Ichhya Raj Tamang is the president of Nepal Land and Housing Developers' Association (NLHDA) and chairperson of Civil Homes Pvt Ltd. He spoke to Prakriti Pathak of THT Property Plus about the present situation, challenges and prospects of the real estate sector.Excerpts:
What is your response on the new directives issued by Nepal Rastra Bank (NRB) regarding home loans?
Though NRB has decided to exclude personal home loans of up to Rs 6 million from real estate loans, it is just a piece of the whole pie. This directive does encourage the general public to buy houses, but it will make very little difference to developers.
What are the problems faced by the housing and real estate developers?
Real estate is currently at a standstill and it is impossible to overcome this situation until NRB relaxes the cap. The government has a policy, according to which banks can invest up to 40 per cent in any sector. But in real estate, NRB has limited this to only 25 per cent -which is unjust and irrational.
According to central bank data, approximately Rs 1.35 billion is invested in the real estate sector. If the liquidity crisis is not solved, all banks will be bankrupt and the real estate sector will collapse. The only solution to liquidity crisis is to lift the cap from real estate.
Do you mean NRB had no valid reason to put the ceiling? Is it not a major step to control the asset bubble?
NRB is, of course, entitled to be concerned about the situation. But it should not enforce the ceiling without any study. Instead, it should formulate proper guidelines to monitor the real estate sector. I would also like to mention that there were no artificial transactions, as many assumed. And there were no chances of the bubble being burst.
It was the demand of that time since there was no investment in productive sector due to the decade long conflict and Maoist agenda.
People believed that Maoists would nationalise free land once they entered the mainstream. But this did not happen. So, people were relieved and re-attracted towards this business. That is why the prices skyrocketed. Since inflation has affected every sector, it is no surprise that the prices of land have also been hiked. Similarly, Tarai unrest and unstable government were also responsible for the price hike.
All constructions are targeted only for upper and middle class strata. Isn't there a need for low-cost housing too?
We can provide low-cost housing only if the government grants subsidies to us. For instance , extra expenses such as tax, VAT and paid-up capital need to be deducted. Barren public land can be set up with infrastructure such as electricity, drinking water and sewage. The people who cannot afford land should be instructed to build their houses in such places so that they will not be burdened with land prices. The government should also undertake responsibility for such housing under its scheme to fulfill basic needs of all citizens. The solution would be the government developing guideline to give subsidies to rooms or areas allocated in constructions targeting people from lower economic strata.The mechanism and technology of low-cost housings also need to be monitored and regulated.
How beneficial is the idea of allowing foreigners to buy houses in Nepal?
I think it is a good idea. Though it is still in the conceptual stage, the draft has mentioned that only those above 50 years of age can buy houses here. Once they reside in Nepal, they will bring in foreign investment. It will also generate employment.
What are the challenges of this sector?
Firstly, the government lacks clear vision and policy regarding real estate and housing and its potential to boost the economy. Secondly, we the developers and entrepreneurs need to gain knowledge about planned growth, as unscrupulous agents are encouraging haphazard expansion.
What are your expectations from the government?
In the absence of concrete bylaws, this sector is operating on an ad hoc basis. To ensure smooth running, the government must recognise real estate as an industry and come up with an effective code of ethics. It should also take steps to pass the House and Land Transaction Act which has been under consideration in the parliament since three years.The development budget lapses every year due to unstable government and parties' differing ideologies, which is a major hinderance for development in the sector.
source: The Himalayan Times(2011),"We can provide low-cost housing only if the government grants subsidies: Ichhya Raj Tamang", The Himalayan Times,26 March 2011
Fourth REMA training concludes
Brihat Investments Pvt. Ltd. (BI), in affiliation with Thai Real State Business School (TREBS), has for the fourth consecutive time, successfully conducted the Real Estate Marketing Agent (REMA) Course from March 23 - 28, 2011. With the primary objective to bring about positive changes in the construction world and with an emphasis on the 3 RE’s - Real Estate Investment, Real Estate Partnering for Entrepreneurship and Real Estate Marketing Agents - the trainees are guided on ethical business deals in the land and housing sector.
Dr. Sopon Pornchokchai, a Real Estate Expert from TREBS Bangkok, Mr. Om Rajbhandary, Chairman of BI & CEO of TCH and the Real Estate and Marketing Expert along with other professionals, bankers, insurance experts and other concerned authorities partook in this session.
Altogether, 14 participants were fortunate to be united in this session where Real Estate Market Scenario of Nepal, Fundamentals of Real Estate Marketing, Housing Projects at a glance were delved by Mr. Om Rajbhandary while Er. Shambhu K.C, Superintendent Engineer, Department of Urban Development Building Construction Division Officer had spoken on By-laws for Residential and Commercial Buildings, Ar. Purusottam Dangol, highlighted on Civil Construction and Role of Architects in Real Estate Market. Mr. Ranjit Acharya, CEO of Prisma Advertising mesmerized the trainees with the product selling enhanced by knowledge, power and negotiation aspects in an improvised ambience compounded with bizarre roles of the media world and Mr. Kalyan Bikram Pande, Head of Business Banking of Janata Bank had spoken on banking sectors' role in housing with proper emphasis on current market scenario. Everest Insurance’s General Manager, Mr. Kewal Krishna Shrestha highlighted on the insurance attributes that affect this sort of industry in many ways.
Similarly, Advocate, Mr. Rudra Prasad Pokhrel elaborated on the necessities of knowing the Legal Formalities in Real Estate while The Comfort Housing's Senior Manager / Advocate, Mr. Sushil Kumar Chapagain had shed more light on the intricacies of registration and legal formalities. REMA Coordinator, Ms Sabita Joshi also spoke on the real estate transactions with reference to the role of REMA in focus. Dr. Sopon Pornchokchai portrayed his visions with his meticulously gathered experiences highlighting the practical ideas of Real Estate Marketing, Property Valuation and Market Feasibility.
Both the buyers and sellers eventually benefit if transactions are undertaken by such trained individuals as such ethical practices promote genuine valuation of the property as well as eliminate related hassles for the buyer.
Property valuation key to real estate
There is an urgent need to adopt and follow a consistent property valuation approach and developing trained property valuator.
This was emphasised by the stakeholders in the one-day workshop on ‘Valuation Practice in International Standard’ jointly organised by Nepal Land and Housing Developers’ Association (NLHDA) and Brihat Investments here today.
“The housing and realty sector needs professional and educated property valuers so that the valuation becomes reliable and consistent,” said Om Rajbhandary, president of Brihat Investment and vice president of NLHDA.
He also stressed on the need of valuers being ethical so that they will not value the property based on the interest of their clients’ interest and commission.
“Moreover, the genuine valuation of property will also encourage entry of more competitive entrepreneurs in this field,” he said, adding that the workshop will help stakeholders in determining the kind of valuation approach that will be suitable for the unorganised market like Nepal.
At present, the property valuation is undertaken in Nepal only to access loans provided by the banks.
“A Valuer does not invent value, but interprets the market forces that determine the value, a professional valuer determines the value of property based upon market conditions at a given time and situation,” said Dr Sopon Pornchokchai, a real estate expert from Thai Real Estate Business School (TREBS).
“In Nepal, only cost approach of property valuation is used. There are four major approaches that are used in property valuation globally - cost approach, sales comparison approach, income approach and market approach,” informed Ramachar Srinivas, expert on real estate valuation.
“to assess the right value of the property the stakeholders -banks and valuers need to have extensive database of prices of inputs that can be referred to when valuing a property based on cost approach,” he added.
source: The Himalayan Times
Realtors' bid to iron out crinkles in property valuation
Nepal Land and Housing Developers’ Association (NLHDA) in association with Brihat Investment on Tuesday organised a workshop ‘Valuation Practice in International Standard’.
Addressing the function, Om Rajbhandary, third vice-president of NLHDA, said the workshop aims to introduce practical approaches in property evaluation. “We hope to deliver practical approaches in property evaluation by adopting international techniques,” said Rajbhandary.
Ramachar Srinivas, an expert from R. Srinivas and Associates, India, presented a paper on Valuation of Personal Property (Plant and Machinery). Similarly, Sopon Pornchokokchai, director of Thai Real Estate, presented a paper on Practical Valuation Techniques for the Development of Nepal.
Maha Prasad Adhikari, deputy governor of the Nepal Rastra Bank, said such programmes would help even regulators to formulate policies. “Output of such workshops can become guidelines for regulators for formulating policies,” said Adhikari.
NLHDA President Ichha Raj Tamang said the programme would help build a platform for sorting out flaws in the realty sector.
source: The Kathmandu Post
Addressing the function, Om Rajbhandary, third vice-president of NLHDA, said the workshop aims to introduce practical approaches in property evaluation. “We hope to deliver practical approaches in property evaluation by adopting international techniques,” said Rajbhandary.
