The NRB should reconsider its policy on the soft loan and extend the payback period if its intent is to help them

Immediately after the devastating earthquake in 2015 the government had announced extending loan assistance to the quake victims through Nepal Rastra Bank (NRB). It was planned that NRB would provide the loan to the commercial banks at zero percent interest rate and the latter would issue it to the quake victims at two percent interest rate. But they were required to pay back the loan within two years. As per the government decision, the quake victims in the Kathmandu Valley would get Rs. 2.5 million and others in 31 hilly districts Rs. 1.5 million. The payback period fixed by the central bank is very short and impractical. Apart from this, the government has also decided to provide Rs. 300,000 as grant assistance to the victims in three tranches and the grant assistance has to be utilized within this fiscal. But sad to say most of the quake victims even within the Valley have not been able to get the grant assistance. It means that both the grant assistance and the soft loans are going to freeze because of the faulty policies of the government, Nepal Rastra Bank and the Nepal Reconstruction Authority (NRA), the body created to spearhead the reconstruction processes.

The central bank’s policy has not attracted many quake victims if the statistics are anything to go by. According to the commercial banks, they have been able to disburse only Rs. 780 million in the last one-and-a-half year period. The victims have shown no interest in borrowing the concessional loan mainly because of the short payback period. Another string attached to the concessional loan is that a borrower needs to renew the loan after one year. It means that the borrower has to pay the installments on time. Failure to pay the installment means the next year’s loan will not be renewed. The NRA’s faulty provision is to blame for the short payback period fixed by the NRB. When the NRA has set the deadline of extending its grant assistance to the victims by the end of this fiscal, how can the central bank issue concessional loans for more than two years?

Most quake victims in the rural areas have been deprived of the concessional loans due to no access to commercial banks which are mostly concentrated in urban centres. Micro-finance institutions (MFIs) which are active in rural areas have been allowed to issue loans up to Rs. 300,000, that too, on a group guarantee under this scheme. But the MFIs have not been offered the concessional interest rate as they are not allowed the refinancing facility. Nepal Rastra Bank’s policy of providing soft loans to the quake victims is akin to giving with one hand and taking away with the other. The soft loans provision should have been similar to the auto or home loans that commercial banks provide to their clients for up to 10-15 years. Even a layman can calculate that a quake victim whose property has been damaged cannot pay back the soft loans within two years. The NRB, therefore, should reconsider its policy on the soft loan and extend the payback period if its intent is to help them. All concerned agencies and autonomous bodies must work in line with the government policy so that the victims get benefits without any hassles.

Private practice

The Ministry of Health (MoH) has permitted its employees, who include doctors, to carry out their private practice. However, they are expected to work there only after office hours. About 1,000 doctors had written to the MoH seeking permission to do so to which the Ministry has agreed. The Ministry however requires its employees to seek prior permission for the establishment or registration of any bank or company and also health clinics and  private hospitals or nursing homes.

Now the ministry has sought applications from its employees numbering more than 33,000 to carry out private practice and trade. Such practices would not be allowed to those who have not submitted the application to do so with the MoH. It would also provide the ID cards for doctors and other employees who have been permitted to carry out private practice and trade. Legal action could be taken against those who do not follow the rules. However, such a provision should not hamper the daily business of the hospitals and also offices. Those who do not comply will face action in the form of rejection of registration and denial of renewal. It appears that this new provision will deal with the problem besetting the health area.