Gorkha Earthquake victims loan issue: Centre, central bank in funds duelThe government and the central bank seem to be on a different page over the issue of concessional loans provided to victims of the 2015 Gorkha Earthquake.
The government and the central bank seem to be on a different page over the issue of concessional loans provided to victims of the 2015 Gorkha Earthquake.
While the government has been assuring the quake victims on the availability of the funds, senior officials at the Nepal Rastra Bank say that disbursement of funds should be discontinued.
Addressing a press conference on Friday, Finance Minister Yuba Raj Khatiwada dismissed the suggestions that interest on the concessional loans offered by the government through banks and financial institutions would be increased.
“We have already directed the central bank to continue supporting quake victims,” Khatiwada said.
Officials at the central bank are, however, against the idea of giving continuity to the funds. They are of the view that the funds should be discontinued as the quake survivors do not seem to need the help anymore. Moreover, the funds pose a serious risk to the financial institutions and should be reviewed at the earliest, they said.
Central bank records show, the banks and financial institutions have disbursed Rs 1.77 billion in housing loans to quake victims at a concessional interest rate of 2 percent as of mid-June 2018.
The Nepal Rastra Bank (NRB) provides refinance facility to financial institutions at a zero percent interest to facilitate housing loans to the quake victims.
As per the government provision, homeowners in Kathmandu Valley, whose houses have been damaged by the quake, will get the maximum loan of Rs2.5 million. Those outside the Valley will receive up to Rs1.5 million.
According to the National Reconstruction Authority, an agency mandated to supervise the post-earthquake reconstruction drive, around 1,200 households have collected the amount so far. The authority’s data shows around 750,000 houses need to be rebuilt following the horrific disaster that killed 8,790 people.
According to NRB Executive Director Nara Bahadur Thapa, the disbursement of concessional loans is not low considering the overall scenario of the reconstruction drive.
“People have not even received the housing grant that has been provided by the government for free,” Thapa told the Post, adding that 2 percent interest rate on the concessional loans does not seem to appeal to the quake victims.
The NRA data shows 269,573 houses have been rebuilt so far, but a large chunk of quake survivors are still to obtain government support. The government provides Rs300,000 for the reconstruction of private homes in three instalments—Rs50,000, Rs 150,000 and Rs 100,000.
A senior central bank official told the Post that it will be lobbying with the Finance Ministry to discontinue the funds because of the poor response.
“Moreover, it is not a good idea to put the general people’s money at risk by putting undue pressure on the financial institutions to sanction concessional loans,” the official said.
The NRA, however, does not agree with the statement.
NRA Spokesperson Manohar Ghimire claimed that most of the financial institutions had made the procedure to obtain the concessional loan difficult, resulting in a low loan disbursement.
“We have been consistently urging the financial institutions to take this initiative as part of their corporate social responsibility and look beyond the risk factor or profitability,” Ghimire said.