Comedy of errors

Published On: June 30, 2016 12:25 AM NPT By: Republica  | @RepublicaNepal

The main opposition, Nepali Congress, had been consistently obstructing the parliament, citing the government’s failure to deliver timely help to around 700,000 families rendered homeless by last year’s earthquakes. The house could resume its normal business only after the prime minister categorically committed to providing each victim family Rs 150,000 in the first of two installments totaling Rs 200,000. The government had announced Rs 200,000 in grants to all affected families shortly after the 7.8-magnitude earthquake on April 25th, 2015. But so far only around 6,000 families have been able to receive the first installment (initially fixed at Rs 50,000) even though at least 171,000 families have already signed agreements with local authorities—on behalf of the National Reconstruction Authority (NRA)—that make them eligible for such grants. This failure to deliver timely help to quake victims is the result of a comedy of errors. It appears that the areas where local authorities have signed grant agreements with quake victims are different to the areas where the NRA has signed agreements with various banks to deliver such grants. NRA officials, in other words, were careless.

The authority has been careless in other areas as well. For instance there have been many instances of discrepancies between the names of earthquake victims registered with NRA and the names of such victims provided to local bank units where their share of grants are to be deposited. In this depressing drama, the banks and financial institutions (BFIs) are culpable of a different sort of crime. So far only 18 earthquake victims have been able to take out the subsidized loans offered in the wake of last year’s earthquakes. The Nepal Rastra Bank had instructed BFIs to provide these loans at only 2 percent interest to earthquake victims. The central bank would then refinance these BFIs at zero percent interest. But the banks have been reluctant to offer such subsidized loans—with a ceiling of Rs 2.5 million inside Kathmandu valley and Rs 1.5 million outside the valley. Many bankers think the payoff is too little. They are also unhappy at what they say are arbitrary ceilings on home loans. Nor do they trust the central bank when it promises to refinance them on time.

The way we see it, most banks see the work of providing subsidized loans as an added burden, with uncertain payoffs. In so blatantly chasing profits, they seem to forget that they have social obligations as well. If they refuse to realize their duty, the central bank must make them. We believe the Nepal Rastra Bank has so far been far too lenient on these banks and financial institutions that are noncomittal on their social duty. Overall, too, the way in which the post-quake grant and loan delivery has been handled so far leaves a lot to be desired. The main problem is lack of commitment for timely resettlement of quake victims. Hundreds of thousands of families have already spent 15 months in rickety shelters that provided little protection against lashing monsoon rains or the bitter winter cold. After their prolonged hardships, they deserve some respite. 

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