November 3: Any individual purchasing home or apartment  for the first time will now be able to get loan up to 70 percent from banks and financial institutions (BFIs). Prior to this, BFIs had been funding 50 percent of the total cost within the Kathmandu Valley and 60 percent outside the valley.

Nepal Rastra Bank introduced this new policy by amending the Unified Directives on Friday, November 1.  As per the revised policy, borrowers can acquire up to Rs 15 million from banks.

The central bank has stated that in order to acquire such loan, the borrower must have to purchase a residential area of 3000 square feet and the housing must be purchased for personal use.

Before providing such loan, BFIs must ascertain that the borrower has not taken such type of loan before. The central bank has also instructed not to increase the installment amount in case the interest rate increases.

Although this new provision has provided some relief for those aspiring to purchase apartments at a time when the central bank has tightened its screws on lending in the housing sector, CEO of Sanima Bank Bhuvan Dahal says there are some ambiguities in this new policy.

“This provision is overall good. But the central bank does not have clear policy regarding the individuals who had taken such loans and cleared all the dues,” said Dahal.

Dahal further said that the BFIs do not have records of such individuals.

“This will complicate things for us,” he added.

Likewise, the central bank as also introduced a policy to stabilize the rate of interest. As per the new policy, a mutual understanding can be reached between the lender and the borrower for a fixed rate of interest if the loan is provided for a period of more than a year.

BFIs cannot increase the rate of interest whatever might be the situation. However, such rate of interest will be more than the normal rate, according to BFIs.