Issuing a notice on Thursday, the central regulatory bank introduced the new facility that aims to provide relief to people devastated by the earthquake of April 25.
According to the new provision, earthquake victims can get loans at a maximum of 2 percent interest rate to rebuild their homes damaged by the earthquake. However, BFIs are allowed to lend a maximum of Rs 2.5 million for quake-hits inside the Kathmandu Valley and Rs 1.5 million for those outside the valley.Licensed 'A', 'B' and 'C' class BFIs will float such loans, according to the notice.
This is the first time that refinancing facility for residential home loan has been introduced. NRB so far had been providing four types of refinance facility -- general refinance, special refinance, export refinance and SMEs.
Bankers, however, say the new refinance provision lacks procedural clarity. "The refinance facility is obviously good as it will heal the wound of earthquake victims who have become homeless," a CEO of a commercial bank told Republica. "However, the provision also calls for the working procedure which lays out the process and other detailed provisions about the refinance facility."
The CEO further said that loan mobilized under the refinance facility has maturity period of six months as per the Nepal Rastra Bank Act which needs to be amended as home loan requires long-term maturity period.
However, NRB Spokesperson Min Bahadur Shrestha said that the maturity period can be extended every six months once the maturity period expires. "This is the technical aspect which is stated in the NRB Act," he added.
NRB has proposed one-year maturity period in the NRB Act (Amendment) Bill which was registered in the parliament secretariat last month.
According to NRB officials, interested borrowers will have to present recommendation letter from the respective village development committees, municipality or other local government agencies.
Related story
2,345 more households to get housing grant
