Print Edition - 2015-08-02 | MONEY
NRB to study needs to ascertain fund size
Aug 1, 2015-
Nepal Rastra Bank (NRB) will recommend the size of the Rehabilitation Fund to be established to refinance and provide interest subsidy to earthquake-affected sectors, including housing, agriculture, trading and tourism, only after conducting a needs assessment.
The government has announced establishing the fund to support various enterprises related to these sectors in the budget for fiscal year 2015-16.
At a meeting on Friday, the central bank had proposed setting up a Rs10-billion fund, but Finance Minister Ram Sharan Mahat asked the NRB to first study the needs.
“We had proposed the Rehabilitation Fund of at least Rs10 billion, considering the capacity of the government to provide refinance and cash subsidy, although the needs could be much higher,” said NRB Spokesperson Min Bahadur Shrestha. “As per the minister’s instruction, we will conduct the study first and recommend the size.”
While presenting the proposal, the central had planned to design recovery programmes remaining within on Rs10 billion.
The ministry has said it will put money in the fund based on the needs assessment. “We have set aside adequate amount under the miscellaneous heading, and necessary resources for the Rehabilitation Fund will be injected once the size is finalised,” said Finance Secretary Suman Sharma.
The government has fixed the size of the fund for the National Reconstruction Authority at Rs74 billion. Sharma said the government could put in around Rs2 billion in the fund, and could inject all the necessary resources after the budget is endorsed by the Parliament.
The Rehabilitation Fund is aimed at helping quake-affected businesses recover. As per the Post-Disaster Needs Assessment (PDNA), the housing sector witnessed the highest losses (damage and business losses) of Rs350 billion, while the commercial sector witnessed damage and business losses of Rs16.95 billion. Tourism suffered a total losses of Rs81 billion, while agriculture sector faced Rs28.36 billion losses.
According to Shrestha, all businesses may not need refinancing and interest subsidy. “We have to find out those requiring refinance and cash subsidy,” Shrestha said.
The central bank has announced a policy of providing refinance facility for the reconstruction of damaged houses. As per the policy, victims from the Kathmandu valley could get loans up to Rs2.5 million at 2 percent interest from banks and financial institutions, while those from outside the valley could get up to Rs1.5 million.
The central bank has also made a provision allowing earthquake-hit borrowers to get their loans rescheduled by one year.
Published: 02-08-2015 09:25