NRA directs BFIs to ease loan processThe National Reconstruction Authority (NRA) has directed the concerned stakeholders to ease the process for disbursement of interest-free loans up to Rs300,000 to earthquake survivors against their under-construction house as collateral.
The National Reconstruction Authority (NRA) has directed the concerned stakeholders to ease the process for disbursement of interest-free loans up to Rs300,000 to earthquake survivors against their under-construction house as collateral.
At a meeting this week, the NRA Chief Executive Officer Govind Raj Pokhrel urged officials from the Ministry of Federal Affairs and Local Development, the Ministry of Urban Development, the Nepal Bankers Association (NBA) and the Financial Comptroller General Office to simplify the process of obtaining loan from the financial institutions.
A Cabinet meeting on Monday had made an amendment to the working procedure, enabling quake survivors to obtain interest-free loan up to Rs300,000 from the financial institutions on top of as much amount they would receive in three instalments from the government for reconstruction of the homes destroyed by the 2015 Gorkha Earthquake. “The working procedure has been approved by the Cabinet. Hence, I urge the concerned stakeholders to simplify the loan process,” CEO Pokhrel said in an NRA statement.
The NRA has stated that it is also making preparations to direct all the banks and financial institutions (BFIs) to put sanctioning of loans through the NBA on top of the priority list. The meeting has also requested the Nepal Rastra Bank to issue similar directive to the BFIs.
The recent Cabinet decision has opened the door for the A, B, C and D class BFIs to issue loans based either on collective surety or against the under-construction house as collateral. While micro-finance companies and cooperatives were open to issuing loans on the basis of collective surety, commercial banks, development banks and finance companies had sought a different arrangement. The interest-free loan has to be paid back in five years.
Meanwhile, the NRA is making preparations to release second and third tranches of housing grant to the quake survivors. The agency has stated that the municipalities and rural municipalities will have to ensure that the houses being reconstructed in their areas are compliant with seismic safety requirements before releasing the two instalments.
In the immediate aftermath of the quakes, the government had decided to provide Rs200,000 per household in private housing aid, which was later increased to Rs300,000 to be distributed in three instalments—Rs50,000, Rs150,000 and Rs100,000. Under the government provision, those obtaining the second and third tranches of housing grant are required to complete the reconstruction within five months from the date of obtaining funds.
Of the total 767,705 registered beneficiaries, 615,447 have received the first tranche of government aid while 79,919 have collected the second instalment and 8,562 the third tranche.