Govt to provide easy loans to aspiring overseas workers, returnees

KATHMANDU, June 29 :

Aspiring overseas workers will not have to take loans from informal channel at high interest rates if the government´s policies and programs for fiscal year 2014/15 are implemented in practice.

According to the policies and programs, which were unveiled by President Dr Ram Baran Yadav on Sunday, aspiring overseas workers would have easy access to loans.

Talking to Republica, Buddhi Bahadur Khadka, spokesperson of the Ministry of Labor and Employment, said the government devised the program keeping in view the rising cases informal money lenders charging exorbitant interest rates on loans from aspiring migrant worker who lack collateral to get bank loans.

The government has said that it would make an arrangement under which the workers borrowing such loan would repay it from the money they send home from foreign job destinations.

Aspiring Nepali overseas workers stand in a queue at the Tribhuvan International Airport in Kathmandu in this file photo.(Bijay Rai/Republica Files)

According to an Amnesty International report of 2011, migrant workers paid interest in range of 15 to 60 percent to moneylenders as compared to official bank rates that range from 8 to 14 percent.

Upendra Poudyal, vice president of Nepal Bankers Association (NBA), told Republica that the provision to provide easy and accessible loans to aspiring overseas workers would provide huge relief to youth who are exploited by informal money lenders.

“This program might help to curb the role of informal money lenders. The government, however, should develop appropriate mechanism which ensures that such loans are repaid in time,” he added.

The government has also said that it would establish a bank to cater financial services for to aspiring overseas workers or overseas returnees. “The bank will be established in collaboration with private sector," states the policies and programs.

Khadka said the government was mulling over establishing a bank which will help the migrant workers to channelize remittance and offer loans to overseas workers and returnees, among others.

“We have just begun discussion on establishment of such bank by mobilizing the funds of Foreign Employment Welfare Fund, Social Security Fund and remittance income,” he added.

Apart from providing loans to aspiring overseas workers, the government has also said that it would provide concessional loans to overseas returnees so that they can be involved in productive sector back in Nepal.

 "In order to utilize the skills and capital of the overseas returnees, concessional loans will be provided to them by creating an appropriate environment," states the policies and programs.

Meanwhile, the government has also said that it would expand the process of channelizing the distribution of social security allowance through banks and financial institutions.
NBA´s Poudyal believes distribution of funds through banking channel would help to increase peoples´ access to finance as well as reduce corruption at the local level while distributing cash to the beneficiaries.

Source: Republica