Nepal Rastra Bank orders banks to disburse concessional loans to quake victimsThe Nepal Rastra Bank has issued a fresh directive, informing banks and financial institutions (BFIs) to provide loans to earthquake survivors in line with the Integrated Working Procedure for Subsidised Credit 2018.
The Nepal Rastra Bank has issued a fresh directive, informing banks and financial institutions (BFIs) to provide loans to earthquake survivors in line with the Integrated Working Procedure for Subsidised Credit 2018. The central bank’s move has come following complaints from quake survivors that the financial institutions have not been providing loans as announced by the government.
The central bank on the last week of September had issued the directive asking the BFIs to provide concessional loans of up to Rs300,000. The central bank’s directive is in line with the procedure ratified by the Cabinet.
“We had to issue a fresh directive after receiving complaints from the earthquake victims,” said Shiva Raj Shrestha, deputy governor at the NRB. “The central bank will also be raising public awareness while keeping a tab on the financial institutions. We are initiating an awareness drive through mass media soon.”
Urging the quake victims to apprise them of complaints and suggestions through email and telephone, Deputy Governor Shrestha vowed to take stringent measures against the banks that are found flouting the government directive.
As per the fresh policy, the government will cover 5 percent interest rate provided to the earthquake survivors by the banks and financial institutions. The BFIs have been allowed to scale up profits by up to 2 percent on their base rate. Those taking out such loans are required to pay it back within five years.
The new policy was introduced after the provision of providing a loan of up to Rs2.5million in Kathmandu Valley and Rs1.5million outside the Capital failed to yield the desired results as only around 1,300 people could obtain the loans even as the rebuilding process has entered the fourth year.
The National Reconstruction Authority (NRA), however, said that it had not received complaints on loan issues. “There might be initial hiccups given the decision is quite new. The new modality on loan was introduced after consultations with stakeholders, including those from the class A, B and C financial institutions. Therefore, we are upbeat about the proper execution of this new loan regime,” NRA Joint Secretary Pitambar Ghimire said.
Apart from quake survivors, the concessional loan is also applicable for young entrepreneurs, projects led by youths who have returned from overseas, women entrepreneurs and people from the Dalit community, among others.