Under the current terms of the central bank, the needy villagers will find it difficult to get the subsidised loan at two per cent. Even the valleyites, without collateral will find it difficult to get the loan to reconstruct their damaged residence at two per cent.
Bankers themselves have doubts whether the scheme would be useful to poor and needy villagers, who lost their only houses.
One has to submit the evidence through government agencies like municipalities or their ward offices and village development committees to get the loan, according to the central bank guideline. Likewise, the banks and financial institutions don’t give loans to those, who do not have the repayment capacity and enough collateral. “The regular income source is key to repayment capacity,” according to a banker, who claims that only five per cent of the affected villagers could get loan due to procedural difficulty.
Likewise, the banks and financial institutions will take collateral of the land that is 20 metres from the main road. However, the earthquakes have demaged houses and villages in the far flung areas, where the banks and financial institution have either no reach or cannot take as collateral.
“The banks and financial institutions have to follow their procedure before floating the loans,” the central bank spokesperson Min Bahadur Shrestha said, adding that the borrower has to fulfill all the procedures as in the normal housing loan. The normal procedure is difficult for the commoner at normal interest rate too.
Under the refinance scheme, the central bank provides refinance to banks and financial institutions at zero per cent and the banks and financial institutions will float loans to the individuals at two per cent for 10 years. Though, it has one year term only at present. But the borrower has to pay three per cent interest as the borrower has to pay one per cent insurance premium of loan, apart from interest.
Likewise, a Valleyite can get Rs 2.5 million maximum and outsiders of valley will get Rs 1.5 million maximum.
The first year will be grace period, and the borrowers need not pay the instalment but banks and financial institutions have to collect the interest for that period later. The repayment period will be five years to 10 years, he said, adding, “If a damaged house was built by taking home loan, the repayment period has been extended to 15 years.”
Only those victims, who have no houses to live in would be eligible to get the loans,” he said, adding that those who had given the damaged building in rent and stayed in another undamaged building won’t get the facility. “If an owner has single house and has given some flats on rent for office purposes, will have to prove from the authority that the building has been damaged and is inhabitable.”
Likewise, central bank has clarified that the subsidised loan under refinancing scheme is strictly for the residential buildings. The owners of commercial buildings destroyed by the earthquake will not get subsidised loans under the refinancing scheme.
The devastating earthquake of 7.8-magnitude, and its subsequent aftershocks, has damaged many commercial buildings, apart from residential buildings. Multistoey hotels and lodges in and around the New Bus Park area and Gongabu have been completely damaged.

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