Despite massive destruction of houses in last year’s earthquakes, the number of takers of subsidised loans—offered by the government to quake survivors for rebuilding homes—has remained negligible.

A total of Rs16.5 million has been extended as of mid-May 2016 under the scheme, according to Nepal Rastra Bank (NRB). Two months ago, only six loans worth Rs15 million were extended.

The quake destroyed over 800,000 houses. As per the Post Disaster Need Assessment (PDNA), the catastrophe caused loss of Rs350 billion in the housing sector alone.

In order to address housing problem following the quake, the NRB introduced a refinance facility at zero percent interest rate to BFIs with an objective of providing concessional housing loans to earthquake survivors at just 2 percent interest rate.

As per the working procedure, only the owners of houses that have been rendered uninhabitable can receive the soft loans. Home owners in the Kathmandu Valley are eligible to get a maximum of Rs2.5 million, while those elsewhere in the country can get up to Rs1.5 million.

However, bankers said they are surprised by such a “discouraging number” of loan requests. 

Agriculture Development Bank Limited (ADBL) said it has not even received a single proposal for the loan. ADBL CEO Lila Prakash Sitaula said there had been two inquiries long ago, but not a single concrete proposal has so far been tabled at any of the ADBL branches. 

“It is probably due to the stringent provisions in the working procedure such as those having another house or those not having enough collateral cannot get the subsidised loans,” said Sitaula.

Besides, the quake survivors’ interest in first claiming the government-pledged grant of Rs200,000 might be another reason for the discouraging enquiry, the bankers said, adding the government’s failure to issue a new building code on time and the fuel crisis and unavailability of raw material due to the four-month Indian blockade are other major reasons for the scheme’s failure. 

Nepal Bank Limited has also received “very few” proposals for loans under the scheme. “A few loans have gone to quake victims through our branches in Chabil, Kathmandu, Dolakha, Chitwan and Makawanpur,” said CEO Devendra Pratap Shah. “But there are not many loan proposals in our roster.”

Others such as Laxmi Bank, Nepal Bangladesh Bank, Nepal Credit and Commerce Bank and Prime Commercial Bank have issued a few loans under the scheme. 

Meanwhile, the government has announced to provide loans worth R300,000 to each quake victim without collateral on the top of the grant of Rs200,000.