Ramachar Srinivas, an expert from R. Srinivas and Associates, India, presented a paper on Valuation of Personal Property (Plant and Machinery). Similarly, Sopon Pornchokokchai, director of Thai Real Estate, presented a paper on Practical Valuation Techniques for the Development of Nepal.
Maha Prasad Adhikari, deputy governor of the Nepal Rastra Bank, said such programmes would help even regulators to formulate policies. “Output of such workshops can become guidelines for regulators for formulating policies,” said Adhikari.
NLHDA President Ichha Raj Tamang said the programme would help build a platform for sorting out flaws in the realty sector.
source: The Kathmandu Post
Furniture that helps you work better
People generally assume that hard work and calibre of the employees working in the office are the sole reasons of its growth and productivity. While they unquestionably play a great role in achieving the goal, office furniture too plays a catalyst in boosting and enhancing the productivity of an organisation.
Everything from the keyboard, to the filing cabinet, chairs, desks, and shelves, among others that are used in the office affect the overall functioning of employees. If office furniture is not comfortable enough, productivity and the working style of the employees can suffer. Hence, while buying office furniture, one should be extremely careful and opt for furniture that compliments the working style.
With this concept, offices today are more focused on building a work-friendly and comfortable environment, and shifting from using traditional furniture to the concept of building efficient modular workspaces. "Earlier, traditional furniture was the first choice of corporate houses, but today they prefer modular furniture as they offer diversity and customisation facilities," says Dev Raj Mishra, chairperson of Karuna Interior Ltd, adding that the demand for such furniture has seen tremendous growth in the past couple of years. Modular furniture is appealing to look at and provides space in even small areas for a large number of employees. Karuna Interior has been providing modular furniture with full package since the last eight years along with one-year free maintenance service.
The advantages of modular office furniture are many as they are considered to be one of the best ways to accomplish flexibility and help employees to work efficiently. It can be used for executive offices, workstations, front desk and in other areas."Other conventional furniture will somehow look overcrowded and cluttered, but modular furniture is multi-purpose and designed accordingly," adds Mishra.
"Many businesses grow as time passes, and it is not possible to give most employees their own working space. Ultimately, most of these employees end up having partitions or cubicles. This is also one of the reasons for the increasing use of modular furniture," says Nawaraj Joshi, salesperson of AS Furniture at Lagankhel, adding that they are designed with standardised units and dimensions.
They are portable and easy to assemble and incur less labour cost to shift or to change the look of the office by rearranging them. According to Joshi, some of the furniture have wheels to increase the ease of mobility. These furniture systems are subdivided into smaller parts, such as desks, hutches, stationary and mobile filing cabinets, lateral files, overhead storage shelves, keyboard trays, bookcases, and more. They are available in a wide range of colours, styles, types and materials.
They come with wooden and aluminium partitions. According to traders, business houses mostly opt for wooden partition as compared to aluminium, though the former is priced higher than the latter.
"Because of fine finish, sleek look and comfort, wooden furniture is getting more popular nowadays," adds Joshi. With modular furniture, one can increase or decrease the level of privacy with higher or lower walls, as well as conceal all the wires and data connectors.
Elaborating on the advantages of modular furniture, Mishra says, "Since it provides smaller units, it gives a sense of privacy to the employees which helps them work efficiently as there is less distraction and in most cases, modular office furniture is very cheap compared to regular office furniture." Price of modular furniture depends on the area allocated. For instance, setting up an office on 1,000 square feet area will cost approximately Rs 600,000, depending on the material and elements used. For the same area, four to five separate cabins with a central area workstation can be set up. urniture manufacturers today F utilise a variety of materials and specialised finishes to protect the furniture during regular use.Cleaners, waxes and polishes are available to help protect the finish on all of your furniture from scratches and abrasions.
Cleaning and polishing your furniture should be done on a regular basis. Dust attracts moisture, which can accumulate and soften the finish on your furniture. This can lead to further damage, possibly to the wood itself.
There are a variety of furniture care products readily available at most department stores, hardware centres and even in supermarkets.Regular care and maintenance will give you the years of satisfaction that you expected when purchasing your furnishings.
source:The Himalayan Times:Property Plus(2011),"Furniture that helps you work better", The Himalayan Times, 19March 2011
Everything from the keyboard, to the filing cabinet, chairs, desks, and shelves, among others that are used in the office affect the overall functioning of employees. If office furniture is not comfortable enough, productivity and the working style of the employees can suffer. Hence, while buying office furniture, one should be extremely careful and opt for furniture that compliments the working style.
With this concept, offices today are more focused on building a work-friendly and comfortable environment, and shifting from using traditional furniture to the concept of building efficient modular workspaces. "Earlier, traditional furniture was the first choice of corporate houses, but today they prefer modular furniture as they offer diversity and customisation facilities," says Dev Raj Mishra, chairperson of Karuna Interior Ltd, adding that the demand for such furniture has seen tremendous growth in the past couple of years. Modular furniture is appealing to look at and provides space in even small areas for a large number of employees. Karuna Interior has been providing modular furniture with full package since the last eight years along with one-year free maintenance service.
The advantages of modular office furniture are many as they are considered to be one of the best ways to accomplish flexibility and help employees to work efficiently. It can be used for executive offices, workstations, front desk and in other areas."Other conventional furniture will somehow look overcrowded and cluttered, but modular furniture is multi-purpose and designed accordingly," adds Mishra.
"Many businesses grow as time passes, and it is not possible to give most employees their own working space. Ultimately, most of these employees end up having partitions or cubicles. This is also one of the reasons for the increasing use of modular furniture," says Nawaraj Joshi, salesperson of AS Furniture at Lagankhel, adding that they are designed with standardised units and dimensions.
They are portable and easy to assemble and incur less labour cost to shift or to change the look of the office by rearranging them. According to Joshi, some of the furniture have wheels to increase the ease of mobility. These furniture systems are subdivided into smaller parts, such as desks, hutches, stationary and mobile filing cabinets, lateral files, overhead storage shelves, keyboard trays, bookcases, and more. They are available in a wide range of colours, styles, types and materials.
They come with wooden and aluminium partitions. According to traders, business houses mostly opt for wooden partition as compared to aluminium, though the former is priced higher than the latter.
"Because of fine finish, sleek look and comfort, wooden furniture is getting more popular nowadays," adds Joshi. With modular furniture, one can increase or decrease the level of privacy with higher or lower walls, as well as conceal all the wires and data connectors.
Elaborating on the advantages of modular furniture, Mishra says, "Since it provides smaller units, it gives a sense of privacy to the employees which helps them work efficiently as there is less distraction and in most cases, modular office furniture is very cheap compared to regular office furniture." Price of modular furniture depends on the area allocated. For instance, setting up an office on 1,000 square feet area will cost approximately Rs 600,000, depending on the material and elements used. For the same area, four to five separate cabins with a central area workstation can be set up. urniture manufacturers today F utilise a variety of materials and specialised finishes to protect the furniture during regular use.Cleaners, waxes and polishes are available to help protect the finish on all of your furniture from scratches and abrasions.
Cleaning and polishing your furniture should be done on a regular basis. Dust attracts moisture, which can accumulate and soften the finish on your furniture. This can lead to further damage, possibly to the wood itself.
There are a variety of furniture care products readily available at most department stores, hardware centres and even in supermarkets.Regular care and maintenance will give you the years of satisfaction that you expected when purchasing your furnishings.
source:The Himalayan Times:Property Plus(2011),"Furniture that helps you work better", The Himalayan Times, 19March 2011
Bajrashakti Cement in market
Narayani Cement Industry has introduced Bajrashakti cement in the Nepali market after the success of its another brand Tri-Shakti.
The new brand is suitable to Nepal’s market, the company, claimed adding that Bajrashakti cement is produced from high quality raw materials from the factory equipped with state-of-art technology from Germany.
Lately the country has witnessed a construction boom giving enough room for the expansion of cement industries.
The brand is sent to the market after a strict quality test in the company’s laboratory, the company said.
“The new cement brand is suitable for large commercial buildings, infrastructure projects like roads, hydropower and tunnels,” Narayani Cement Industry claimed.
source: The Himalayan Times
The new brand is suitable to Nepal’s market, the company, claimed adding that Bajrashakti cement is produced from high quality raw materials from the factory equipped with state-of-art technology from Germany.
Lately the country has witnessed a construction boom giving enough room for the expansion of cement industries.
The brand is sent to the market after a strict quality test in the company’s laboratory, the company said.
