September 9, 2020 | Investopaper
Banks and financial institutions will no longer be allowed to raise interest rates on home and car loans. Nepal Rastra Bank (NRB) on Tuesday issued an integrated directive for banks and financial institutions.
With this directive of the Nepal Rastra Bank, those who have taken loans for the purchase of vehicles and houses have got some relief. At the same time, the customer will pay the interest rate at the time of taking the loan. Earlier, banks had been changing interest rates from time to time.
According to the new provision, banks and financial institutions will not be allowed to change the interest rates of all personal term loans with a repayment period of more than one year. This means that the same interest rate fixed at the time the customer takes the loan will be applicable throughout the maturity period of the loan. Nepal Rastra Bank has brought this provision at a time when banks and financial institutions are initially providing loans at cheaper rates, but within a few months, there is a growing trend of raising interest rates to make them more expensive.
NRB has clarified that this provision will be applicable to the loans provided in the name of person including home and car loan which are to be paid in monthly or any periodical installment.