Central bank simplifies concessional home loans guideline

Earthquake survivors seeking concessional home loans, from now on, will not have to submit official documents authenticating that the houses they lost to devastating quakes of last April and May were the only units for dwelling. Simplifying the guideline on concessional home loan for quake survivors, Nepal Rastra Bank (NRB) has said self-declaration from home owner, mentioning house one lost was the only place to reside, would be sufficient to bagthe credit. Earlier, such documents had to be issued by government authorities or local bodies, such as office of the village development committee, municipality, sub-metropolitan city or metropolitan city. Also, NRB has said quake survivors, who have obtained concessional home loan, can build houses on land other than where their houses had collapsed, if they submit an official document stating the plot, where their houses collapsed, is unsafe for building construction, as per directive. In May 2015, NRB introduced a guideline on concessional home loan for quake survivors, paving way for those whose houses had become uninhabitable to acquire credit from banks and financial institutions (BFIs) at annual interest rate of two per cent. The ceiling on such loans has been fixed at Rs 2.5 million for quake survivors of Kathmandu Valley and Rs 1.5 million for survivors residing outside the Valley. The loan has to be paid back between five to 10 years. But if quake survivors are currently servicing home loans, they can get credit facility for up to 15 years. Despite this facility, BFIs, so far, have only been able to issue concessional home loans of Rs 20 million. The central bank, through the latest directive, has directed BFIs simplify the process of extending the credit. Source: The Himalayan Times