“The new cement brand is suitable for large commercial buildings, infrastructure projects like roads, hydropower and tunnels,” Narayani Cement Industry claimed.
source: The Himalayan Times
Disorganised Plotting Spells Havoc
Kathmandu valley and its outskirts have witnessed an ugly urban sprawl and the problem is compounded by land plotting done in a haphazard manner. In the past few years, open spaces and fields are being devel oped for real estate purposes with rampant land plotting. Even small open areas, sandy river banks and uneven areas like hill slopes are not spared. The areas most affected by haphazard plotting in the valley include Dilli Bazaar, Maitighar, Baneshwor, Gongabu, Ghattekulo, Bal aju, and Koteshwor. According to the Kathmandu Valley Town Development Committee (KVTDC), the minimum required area to be plotted is two aanas and two paisa (855.6 square feet). But this criteria is not being met. In addition to it, the trend of plotting land without seeking permission from concerned authorities is not only prevalent but also on the rise.Consequently, the rate of evasion of land tax is also escalating with the government losing in millions.
"Beside land plotting by real estate enterprises, haphazard plotting by land owners has become a problem for us," says Roshani Karki, section officer at the land administration branch of KVTDC, adding that landowners say they are just labelling the land for their own purpose, while later on it is sold off for commercial use. She ad mitted that ille gal land plotting is on the rise and due to absence of proper regulation and monitoring system; the concerned authorities have not been able to keep it in check as expected. In addition to it, they lack capable human resources and mechanism to stop the ongoing process. According to Karki, they have received a number of complaints in last few months regarding irregularities in plotting. The concerned authorities seem to be in the dark and come to know about it only after the news is published.
According to Karki, even if they halt the process the question of security arises. She questions, "Who is responsible for the consequences after the process is halted?" According to her, the main reason for the inability to enforce the regulations is due to the dual system of handling the land issue. Plotting is monitored by the KVTDC and approval of blueprint is obtained through the metropolitan office. She opines that it would be more effective if both of them were handled by a single authrority.
"Vertical expansion is justifiable but if the rate of plotting horizontal area continues, the whole valley and its out skirts will turn into a slum and there will be scarcity of open space," says Devendra Dongol, senior planner of Kathmandu Metropolitan City (KMC). According to him, the government should discourage horizontal expansion and encourage vertical expansion with carefully devised scientific and technical methods. He emphasised that encouraging vertical e x p a n s i o n according to floor area ratio will ensure availability of more space. The only way this is possible is through formulation and implementation of revised housing policy rules and regulations. If left unchecked, this trend will not just further damage landscapes but also threaten the habitat. KMC is planning to collabo rate with interested parties to conduct a study to discour age horizontal expansion.
source: The Himalayan Times: Property Plus
"Beside land plotting by real estate enterprises, haphazard plotting by land owners has become a problem for us," says Roshani Karki, section officer at the land administration branch of KVTDC, adding that landowners say they are just labelling the land for their own purpose, while later on it is sold off for commercial use. She ad mitted that ille gal land plotting is on the rise and due to absence of proper regulation and monitoring system; the concerned authorities have not been able to keep it in check as expected. In addition to it, they lack capable human resources and mechanism to stop the ongoing process. According to Karki, they have received a number of complaints in last few months regarding irregularities in plotting. The concerned authorities seem to be in the dark and come to know about it only after the news is published.
According to Karki, even if they halt the process the question of security arises. She questions, "Who is responsible for the consequences after the process is halted?" According to her, the main reason for the inability to enforce the regulations is due to the dual system of handling the land issue. Plotting is monitored by the KVTDC and approval of blueprint is obtained through the metropolitan office. She opines that it would be more effective if both of them were handled by a single authrority.
"Vertical expansion is justifiable but if the rate of plotting horizontal area continues, the whole valley and its out skirts will turn into a slum and there will be scarcity of open space," says Devendra Dongol, senior planner of Kathmandu Metropolitan City (KMC). According to him, the government should discourage horizontal expansion and encourage vertical expansion with carefully devised scientific and technical methods. He emphasised that encouraging vertical e x p a n s i o n according to floor area ratio will ensure availability of more space. The only way this is possible is through formulation and implementation of revised housing policy rules and regulations. If left unchecked, this trend will not just further damage landscapes but also threaten the habitat. KMC is planning to collabo rate with interested parties to conduct a study to discour age horizontal expansion.
source: The Himalayan Times: Property Plus
NRB nod to loans for buying homes :Initiative a breather to struggling banking‚ housing sectors
Home buyers with certain income source, banks, construction sector and investors can cheer!
The central bank has created a separate category for the home loans of up to Rs 6 million as Personal Home Loans that will not be dealt as the part of real estate and housing loans and also provided a rescheduling facility to the margin lending on shares.
“The people can get home loans as the move will instantly enhance lending capacity of
the banking sector by Rs 15 billion,” said Bhaskar Mani Gyanwali, spokesperson of the central bank that has brought the circular today in line with its mid-term evaluation of Monetary Policy.
“The central bank has also offered a rescheduling provision for real estate loans that will definitely benefit the banking and construction sectors that were under pressure for last 16 months,” he said, adding that Personal Home Loans signify that the loans given to a consumer is for acquiring residential houses or apartments only.
Fearing the eventual systemic failure by BFIs’ overexposure to real estate and housing loans, Nepal Rastra Bank had directed the BFIs to restrict the credit flow to the sector to 25 per cent of their total lending after it noticed that some commercial banks’ portfolios showed dangerously high concentration risk.
As a domino effect, the contraction in housing sector has got the BFIs struggling with loan recovery as the whole housing sector is stagnating due to NRB’s cap on housing and realty loans.
“Now, the move will provide much-needed respite to the struggling housing sector that has started to stagnate after NRB directed the BFIs to scale down their exposure to housing and realty,” said Om Rajbhandari, CEO of the Comfort Housing.
However, the central bank, banks and construction companies must boost the depositors must create conducive environment to bring the money to the banking channels, he added.
NRB has allowed BFIs to reschedule loans to realty for one time only within the current fiscal year, if the borrower pays the outstanding interest.
To save the capital market from an imminent crash, the central bank has also relaxed the provision for rescheduling the margin type loans.
“BFIs can reschedule the loan once for one year, if the borrower pays accumulated interest,” the central bank said.
“However, the banks should not misuse the spirit of the circular,” NMB Bank CEO Upendra Poudel cautioned, adding that the provision could be a breather to the banks, construction sector and the capital market too.
These provisions will definitely improve the condition of Non-Performing Loans (NPL) of the banks.
source: The Himalayan Times
The central bank has created a separate category for the home loans of up to Rs 6 million as Personal Home Loans that will not be dealt as the part of real estate and housing loans and also provided a rescheduling facility to the margin lending on shares.
“The people can get home loans as the move will instantly enhance lending capacity of
the banking sector by Rs 15 billion,” said Bhaskar Mani Gyanwali, spokesperson of the central bank that has brought the circular today in line with its mid-term evaluation of Monetary Policy.
“The central bank has also offered a rescheduling provision for real estate loans that will definitely benefit the banking and construction sectors that were under pressure for last 16 months,” he said, adding that Personal Home Loans signify that the loans given to a consumer is for acquiring residential houses or apartments only.
Fearing the eventual systemic failure by BFIs’ overexposure to real estate and housing loans, Nepal Rastra Bank had directed the BFIs to restrict the credit flow to the sector to 25 per cent of their total lending after it noticed that some commercial banks’ portfolios showed dangerously high concentration risk.
As a domino effect, the contraction in housing sector has got the BFIs struggling with loan recovery as the whole housing sector is stagnating due to NRB’s cap on housing and realty loans.
“Now, the move will provide much-needed respite to the struggling housing sector that has started to stagnate after NRB directed the BFIs to scale down their exposure to housing and realty,” said Om Rajbhandari, CEO of the Comfort Housing.
However, the central bank, banks and construction companies must boost the depositors must create conducive environment to bring the money to the banking channels, he added.
NRB has allowed BFIs to reschedule loans to realty for one time only within the current fiscal year, if the borrower pays the outstanding interest.
To save the capital market from an imminent crash, the central bank has also relaxed the provision for rescheduling the margin type loans.
“BFIs can reschedule the loan once for one year, if the borrower pays accumulated interest,” the central bank said.
“However, the banks should not misuse the spirit of the circular,” NMB Bank CEO Upendra Poudel cautioned, adding that the provision could be a breather to the banks, construction sector and the capital market too.
These provisions will definitely improve the condition of Non-Performing Loans (NPL) of the banks.
source: The Himalayan Times
We need to understand the difference between trading and value addition
Ashish Garg is the executive director of Clean Developers Private Limited, which is involved in eco-friendly construction projects.Celebrity Malvika Subba had a tête-à -tête with him.Excerpts:
How did you start Clean Developers?
This is basically an infrastructure company which was begun two and a half years ago. I was involved in the banking sector before that. I was working with the World Bank in the financial sector project. I was also deputed in the management team of Rastriya Banijya Bank, where I worked for six years. After that I started this company. Clean Energy Development Bank sponsored some equity in this company and they are also our shareholders. This is an associate company of theirs. We had a clear vision when we started, of getting into sustainable infrastructure, which is green and eco-friendly.
