Nepal | July 04, 2020

NRA forms committee to simplify process of extending grant, loans

Himalayan News Service
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Kathmandu, February 25

The National Reconstruction Authority (NRA) today formed a five-member committee to frame a guideline to ease the process of extending grant and loans to victims of devastating earthquakes of April and May.

The committee, formed under NRA Joint Secretary Ram Prasad Thapaliya, comprises officials of the Ministry of Finance, Nepal Rastra Bank (NRB), the NRA and an independent consultant.

“It will review existing provisions on extension of grant and credit to quake victims, and simplify procedures so that borrowers and beneficiaries of the grant amount can reap maximum benefit from these arrangements,” NRA Under Secretary Bhisma Kumar Bhusal told The Himalayan Times.

As of now, NRB has introduced a guideline that entitles owners, whose houses have become uninhabitable by the quakes, to credit at subsidised interest rate of two per cent. The ceiling on these loans, which could be obtained through banks and financial institutions, has been fixed at Rs 2.5 million for quake victims of Kathmandu Valley and Rs 1.5 million for victims residing outside the Valley.

On top of this, the government has pledged to extend a grant of Rs 200,000 to every owner whose house was destroyed by the quakes. This amount would be provided in three instalments of Rs 50,000, Rs 80,000 and Rs 70,000.

Also, the government has pledged to extend a credit of
Rs 300,000 at a subsidised interest rate from selected banks and financial institutions to victims whose houses have been completely damaged.

“Although all these arrangement have been put in place, some of the provisions are not very friendly for earthquake victims,” said Bhusal.

For instance, earthquake victims who have acquired loans at two per cent interest will not qualify for the grant amount of Rs 200,000. Many say this may be one of the reasons why very few victims are reaching out to banks and financial institutions to obtain home loans.

“These provisions need to be reviewed and simplified,” said Bhusal.

“Also, NRB has issued directive to financial institutions to extend loan at two per cent interest. But banks have not framed a guideline for borrowers who want to take advantage of this facility. The committee will draft a guideline, which would be acceptable to all the banks and financial institutions.”

Apart from these, the International Organisation for Migration has also proposed to extend interest-free loans to families of Nepalis working abroad. “The committee will also look into this matter and see how the credit can be channelled,” said Bhusal, adding, “The committee has been asked to frame the guideline immediately.”

The earthquakes destroyed at least 510,000 private houses and another 291,707 houses were damaged by the disaster.

A version of this article appears in print on February 26, 2016 of The Himalayan Times.

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