Inside Valley Policy: Hire Purchase Two-Wheeler

Study Notes

Hire Purchase Two-Wheeler Loan (Inside Kathmandu Valley)

• Effective Date: 17th July 2022 • Last version approved on: 8th August 2021 • Approver: BOD • Policy Owner: Credit Risk Department • Review Frequency: 1st quarter of every fiscal year

Product Details

• Product: Hire Purchase- 2Wheeler Loan • Target Customer: Individuals/Professionals/Self-employed working in Kathmandu Valley • Age Minimum: 18 years, Maximum: 63 years at the time of loan (Deviation can be sought if additional guarantor within age group is obtained) • Financing Areas: Kathmandu, Bhaktapur, Lalitpur, Banepa, Dhulikhel, and Panauti municipality

Financing Percentage

• For Permanent Resident of KTM Valley: + Maximum 75% against the cost price of the vehicle up to Rs 4.00 lakhs + Maximum 70% against the cost price of the vehicle above Rs 4.00-5.00 lakhs + Maximum 60% against the cost price of the vehicle above Rs 5.00 lakhs • For Temporary Resident of KTM Valley: + Maximum 70% against the cost price of the vehicle up to Rs 4.00 lakhs + Maximum 60% against the cost price of the vehicle above Rs 4.00-5.00 lakhs + Maximum 50% against the cost price of the vehicle above Rs 5.00 lakhs

Tenure

• For Permanent Resident: Minimum 6 months, Maximum 36 months • For Temporary Resident: Minimum 6 months, Maximum 30 months

Eligibility/Conditions

• Customer should be of sound background and reputation • Customer should not be in the Internal Hotlist (Deviation can be sought) • The client should be a permanent/temporary resident of Kathmandu Valley • Residence visit of the borrower is mandatory • Residence visit of the personal guarantor is mandatory if the borrower is a temporary resident • EMI of all loans should not cross 40% of gross income for permanent residents • EMI of all loans should not cross 30% of gross income for temporary residents

General Criterion

• Customer should have a valid driving license of a 2-Wheeler • In case of license from the single family member, personal guarantee of that member is mandatory • For temporary resident, personal guarantor must be credible and a permanent resident of KTM Valley

Loan Assessment

• Income Assessment: Income to be assessed as per MIPL's income evaluation guidelines • Documents: Application form, Guarantor profile, Borrower and guarantor family details, Photocopy of citizenship, etc.

Interest and Charges

• Interest: As per Pricing Chart or as decided by the management from time to time • Penal Charge: As per Pricing Chart • Prepayment charge: As per pricing chart • Commission: As per pricing chart### Registration and Approval Process

Vehicle registration is the responsibility of the dealer, in the name of MIPL or the refinancing bank.
A maximum of 2 deviations per proposal are allowed; more than 2 deviations require approval from the Chairman.
Approval for any waiver or deviation is done by the CAD holder.
"No deviation" condition in the product paper requires specific approval from the Chairman.

Product Paper Amendments

Any amendments to the product paper can be made in the future with the approval of the Chairman or BOD of the company.
Any circulars or directives issued by NRB will supersede the existing terms and conditions of the product document.

Two-Wheeler Loan (Individual) Flow Chart

Customer acquisition can be through referrals from existing clients, old clients, showroom, or walking customers.
The customer service officer provides information about the loan, registers the client, and assists in filling up the application form.
The marketing officer interviews the client, scrutinizes documents, conducts a residence visit, and establishes the use of the loan, income sources, and security coverage ratio.
The HOD checks the detailed report, conducts a site visit if necessary, and issues the Temporary Delivery Order.
The marketing officer prepares the final report, submits the file to the HOD, and obtains approval from the HOD/CAD Holder.
The credit administration officer completes the legal documentation, checks the file for completeness, and issues the Delivery Order.

Post-Approval Process

The credit administration officer disburses the sanctioned loan, issues a repayment schedule, and obtains the original insurance policy paper.
The loan file is reviewed, and a recovery officer is assigned.
The file is then forwarded for file keeping.

Description

This policy outlines the terms and conditions for hire purchase of two-wheelers within the Inside Valley Policy effective from July 17, 2022. It is approved by the Board of Directors and owned by the Credit Risk Department.