So we started off with Central Park. We are one of the most successful projects. Sales are critical but we have bookings of 90 per cent. This is the largest project in Kathmandu within the Ring Road. Encouraged by the success of Central Park, we came up with Central Business Park. We have received an overwhelming response and have started the construction as well. We are certified by the US Green Building Council and have a renowned architectural team.
When you started two and a half years ago, real estate business was booming. But sales have diminished after 2010.
How has it affected Central Park?
The country's situation, liquidity and banks' concentration on the real estate sector is not so good, but we are still getting bookings.Nepalis have sentimental value about property .When a common man here starts earning, the first target is to buy land then construct a house.That is driving the sales.It's a city of 5 million people; you need about 50,000 odd houses every year. I personally don't see many projects taking off, going for construction on real ground activity . Several of them have vanished. But there is a good demand, and this sector is here to stay.
Organised housing can be sustained because the city has no power, water, security, or organised way of construction. Housing projects will provide solutions for the people.
As a builder and developer, what expectations do you have from the government?
This sector is looked upon negatively. There are rags to riches stories where land brokers and people engaging in land trading earn millions overnight. It's like gambling, a volatile and quick buck business.
First of all, we need to change this image. We need to understand the difference between trading and value addition.
The former means land trading and plotting while the latter refers to buying land and developing housings which are part of urban development. Our housing community has to differentiate between them and notify the government that these two need to be treated differently.
Nepal Rastra Bank has to come up with regulation that treats these two entities separately. The second thing is the approval, for which there is no single window concept. Till date, we don't know how many approvals we are supposed to get. We approach one ministry , which passes it on to the next one. And that makes the process difficult and confusing.
Do you think it would be beneficial for the country and the real estate business if the government allows nonNepalis to buy houses and apartments here?
If you open property investment for non Nepalis in Nepal, it will be full capital convert ibility. The inflow and outflow of foreign money to and from Nepal will be deregulated. Our economy fundamentals are not so strong. Today we may think that foreigners will buy property and the economy will benefit. But that money can be taken away in one go as well. This happened in South East Asia. So we should not be over enthusiastic about this concept. Perhaps we can start on it in a steady manner, like by allowing NRNs to buy it first. Or as the government is suggesting, by allowing them to buy apartments but not land.
What is the toughest challenge you have had to face?
The toughest challenge is approvals. Sales and other things depend on your business module, which may or may not click. The way you have to run around the system is discouraging.
What future projects are Clean Developers planning?
We realised that the corporate crowd needs office space. So we are developing Central Business Park. We have another project for villas coming in soon. We are also into hydropower now. We won the bid, for lower Solu, which is an 80 mega watt project. It was unprecedented that someone paid upfront cash for hydro license.We are now going full on and expect to complete it in four years' time. We are also expanding into road construction.
source: The Himalayan Times(2011),"We need to understand the difference between trading and value addition", The Himalayan Times, 19 March 2011
photo: The Himalayan Times
How did you start Clean Developers?
This is basically an infrastructure company which was begun two and a half years ago. I was involved in the banking sector before that. I was working with the World Bank in the financial sector project. I was also deputed in the management team of Rastriya Banijya Bank, where I worked for six years. After that I started this company. Clean Energy Development Bank sponsored some equity in this company and they are also our shareholders. This is an associate company of theirs. We had a clear vision when we started, of getting into sustainable infrastructure, which is green and eco-friendly.
So we started off with Central Park. We are one of the most successful projects. Sales are critical but we have bookings of 90 per cent. This is the largest project in Kathmandu within the Ring Road. Encouraged by the success of Central Park, we came up with Central Business Park. We have received an overwhelming response and have started the construction as well. We are certified by the US Green Building Council and have a renowned architectural team.
When you started two and a half years ago, real estate business was booming. But sales have diminished after 2010.
How has it affected Central Park?
The country's situation, liquidity and banks' concentration on the real estate sector is not so good, but we are still getting bookings.Nepalis have sentimental value about property .When a common man here starts earning, the first target is to buy land then construct a house.That is driving the sales.It's a city of 5 million people; you need about 50,000 odd houses every year. I personally don't see many projects taking off, going for construction on real ground activity . Several of them have vanished. But there is a good demand, and this sector is here to stay.
Organised housing can be sustained because the city has no power, water, security, or organised way of construction. Housing projects will provide solutions for the people.
As a builder and developer, what expectations do you have from the government?
This sector is looked upon negatively. There are rags to riches stories where land brokers and people engaging in land trading earn millions overnight. It's like gambling, a volatile and quick buck business.
First of all, we need to change this image. We need to understand the difference between trading and value addition.
The former means land trading and plotting while the latter refers to buying land and developing housings which are part of urban development. Our housing community has to differentiate between them and notify the government that these two need to be treated differently.
Nepal Rastra Bank has to come up with regulation that treats these two entities separately. The second thing is the approval, for which there is no single window concept. Till date, we don't know how many approvals we are supposed to get. We approach one ministry , which passes it on to the next one. And that makes the process difficult and confusing.
Do you think it would be beneficial for the country and the real estate business if the government allows nonNepalis to buy houses and apartments here?
If you open property investment for non Nepalis in Nepal, it will be full capital convert ibility. The inflow and outflow of foreign money to and from Nepal will be deregulated. Our economy fundamentals are not so strong. Today we may think that foreigners will buy property and the economy will benefit. But that money can be taken away in one go as well. This happened in South East Asia. So we should not be over enthusiastic about this concept. Perhaps we can start on it in a steady manner, like by allowing NRNs to buy it first. Or as the government is suggesting, by allowing them to buy apartments but not land.
What is the toughest challenge you have had to face?
The toughest challenge is approvals. Sales and other things depend on your business module, which may or may not click. The way you have to run around the system is discouraging.
What future projects are Clean Developers planning?
We realised that the corporate crowd needs office space. So we are developing Central Business Park. We have another project for villas coming in soon. We are also into hydropower now. We won the bid, for lower Solu, which is an 80 mega watt project. It was unprecedented that someone paid upfront cash for hydro license.We are now going full on and expect to complete it in four years' time. We are also expanding into road construction.
source: The Himalayan Times(2011),"We need to understand the difference between trading and value addition", The Himalayan Times, 19 March 2011
photo: The Himalayan Times
Housing loan may aid capital market
The possible move of central bank to relax the ceiling on the loans provided to the housing sector may also give new lease of life to the ailing capital market.
Tightening of the loan to housing by the central bank has affected the Nepali capital market as well, said Shurbir Paudel, Chairman of Securities Board of Nepal (Sebon), adding investors were resorting to selling their shares to pay for their housing loans. This selling pressure partially generated by cap on loan on housing had flooded the market with shares, he added.
If the central bank eases the provision on housing loan, there will not be any compulsion on investors to sell shares in order to pay for their loans that will somewhat restore the balance in the market, he pointed out.
Unlike earlier, the tendency of investors to get funds to invest in stocks by taking loans against their homes will not repeat this time as the interests rates are high while return on shares is not so high, pointed out share analyst Rabindra Bhattarai.
Earlier, in December 2009, the central bank had directed the BFIs to reduce their loan exposure to the realty sector to 25 per cent and 40 per cent to the housing sector to curb overexposure of BFIs to land and housing sector in order to avoid systemic risk due to concentration of lending to one sector.
At present, the central bank has grouped housing and real estate loans as one sector. However, the central bank has announced in the mid-term evaluation of the Monetary Policy to ease the housing sector loans, excluding loans floated to land purchase.
source: The Himalayan Times(2011),"Housing loan may aid capital market ",The Himalayan Times,18 March 2011
Tightening of the loan to housing by the central bank has affected the Nepali capital market as well, said Shurbir Paudel, Chairman of Securities Board of Nepal (Sebon), adding investors were resorting to selling their shares to pay for their housing loans. This selling pressure partially generated by cap on loan on housing had flooded the market with shares, he added.
If the central bank eases the provision on housing loan, there will not be any compulsion on investors to sell shares in order to pay for their loans that will somewhat restore the balance in the market, he pointed out.
Unlike earlier, the tendency of investors to get funds to invest in stocks by taking loans against their homes will not repeat this time as the interests rates are high while return on shares is not so high, pointed out share analyst Rabindra Bhattarai.
Earlier, in December 2009, the central bank had directed the BFIs to reduce their loan exposure to the realty sector to 25 per cent and 40 per cent to the housing sector to curb overexposure of BFIs to land and housing sector in order to avoid systemic risk due to concentration of lending to one sector.
At present, the central bank has grouped housing and real estate loans as one sector. However, the central bank has announced in the mid-term evaluation of the Monetary Policy to ease the housing sector loans, excluding loans floated to land purchase.
source: The Himalayan Times(2011),"Housing loan may aid capital market ",The Himalayan Times,18 March 2011
Vegas Individual Homes, Balkumari, Chakrapath, Kathmandu
The Vegas Individual Homes is located 100m outside from Balkumari, Chakrapath, Kathmandu.
