Kathmandu, February 10 Domestic automobile dealers are seeing red because of the decision of the banks and financial institutions (BFIs) to halt lending to the automobile sector. Halting loan disbursement to the automobile sector and categorising it as an unproductive sector will not only make this fiscal's economic growth target of 6.5 per cent unachievable but also adversely affect the overall economy, according to them. 'Automotive sector is among the top sectors giving momentum to the country's economy. As transport is an integral part of all Nepalis today and the sector makes the largest contribution to the state coffers, it's illogical that government and financial institutions view this sector as 'unproductive',' said Anjan Shrestha, president of Nepal Automobile Dealers' Association (NADA) — the umbrella body of domestic automobile dealers. Following the concerns shown by central bank over BFIs' aggressive lending in unproductive sectors that has resulted in current credit crunch, commercial banks of the country, on Thursday, had decided to temporarily halt lending to ‘unproductive’ sectors, including for automobiles. Auto dealers, however, claim automotive industry is the real driver of economic growth of the country. 'The contribution of transportation sector to the annual revenue of the government is more than 25 per cent, and the sector has already contributed almost Rs 100 billion to the government coffers in the running fiscal year,' said Saurabh Jyoti, former president of NADA and chairman of Syakar Trading Company — the authorised distributor of Honda vehicles in Nepal. He further noted that automobile and transportation sector is the base for development of other sectors as it is directly related to mobility of people and goods. Anil Shah, president of Nepal Bankers' Association (NBA), said that banks would continue lending to all sectors including automotive, but at a slower pace to address the current credit crunch. 'However, we will concentrate more on productive sectors as directed by the central bank,' he said. Though the government has not categorised productive sectors for lending, automobiles, real estate, stock market and trading loans are viewed as 'unproductive' for lending in Nepal. Chinta Mani Siwakoti, deputy governor of Nepal Rastra Bank (NRB), stated that banks and financial institutions have disbursed huge amount of loan in automobile sector in this fiscal, which has resulted in shortage of loanable funds for other productive sectors. 'Automotive sector is less productive compared to sectors like agriculture and energy.' However, according to NADA President Shrestha, automobile industry is among the top revenue contributors and almost two million people are employed in this sector. 'There is no rationale in viewing automotive sector as 'unproductive'.' Speaking along the same lines, Jyoti opined that the current credit crunch is the result of government's low spending capacity. 'The automotive sector is just an easy target for concerned officials, who do not seem to be focusing on identifying ways to address the real root of the crisis,' he said, further warning that the government will bear a huge loss in terms of revenue generation if the way of viewing the automobile sector is not changed. However, NRB deputy governor dismissed the concerns raised by automobile stakeholders. 'The current halt in loan disbursement to the auto sector from banks is only temporary.'