charges and let the vehicles sit in the yard rather than take them to Kathmandu or other cities where cost of leasing land to park the vehicles is high.
Of late, banks and financial institutions have tightened auto lending, as they are facing shortage of loanable funds due to lethal combination of deceleration in deposit growth and higher demand for credit.
To prevent this problem from transforming into a full-blown banking sector crisis, the Nepal Rastra Bank has discouraged banks and financial institutions from extending credit to unproductive sectors, such as automobile.
Recently, the central bank also barred the banking institutions from extending more than 50 percent of the value of the vehicle in credit to auto loan seekers–although this provision is yet to come into effect. The drop in vehicle sales has also affected the government’s revenue collection. The Birgunj Customs Office failed to meet the revenue collection target in the Nepali calendar month of Magh (mid-January to mid-February).
In Magh, only 431 cars, vans and SUVs worth Rs345.5 million were imported from the Birgunj Customs Office. The customs office generated revenue of Rs666.9 million from imports of these vehicles.
In the previous Nepali calendar month of Poush (mid-December to mid-January), 1,085 cars, vans and SUVs worth Rs970 million had been imported from the customs point. In that month, the customs office had generated revenue of Rs2.06 billion from imports of cars, vans and SUVs.
