Support to National Reconstruction Authority (NRA) to Facilitate Uptake of Concessional Loan Products for Gorkha Earthquake Victims

Background

On April 25, 2015, an earthquake of 7.8 Richter scale, with epicentre in the eastern part of Gorkha district, struck Nepal. The Gorkha Earthquake and the subsequent aftershocks left 8,979 dead, 22,309 injured. The damage to the infrastructure was equally devastating.

To lead and manage the recovery and reconstruction work of the damaged infrastructure, Government of Nepal (GON) formed Nepal Reconstruction Authority (NRA) on December 25, 2015.

One of the major challenges identified by NRA in providing better post-earthquake reconstruction was the lack of appropriate housing finance solutions, especially for low-income households. To address this gap GON announced reconstruction housing loan under the concessional loan framework for the Gorkha earthquake victims.

Challenges

Three years since the earthquake and the introduction of concessional loan, the Gorkha Earthquake victims still lack proper access to housing finance. Facilitation of the housing finance faces various hurdles in implementing the loan process especially among the low income and vulnerable groups.

Lack of proper knowledge and awareness among the victims in the rural areas and the banks serving in such locations came up as one of the major obstacles. The victims had little or no information regarding the legal provisions related to land/property, collateral policy, interest rates subsidy and other key features of the concessional loan. The supply side of the financing also required intervention for a smooth operation of the concessional loan.

Sakchyam’s Intervention

Ukaid Sakchyam, in partnership with NRA, is undertaking a pilot project in six local units of Gorkha and Dhading districts to facilitate uptake of concessional housing loan product. The programme’s intervention aims to support policy reforms and capacity building in the areas of access to finance through public-private partnerships.

Likely Impact

The initiative will cover Gorkha Urban Municipality, Sahid Lakhan Rural Municipality and Palungtar Urban Municipality in Gorkha district and Jawalmukhi Rural Municipality, Nilkantha Urban Municipality and Dhunibesi Urban Municipality in Dhading district. These locals units have a high concentration of beneficiaries — an average of 1674. The pilot project intends to serve 40% (4,000) of the targeted beneficiaries. This will help in providing necessary information and feedback for scaling-up the project to serve the rest of the eligible beneficiaries in all earthquake-affected districts.