Some of the facilities of Vegas Individual homes are: swimming pool, community hall,space for health club, open space and others. The area of homes ranges from 1622 sq. ft. to 1671 sq.ft. The home with floor 2 1/2 is located in the prime location connecting three district Kathmandu, Bhaktapur and Lalitpur.
Housing, a major force to reckon with
In almost two decades in this Real Estate field, I feel that growth of urbanization in Nepal is relatively low compared to global ratio. Urbanization is a part of development process that cannot be curtailed and compromised. It is the demand of this modern era, and also a key factor for measuring development. Kathmandu valley alone, by 2020 will face demands of 40,300 housing units per year as expected. The conventional system of owner-built housing is still predominant. However, in the recent past, Community Living Concept has been widely accepted and is in increasing demand. The professionals from private organizations /developers bring products that are built according to building by-laws following norms and considering earthquake safety measures.
It should be the mission of all that each and every Nepali citizens are provided with affordable and adequate shelter.We all believe that earthquakes don't intentionally kill people, but unsafe buildings deliberately do. Similarly, we are aware of the fact that the government has encouraged some private sectors for the delivery of dwelling units as starters. With the support and facilitation provided by the banks so far, we have seen the organized urbanization gain tremendous support.
The global recession has mandated all those citizens of the world to opt for cost effective housing in order to sustain life and live well. Government in Nepal should also go for cost effective housings. This is just the beginning and we have a long way to go in achieving our vision into reality.With the commencement of acceptance of housing products and other real estate products like Town Housing, Group Housing, Senior
Living, Rental Housing demand and coverage will make sure that there is a possibility to cater to more people. This way, we will surely be able to provide safe and cost effective housing for all.
Om Rajbhandary
Chairman
Brihat Investments Pvt. Ltd.
Home loans up to Rs 5m may be excluded from realty loans
In a bid to ease availability of home loans, Nepal Rastra Bank is soon permitting banks and financial institutions (BFIs) to exclude home loans up to Rs 5 million from real estate loans.
However, if home loans crossed over Rs 5 million, it would be counted as real estate loans, a category in which the central bank has imposed a cap, tagging it as speculative investment.Earlier, the central bank had planned to exclude portfolio of home loans as a whole from real estate loans. “However, we revised our position lest real estate developers might use this channel to funnel their projects,” said a source.
This means the central bank doubts high amount of single credit issued under home loans might have been siphoned off to serve purpose of real estate loans in the past.
By excluding ´genuine´ level of real estate loans from real estate cap, the central bank believes it will free general public from the problem they are facing in getting housing loans.
“It will also ease BFIs to comply with the cap imposed on realty loans exposure,” said the source.
Amid soaring asset bubble, the central bank had more than a year ago imposed a cap on realty loans, seeking BFIs to limit their loans in the real estate and housing. Going by this directive, BFIs will need to bring down their realty loans to 25 percent or less of their total lending portfolio.
The policy was enforced to cool the overheated realty market. It, however, had led the market to stagnation, mainly hurting housing industry. Besides, as the BFI´s exposure in the sector was already too high, public were facing problems to get loans with ease.“The new relaxation once into place will instantly exclude well over Rs 30 billion worth of home loans from the real estate loans. This will ease BFIs and also enable them to issue more credit, ultimately relieving borrowers and housing industry as well,” said the source.
The central bank is offering fresh relaxation on home loans as per the announcement it made in the mid-term review of Monetary Policy for the current fiscal year. During the announcement, the central bank had made it clear that it would continue to tighten loans going into real estate business, particularly land trading, as those are speculative in nature and could hurt BFIs financial health.
“However, we will soon take steps whereby BFIs will be able to issue home loans up to certain specified amount without any restrictions,” Governor of NRB Dr Yuva Raj Khatiwada had told the press a couple of weeks ago.
source: republica
However, if home loans crossed over Rs 5 million, it would be counted as real estate loans, a category in which the central bank has imposed a cap, tagging it as speculative investment.Earlier, the central bank had planned to exclude portfolio of home loans as a whole from real estate loans. “However, we revised our position lest real estate developers might use this channel to funnel their projects,” said a source.
This means the central bank doubts high amount of single credit issued under home loans might have been siphoned off to serve purpose of real estate loans in the past.
By excluding ´genuine´ level of real estate loans from real estate cap, the central bank believes it will free general public from the problem they are facing in getting housing loans.
“It will also ease BFIs to comply with the cap imposed on realty loans exposure,” said the source.
Amid soaring asset bubble, the central bank had more than a year ago imposed a cap on realty loans, seeking BFIs to limit their loans in the real estate and housing. Going by this directive, BFIs will need to bring down their realty loans to 25 percent or less of their total lending portfolio.
The policy was enforced to cool the overheated realty market. It, however, had led the market to stagnation, mainly hurting housing industry. Besides, as the BFI´s exposure in the sector was already too high, public were facing problems to get loans with ease.“The new relaxation once into place will instantly exclude well over Rs 30 billion worth of home loans from the real estate loans. This will ease BFIs and also enable them to issue more credit, ultimately relieving borrowers and housing industry as well,” said the source.
The central bank is offering fresh relaxation on home loans as per the announcement it made in the mid-term review of Monetary Policy for the current fiscal year. During the announcement, the central bank had made it clear that it would continue to tighten loans going into real estate business, particularly land trading, as those are speculative in nature and could hurt BFIs financial health.
“However, we will soon take steps whereby BFIs will be able to issue home loans up to certain specified amount without any restrictions,” Governor of NRB Dr Yuva Raj Khatiwada had told the press a couple of weeks ago.
source: republica
False promises
Anil Bhattarai
When I am in Kathmandu, I love to walk as much as I can. When you walk you can see many things you would not see otherwise. I am particularly struck by how the ubiquitous roadside billboards project a fantasy world on the cityscape. Last Friday, for instance, this is what caught my eyes in Patan. Hung up on one of the utility poles near Patan Dhoka was a banner advertising a luxury apartment complex. It promised ‘Western lifestyle’ for its residents. The shiny glass windows and their red overhangs contrasted nicely with blue sky above and blue swimming pool below. There is a car parked nearby, a few children are playing at the garden and there was a tall wall. Did I notice the gate and a security post? Or is it an escape promised for people in Patan or any place in Kathmandu from the seemingly perennial crisis of water? The haze and dust on the sky that has begun to have a permanent presence in the Valley was palpably absent on the banner.
A few metres away, there were a few hundred metal gagris (most of them brass ones) lined up and a dozen or so women huddled together in a gossip. It does not take a long walk in Patan to figure out that most of the water spouts have run dry. The luxury apartment banner did not tell us where the water for the swimming pool would come from. Was it going to be tanker-delivered? Let’s leave that to the imagination of the real estate developers. They are smart people.
For now, let’s accept that the promise seem to have caught the imagination of Kathmandu’s middle and upper class. Why else would one of the leading business houses in the country announce, for instance, on March 6 that it was coming back to the real estate sector? Its managing director proudly told in a news conference that it planned to spend over a billion rupees in housing and commercial building complexes.
“Common people’s need for housing has not slowed down,” he told journalists. One might find this anomaly between the promise of ‘Western lifestyle’ from another developer and the commitment of the business house to cater to the housing need of the ‘common people’ a bit of an anachronism. Except, pore down the news reports and the numbers reveal the truth.
On March 6, the ekantipur online reported that the over Rs. 540 million rupees out of that new one billion was to be invested in two new housing projects called—each with nine stand-alone houses and 60 stand-alone row houses. The business house plans to spend the other Rs. 550 million rupees to build a commercial complex in Chitwan that will have a “luxury shopping mall, multiplex, food court and a hotel under one roof.”
Further down, the news report reveals that the starting price for the houses they would be building is going to be Rs. 10 million, that is, one crore.
The managing director, I am sure, is a learned man. But I am left puzzled by what he meant when he said his business venture into housing sector was geared towards catering to the needs of the common people.
Not long ago the central bank governor Yuva Raj Khatiwada dampened the hopes of real estate business people and bankers when he said that the restrictions imposed on the real estate lending would not be loosened because the projects the realtors had come up with until now were not addressed to the need of the common people. In his own words, “The housing and real estate business people have failed to bring schemes targeting the middle and lower class people.”
There are two major reasons that the houses in Kathmandu have become very expensive. One, the land prices have skyrocketed following the speculative lending on land transactions by banks and other financial institutions. Second, almost all the materials that the housing industry uses for building homes are high-energy materials most of which are imported from outside. Curbing the speculative transactions in land is what the central bank is trying to do by imposing stricter limits on commercial lending on land sector. But addressing the building expenses requires exploring options of using locally available materials.
