The banks had invested more than Rs 10 billion in real estate sector till the first half of current fiscal. According to Nepal Rastra Bank?s Pokhara branch, 94 banks and financial institutions have invested Rs 29.82 billion in land and housing.

Investment in land and housing being unproductive, NRB had instructed banks and financial institutions to reduce the bank loans on real estate below 40 percent of their total investment in the current fiscal year.

NRB has also directed to reduce bank loans in real estates to below 25 percent within two years. Due to this, the bank and financial institutions are in the process of recovering the loans, an officer at NRB?s Pokhara branch said.

Land Revenue Office in Pokhara also stated that selling and buying of land and housing is stagnant. "The transaction of land and housing has dropped to zero in April," Mukunda Dahal, officer at the office, said. It has also affected revenue collection, he said. In March, revenue collection decreased by 70 percent as compared with the previous month.

Rishiram Lamichhane, registration head at the office, said revenue collection was Rs 17.10 million in March against Rs 57 million in November 2009. According to him, there were 1962 land transactions in March, 400 less than in February.