The Nepal Rastra Bank (NRB) has brought a flexible policy to improve the realty sector that has been on a downward spiral for the past four years with the central bank showing signs of taking initiative to improve the sector while revealing the monetary policy for this fiscal year on Sunday.

The monetary policy states that requisite provisions will be made to settle ownership of houses/apartments where banks and financial institutions have mobilized loans on surety and the customers have also paid their installments. NRB Spokesperson Bhaskar Mani Gyawali said that policy arrangements will be made through the monetary policy to ensure broad discussions about the sector. “Though the central bank has made policy provisions in the monetary policy staying within its limits, it cannot decide about the realty sector on its own,” he stated. “Such arrangements will be made soon through discussions with the government bodies concerned,” he added.

Vice president of the Nepal Land and Housing Developers' Association Ichchha Bahadur Wagle said flexibility of the monetary policy toward the realty sector is a positive development. “The government bodies concerned will now take initiative for recovery of loans in the sector where banks and financial institutions and commoners have invested billions,” he added. He said recovery of loans issued by the banks and financial institutions to the housing and apartment developers, and return of amount submitted by commoners while booking houses and apartments will become easier due to government initiative.

The banks and financial institutions have invested around Rs 110 billion in the sector. NRB had fixed a 25 percent ceiling to reduce loan concentration on the sector four years ago. A few commercial banks had invested up to 40 percent in the sector before the ceiling was announced. The entrepreneurs have been claiming that the mandatory provision of reducing the proportion of investment in the realty sector to 25 percent had pushed the sector into trouble.

source: karobardaily,21 july 2013