In fact, good homes could be built with most of the locally available materials. That’s how people used to do in most places and that’s how many still do. Soil, grasses, wood, and stones are some of the most ubiquitous materials. Let me be clear: what I am saying is not about going back to the old days. With creative modern designs and a few scientific understanding about materials and landscapes, it is possible to build very good houses with a lot less money than what we would normally spend on so- called modern houses. By good houses, I mean those that are strong—earthquake, flood and fire resistant; that are aesthetically pleasing and that are functional in terms of the use of space. Our housing industry keeps telling us about giving us the Western experience, but somehow it seems to be rather oblivious to the fact that there has been huge revival of the use of locally available materials for building houses in many Western countries.
I don’t know yet what materials that the above-mentioned business house plans to use to build its houses for the middle and upper class. The managing director promised the journalists at the news conference on March 6 that, although their projects had targeted the middle class in the past, they would come up with projects for all groups. I am sure he was indicating the high price tag for the houses they had been selling. I venture to offer him an unsolicited advice: if they really explore, good homes—homes that makes you feel good and safe—could be built with a lot less money than they have been spending. There is no reason why Nepal’s housing industry could not build houses for common people.
They just have to search on the internet for how others are building beautiful, safe, strong and functional homes with limited money.
Anil Bhattarai anilbhattarai@gmail.com
source: The kathmandu Post,15 March 2011
When I am in Kathmandu, I love to walk as much as I can. When you walk you can see many things you would not see otherwise. I am particularly struck by how the ubiquitous roadside billboards project a fantasy world on the cityscape. Last Friday, for instance, this is what caught my eyes in Patan. Hung up on one of the utility poles near Patan Dhoka was a banner advertising a luxury apartment complex. It promised ‘Western lifestyle’ for its residents. The shiny glass windows and their red overhangs contrasted nicely with blue sky above and blue swimming pool below. There is a car parked nearby, a few children are playing at the garden and there was a tall wall. Did I notice the gate and a security post? Or is it an escape promised for people in Patan or any place in Kathmandu from the seemingly perennial crisis of water? The haze and dust on the sky that has begun to have a permanent presence in the Valley was palpably absent on the banner.
A few metres away, there were a few hundred metal gagris (most of them brass ones) lined up and a dozen or so women huddled together in a gossip. It does not take a long walk in Patan to figure out that most of the water spouts have run dry. The luxury apartment banner did not tell us where the water for the swimming pool would come from. Was it going to be tanker-delivered? Let’s leave that to the imagination of the real estate developers. They are smart people.
For now, let’s accept that the promise seem to have caught the imagination of Kathmandu’s middle and upper class. Why else would one of the leading business houses in the country announce, for instance, on March 6 that it was coming back to the real estate sector? Its managing director proudly told in a news conference that it planned to spend over a billion rupees in housing and commercial building complexes.
“Common people’s need for housing has not slowed down,” he told journalists. One might find this anomaly between the promise of ‘Western lifestyle’ from another developer and the commitment of the business house to cater to the housing need of the ‘common people’ a bit of an anachronism. Except, pore down the news reports and the numbers reveal the truth.
On March 6, the ekantipur online reported that the over Rs. 540 million rupees out of that new one billion was to be invested in two new housing projects called—each with nine stand-alone houses and 60 stand-alone row houses. The business house plans to spend the other Rs. 550 million rupees to build a commercial complex in Chitwan that will have a “luxury shopping mall, multiplex, food court and a hotel under one roof.”
Further down, the news report reveals that the starting price for the houses they would be building is going to be Rs. 10 million, that is, one crore.
The managing director, I am sure, is a learned man. But I am left puzzled by what he meant when he said his business venture into housing sector was geared towards catering to the needs of the common people.
Not long ago the central bank governor Yuva Raj Khatiwada dampened the hopes of real estate business people and bankers when he said that the restrictions imposed on the real estate lending would not be loosened because the projects the realtors had come up with until now were not addressed to the need of the common people. In his own words, “The housing and real estate business people have failed to bring schemes targeting the middle and lower class people.”
There are two major reasons that the houses in Kathmandu have become very expensive. One, the land prices have skyrocketed following the speculative lending on land transactions by banks and other financial institutions. Second, almost all the materials that the housing industry uses for building homes are high-energy materials most of which are imported from outside. Curbing the speculative transactions in land is what the central bank is trying to do by imposing stricter limits on commercial lending on land sector. But addressing the building expenses requires exploring options of using locally available materials.
In fact, good homes could be built with most of the locally available materials. That’s how people used to do in most places and that’s how many still do. Soil, grasses, wood, and stones are some of the most ubiquitous materials. Let me be clear: what I am saying is not about going back to the old days. With creative modern designs and a few scientific understanding about materials and landscapes, it is possible to build very good houses with a lot less money than what we would normally spend on so- called modern houses. By good houses, I mean those that are strong—earthquake, flood and fire resistant; that are aesthetically pleasing and that are functional in terms of the use of space. Our housing industry keeps telling us about giving us the Western experience, but somehow it seems to be rather oblivious to the fact that there has been huge revival of the use of locally available materials for building houses in many Western countries.
I don’t know yet what materials that the above-mentioned business house plans to use to build its houses for the middle and upper class. The managing director promised the journalists at the news conference on March 6 that, although their projects had targeted the middle class in the past, they would come up with projects for all groups. I am sure he was indicating the high price tag for the houses they had been selling. I venture to offer him an unsolicited advice: if they really explore, good homes—homes that makes you feel good and safe—could be built with a lot less money than they have been spending. There is no reason why Nepal’s housing industry could not build houses for common people.
They just have to search on the internet for how others are building beautiful, safe, strong and functional homes with limited money.
Anil Bhattarai anilbhattarai@gmail.com
source: The kathmandu Post,15 March 2011
Low vaccination in housing colonies and apartment
In a move to expand the scope of vaccination drive in Kathmandu valley, the government is planning to launch awareness campaigns targeting people in housing colonies and apartment complexes.
The move comes after volunteers, who work on the forefront in administering vaccines to children, complained about non-cooperation from those living in colonies and apartment complexes.
"In every vaccination drive, some 15 per cent of children are left out," said Bishwo Ram Shrestha, chief of the District Public Health Office (DPHO) of Kathmandu.
"It is mainly because our health volunteers are not allowed to enter housing colonies to vaccinate the children living there." According to Shrestha, last year, a woman health volunteer who tried to enter a colony compound in Baneshwar to vaccinate children was shooed away. "The residents unleashed a dog against her," Shrestha said, adding, "She broke one of her legs in a bid to escape.”
Officials at the Department of Health Services (DoHS) say that people residing in housing colonies are less aware of the importance of vaccination despite being educated. "Most of them think such campaigns are meant for poor, not for well-off people like them," a DoHS official said.
Health officials believe that difficulty in penetrating apartment complexes and housing colonies has hindered the government´s drive to vaccinate each and every child.
As the valley embraces modern lifestyle, people, mainly those who prefer a nuclear family, are increasingly choosing to settle in apartment complexes and housing colonies. According to the Department of Urban Development and Building Construction (DUDBC), there are some 90 housing colonies and apartment complexes in the valley.
source:Poudel, Arjun(2011),"Low vaccination in housing colonies and apartment", republica, 14 March 2011
The move comes after volunteers, who work on the forefront in administering vaccines to children, complained about non-cooperation from those living in colonies and apartment complexes.
"In every vaccination drive, some 15 per cent of children are left out," said Bishwo Ram Shrestha, chief of the District Public Health Office (DPHO) of Kathmandu.
"It is mainly because our health volunteers are not allowed to enter housing colonies to vaccinate the children living there." According to Shrestha, last year, a woman health volunteer who tried to enter a colony compound in Baneshwar to vaccinate children was shooed away. "The residents unleashed a dog against her," Shrestha said, adding, "She broke one of her legs in a bid to escape.”
Officials at the Department of Health Services (DoHS) say that people residing in housing colonies are less aware of the importance of vaccination despite being educated. "Most of them think such campaigns are meant for poor, not for well-off people like them," a DoHS official said.
Health officials believe that difficulty in penetrating apartment complexes and housing colonies has hindered the government´s drive to vaccinate each and every child.
As the valley embraces modern lifestyle, people, mainly those who prefer a nuclear family, are increasingly choosing to settle in apartment complexes and housing colonies. According to the Department of Urban Development and Building Construction (DUDBC), there are some 90 housing colonies and apartment complexes in the valley.
source:Poudel, Arjun(2011),"Low vaccination in housing colonies and apartment", republica, 14 March 2011
How to Decorate a large window
Consider how much privacy you really need. This will deter mine what kind of window treatments or if you need curtains at all. You may have large floor-to-ceiling win dows that overlook a scenic view. If so, hang a curtain rod on the lower windows to give you privacy while allowing light to stream in.
Use faux panels You might not need curtains that cover the whole expanse of the large window.
You may already have plantation shutters or blinds on the window. Curtains can be used to add softness to the room as well as pattern and texture. Make a cornice box You might think that curtains are too fussy or expensive. A local upholster can create a cornice box. This is the more modern version of a valance.
