Kathmandu, April 26

Banks and financial institutions (BFIs) have issued loans worth Rs 14 million as of April 12 to the earthquake victims for rebuilding individual houses under the refinancing facility of Nepal Rastra Bank (NRB).

Under the refinancing facility of NRB, BFIs have been asked to extend loan of up to

Rs 2.5 million to the residents of Kathmandu Valley and Rs 1.5 million to the residents in the quake-hit districts outside the Valley, whose homes were destroyed in the devastating quake, at two per cent interest rate.

Issuing a circular on May 27 last year, the central bank had urged the BFIs to extend loan of up to 80 per cent of their tier 1 capital. NRB would extend the fund to the BFIs for refinancing facility at zero per cent interest. Ironically, less than 10 individual households have benefited so far from the home loan schemes for quake victims.

Addressing the 61st anniversary of NRB today, NRB Governor Chiranjibi Nepal said that there is dismal progress in loan disbursement to the earthquake victims from the BFIs. Governor Nepal urged BFIs to expedite disbursement of loan to the quake-affected people who have approached them.

Victims, who wish to obtain loans from the BFIs, need to submit the verified documents from the respective municipalities and village development committees. BFIs themselves can negotiate the loan repayment period with the borrowers.

However, the repayment period cannot vary too much from their normal home loan schemes.

Over 500,000 individual houses were damaged by the devastating temblors of April and May last year.

Under the refinancing facility of NRB, the credit for home rebuilding is issued for five to 10 years and those who were already using home loan facility from the BFIs get payback period of 15 years for the second loan, as per the Earthquake Relief Refinance Procedure of NRB.

However, only the victims who can assure repayment of loan are eligible for such loan schemes, meaning those who have satisfactory source of income and collateral.

Moreover, those taking the loan are required to build earthquake-resistant homes.

In the aftermath of the earthquake, the government had announced it was extending

Rs 200,000 per household to facilitate in rebuilding of individual homes of victims who did not have income source to assure the loan repayment and collateral.

A total of 319,912 individual households in 11 quake-hit districts (outside the Valley) have been listed as beneficiaries, according to National Reconstruction Authority (NRA). Even those who receive grant from NRA will be able to obtain loan from BFIs to build earthquake-resistant houses.