You can have the cornice made to your exact window size and covered with the fabric of your choice. This will add pattern to your window without obstructing your view.Keep it simple Elaborate window treatments can feel overwhelming on a large window. Look for clean lines. Use a valance, sheers or curtain panels.
You do not need to use all of the treatments to make a statement. Show off the windowsill You might already have pri vacy and want to show off your large window instead of hiding it. Try painting the window frame a different colour to cre ate a focal point. A bright turquoise windowsill will fit in with a French country or mod ern look.
Consider the other window treatments throughout the space A large window draws most of the attention in a room. Look around at the other windows that you can see from your room. You might want the win dow treatments to match so they relate to each other and the rooms feel finished. This is essential if you have an open floor plan. Use the same colour or texture if you do not want to use the exact same fabric.
Make your window treatments easy to open and close Attach curtain rings to the top of your window treatments.You can either sew the rings on or look for clip-on rings.This will allow you to use window treatments across a large window.
Create a seating area in front of the window Move a pair of chairs in front of the window so your guests can enjoy the feature. You can even have a window seat built in a large bay window for extra seating space. It is also a cosy place to curl up with a book or take a nap in the sun.
Tips and warnings Go for a heavy-duty curtain rod. Even if you use lightweight window treatments, they can add up across a large window. Use a thick curtain rod that will not bend in the middle and can handle the weight of your window decorations.
Use faux panels You might not need curtains that cover the whole expanse of the large window.
You may already have plantation shutters or blinds on the window. Curtains can be used to add softness to the room as well as pattern and texture. Make a cornice box You might think that curtains are too fussy or expensive. A local upholster can create a cornice box. This is the more modern version of a valance.
You can have the cornice made to your exact window size and covered with the fabric of your choice. This will add pattern to your window without obstructing your view.Keep it simple Elaborate window treatments can feel overwhelming on a large window. Look for clean lines. Use a valance, sheers or curtain panels.
You do not need to use all of the treatments to make a statement. Show off the windowsill You might already have pri vacy and want to show off your large window instead of hiding it. Try painting the window frame a different colour to cre ate a focal point. A bright turquoise windowsill will fit in with a French country or mod ern look.
Consider the other window treatments throughout the space A large window draws most of the attention in a room. Look around at the other windows that you can see from your room. You might want the win dow treatments to match so they relate to each other and the rooms feel finished. This is essential if you have an open floor plan. Use the same colour or texture if you do not want to use the exact same fabric.
Make your window treatments easy to open and close Attach curtain rings to the top of your window treatments.You can either sew the rings on or look for clip-on rings.This will allow you to use window treatments across a large window.
Create a seating area in front of the window Move a pair of chairs in front of the window so your guests can enjoy the feature. You can even have a window seat built in a large bay window for extra seating space. It is also a cosy place to curl up with a book or take a nap in the sun.
Tips and warnings Go for a heavy-duty curtain rod. Even if you use lightweight window treatments, they can add up across a large window. Use a thick curtain rod that will not bend in the middle and can handle the weight of your window decorations.
Booking Open for Mount View Residency
CG Developers has opened bookings for its individual homes project, Mount View Residency located at Harisiddhi, Lalitpur.
Some of features are:
> Built up area of 2500 sq.ft. with 5 bed rooms and other amenties
> Best Housing Complex with wider road of 9 meters and more of green and open space
> Very rich finishing with earcthquake resistance design
> Construction Started
Interview with Nirvana Chaudhary on Chaudhary Group reentering Real estate Business
Niravana Chaudhary took over the role of managing director of Chaudhary Group (CG) in 2010.Thus, his name has now become synonymous with the CG.The group was the first corporate house in the country to venture into the housing sector with Kathmandu Residency in 2000. And in 2003, it came up with Mount View Residency (MVR) phase I and phase II at Harisiddhi, which had both independent and duplex houses. CG is involved in almost every possible segment of business sector, ranging from food and beverage, automobiles, financial services to electronic appliances.While the group took a break from housing sector after 2003, they recently decided to resume the project.
Chaudhary talked with THT Property Plus regarding the come back into the housing sector. Excerpts:
The housing sector is facing a tough time, with the prices falling, and the number of transactions in the market dwindling in the recent times.In such a situation, why is CG coming up with the new housing projects?
The transaction in real estate sector is very slow, as it has been affected by the liquidity crisis and the hike in the interest rate on home loans. Despite these problems, there is still a huge market of housing sector in the country and we are confident that common people's need for housing sector has not diminished. And we hope that it will peak up within a year or two.
In addition to it, the demand of independent houses are growing as compared to the apartments.If the right product is introduced at the right time, liquidity will not affect it as much.
What are your new projects and what kind of investment is being made?
We are developing two housing projects. One is the extension of MVR and named MVR phase III in Harisiddhi, Lalitpur. It will have nine independent houses. And the next one is CG Hills in Hattigauda, Kathmandu, which will include 60 stand alone and row houses.
The total investment in these projects is Rs 540 million, where four to six aana of land is allocated for each house at CG Hill. We are satisfied with the positive feedback of MVR phase III, as all the houses have already been booked. The houses in both the projects are priced between Rs 10 million and Rs 15 million.
In addition to these, we are also planning to develop a commercial complex outside the valley, as it is high time we broke the Kathmandu centric housing projects. We are commencing it from Bharatpur, Chitwan, which will be replicated in other cities -Pokhara, Itahari and Butwal. It will be the first of its kind in Nepal and we have termed it as a mixed development, since it includes shopping mall, multiplex, food court and a hotel under one roof. The complex will be 11-storied building consisting of three-star hotel with 56 rooms.
The estimated cost of the project is Rs 550 million. What is the unique selling point (USP) of your projects?
Exterior design of all the houses will give a glimpse of our culture as they will resemble the architecture of Patan and Bhaktapur Durbar squares, but will also include a touch of f modern architecture. And we are coming up with a package of `customer attractive prices' within a month, which will make the houses more affordable for the customers.
What are the future plans of CG in this sector?
Our projects up to now are only targeted for the middle and upper middle classes, but we are planning to come up with other projects that will expand our focus to all groups.
Chaudhary talked with THT Property Plus regarding the come back into the housing sector. Excerpts:
The housing sector is facing a tough time, with the prices falling, and the number of transactions in the market dwindling in the recent times.In such a situation, why is CG coming up with the new housing projects?
The transaction in real estate sector is very slow, as it has been affected by the liquidity crisis and the hike in the interest rate on home loans. Despite these problems, there is still a huge market of housing sector in the country and we are confident that common people's need for housing sector has not diminished. And we hope that it will peak up within a year or two.
In addition to it, the demand of independent houses are growing as compared to the apartments.If the right product is introduced at the right time, liquidity will not affect it as much.
What are your new projects and what kind of investment is being made?
We are developing two housing projects. One is the extension of MVR and named MVR phase III in Harisiddhi, Lalitpur. It will have nine independent houses. And the next one is CG Hills in Hattigauda, Kathmandu, which will include 60 stand alone and row houses.
The total investment in these projects is Rs 540 million, where four to six aana of land is allocated for each house at CG Hill. We are satisfied with the positive feedback of MVR phase III, as all the houses have already been booked. The houses in both the projects are priced between Rs 10 million and Rs 15 million.
In addition to these, we are also planning to develop a commercial complex outside the valley, as it is high time we broke the Kathmandu centric housing projects. We are commencing it from Bharatpur, Chitwan, which will be replicated in other cities -Pokhara, Itahari and Butwal. It will be the first of its kind in Nepal and we have termed it as a mixed development, since it includes shopping mall, multiplex, food court and a hotel under one roof. The complex will be 11-storied building consisting of three-star hotel with 56 rooms.
The estimated cost of the project is Rs 550 million. What is the unique selling point (USP) of your projects?
Exterior design of all the houses will give a glimpse of our culture as they will resemble the architecture of Patan and Bhaktapur Durbar squares, but will also include a touch of f modern architecture. And we are coming up with a package of `customer attractive prices' within a month, which will make the houses more affordable for the customers.
What are the future plans of CG in this sector?
Our projects up to now are only targeted for the middle and upper middle classes, but we are planning to come up with other projects that will expand our focus to all groups.
source: The Himalayan times(2011),"CHAUDHARY GROUP RESUMES REAL ESTATE BUSINESS ", The Himalayan times : Property Plus,12 March 2011
Photo courtesy: The Himalayan Times
Photo courtesy: The Himalayan Times
Nepal `lacks quake emergency response
Capital city may suffer most due to dilapidated buildings Experts warn that there will be thousands of deaths if a high magnitude earthquake like in Japan hits the country.
The capital city would be the worst hit due to its dilapidated buildings and non-quake resistant structures.
Talking to The Himalayan Times, Executive Director of National Society for Earthquake Technology Nepal, Amod Mani Dixit, said the country should have essential information on the resources, workforce, and necessary equipment, which will be useful for emergency response after an earthquake.Following a study conducted by United Nations Development Programme in 1996, the resource inventory to respond in case of emergency was prepared. “Our neighbouring countries like India, Pakistan, Bhutan have done a lot to mitigate the risk of natural disasters, but, we are still struggling,” said Dixit.
However, a recently formed body, National Emergency Operation Centre, under the Ministry of Home Affairs, to coordinate the emergency response, is working on collecting information about resources and workforce for emergency services from various government agencies, NGOs and INGOs.
Balkrishna Panthi, in-charge of the Centre, said they could not specify the capacity of
Nepal in relation to responding to emergency.
"We are preparing Standard Operating Procedure before starting the assessment of the capacity of the government and other organisations," he said. Besides, there is no sufficient law other than the 30-yearold Natural Calamity (relief ) Act 1982. A Natural Calamity Bill is included in the list of bills to be approved by the parliament, but no regulations have been drafted yet.
source: The Himalayan Times
The capital city would be the worst hit due to its dilapidated buildings and non-quake resistant structures.
Talking to The Himalayan Times, Executive Director of National Society for Earthquake Technology Nepal, Amod Mani Dixit, said the country should have essential information on the resources, workforce, and necessary equipment, which will be useful for emergency response after an earthquake.Following a study conducted by United Nations Development Programme in 1996, the resource inventory to respond in case of emergency was prepared. “Our neighbouring countries like India, Pakistan, Bhutan have done a lot to mitigate the risk of natural disasters, but, we are still struggling,” said Dixit.
However, a recently formed body, National Emergency Operation Centre, under the Ministry of Home Affairs, to coordinate the emergency response, is working on collecting information about resources and workforce for emergency services from various government agencies, NGOs and INGOs.
Balkrishna Panthi, in-charge of the Centre, said they could not specify the capacity of
Nepal in relation to responding to emergency.
"We are preparing Standard Operating Procedure before starting the assessment of the capacity of the government and other organisations," he said. Besides, there is no sufficient law other than the 30-yearold Natural Calamity (relief ) Act 1982. A Natural Calamity Bill is included in the list of bills to be approved by the parliament, but no regulations have been drafted yet.
source: The Himalayan Times
Booking open for Padma Colony Phase II
After the grand success of phase I, Padma Colony has announced its booking open for Padma Colony phase II.It is loacted 2 kms from Ring Road at Sitapaila Chowk.The price of individual homes ranges from Rs. 57 Lacs to Rs. 72 Lacs. Also, several discount offers has been announced by the company.It will be offering 3% discount for First five bookings(3 days) and 1% discount at nexrt 5 bookings(7 days).The land area ranges from 0-3-0-0 to 0-4-0-0.
Some of the features of colony are:
> Swimming pool
> Multipurpose Hall
> Wide black toped roads
> 24 hrs Electricity/Water Supply
> 24 Hrs Security
> Clean Environment
> 2 Kms from Ring Road at Sitapaila Chowk
> Land 0-3-0-0 to 0-4-0-0
> Easy Payment System and Finance
> Efficient Arcitect Design
> Earth Quake Resistant Structure
Some of the features of colony are:
> Swimming pool
> Multipurpose Hall
> Wide black toped roads
> 24 hrs Electricity/Water Supply
> 24 Hrs Security
> Clean Environment
> 2 Kms from Ring Road at Sitapaila Chowk
> Land 0-3-0-0 to 0-4-0-0
> Easy Payment System and Finance
> Efficient Arcitect Design
> Earth Quake Resistant Structure
10 modern cities to be established in mid-hills
The Ministry of Physical Planning and Works has stated that it will select locations for establishing 10 modern cities in all five development regions. It said that 20 potential locations would be identified having higher economic importance in the initial phase.
The government in the budget for the current fiscal year had announced developing 10 townships in the surrounding areas of the Mid-Hill Highway and north-south corridor roads under construction. Currently, the Department of Urban Development and Building Construction is doing final preparations to start the bidding work and select a consultant.
“The locations will be chosen in such a way that it will help develop the mid-hill sections of all five development regions,” said Mahendra Subba, deputy director general at the department. “Feasibility studies and detailed project reports (DPR) of at least one project related to basic infrastructure development in all the 10 cities will be completed within the current fiscal year.” Earlier, the DPR of the Mid-Hill Highway had underlined Phidim, Jarayotar, Bhojpur, Ghurmi area, Bhakundebeshi, Kurintar, Kusma, Burtibang, Rukumkot, Chaurjahari, Surkhet, Rakam, Sanfebagar, Dipayal and Patan of Baitadi as possible areas for establishing modern cities.
“We will concentrate more on existing settlements and the possibility of establishing them as modern cities than choosing individual settlements and locations having no possibilities for economic development,” said Subba. The ministry plans to get recommendation of 20 locations initially and finalise 10 locations after necessary discussions with the concerned stakeholders, the National Planning Commission and line ministries.
The 10 final locations might also include district headquarters or municipalities.
Suresh Prakash Acharya, joint secretary at the ministry, said that the locations would be selected based on the current situation of the locations, need of infrastructure development and economic importance. “It depends how the selected locations can help develop the area economically,” he added.
Establishing cities in the mid-hills with all modern facilities is intended to reduce the trend of migration from the mountains and hills to the Tarai and increase the possibility of developing hilly areas. Within the current fiscal year, the government will identify the locations and prepare an extensive strategic plan, according to the ministry.
A high level official at the ministry said that it would be impossible to work on developing townships in the mid-hills without the provision of voluntary land contribution and the government must also ban the sale of land as soon as the locations are identified. “If not planned well, the issue of land will be a major problem,” said the official. It is also estimated that most of the locations will be near or in existing cities, and they will be developed in a modern way later on. Officials also said that the cities would be developed at a distance of 150 km to 200 km from the Mid-Hill Highway.
“We can go for investment from the next fiscal year,” said Subba. “However, there might be problems for development of the basic physical infrastructure as we will need huge resources.”
source:The Kathmandu Post
Nepal’s Minsky moment
Kalpana Khanal:
The phrase “Minsky moment” was a buzzword in financial news reports during the recent global financial crisis. The phrase refers to American economist Hyman Minsky (1919-1996), known as a rather pessimistic contrarian for arguing that markets are inherently unstable and long stretches of good times just end in bigger collapses. In other words, Minsky recognised that stability is unstable. Central to Minsky’s view of how financial meltdowns occur is his Financial Instability Hypothesis (FIH, 1985), which has come to be known as “an investment theory of the business cycle and a financial theory of investment.”
According to Minsky, investment in real capital assets is typically financed by borrowing funds from banks and other financial institutions—that is, by going into debt. This borrowing for investment sets up a two-way money flow: a cash inflow to the borrowing firm from earning on its (real) capital assets and a cash outflow from the same firm to pay debts to its creditors. Cash inflows from real capital assets fluctuate and are uncertain, whereas cash outflows to creditors are fixed and certain. Firms heavily dependent on external financing are especially vulnerable because of their high ratio of debt to income. A sharp fall in the value of capital assets, perhaps as a result of less-than-expected earnings, disrupts the cash inflow and may trigger widespread debt deflation.
Minsky’s best-known contribution is his three-way classification of income-debt relations for economic units into hedge, speculative, and Ponzi. A hedge position is one in which the cash flows arising from the liability structure can be fully met out of the prospective income flows from assets; both interest and principal payments can be met as they come due. A speculative position is one which can meet interest payments, but principal will have to be rolled-over until some date in the future, at which time income flows are expected to rise. Finally, a Ponzi unit cannot even make interest payments out of current and near-term income flows, so they are capitalised as outstanding debt grows. A Ponzi position can be fraudulent and there is no likely scenario in which all commitments can be fulfilled—as in a pyramid scheme. A Ponzi scheme more likely results from unanticipated events such as a rise in floating interest on liabilities, or expected cash flows which are not forthcoming. This classification scheme plays a major role in Minsky’s theory of the endogenous transformation of the financial structure of the economy to fragility, subject to a rising risk of financial crises.
Minsky believed that over periods of prolonged prosperity, the economy moves from financial relations that make for a stable system to relations that make for an unstable one. During good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure engaged in speculative and Ponzi finance. The net worth of Ponzi units quickly falls down. Consequently, units with cash flow shortfalls are forced to try to make a position by selling out a position. This is likely to lead to a collapse of asset values. FIH is a model of capitalist economy that doesn’t need outside shocks to generate business cycles.
In the midst of a real estate boom, Minsky’s FIH is relevant to Nepal’s context. Nepal’s liberal monetary policy, particularly from 2007 to 2010, encouraged the rapid expansion of private sector credit. With political uncertainty and a generally poor business climate, a large portion of additional financing went to the retail/commerce and real estate sectors. Much of real estate investment is seen to be speculative and was often funded by banks and under-regulated cooperatives. The liberal licensing policy of the Nepal Rastra Bank created tough competition among financial institutions. Newer banks attempted to take aggressive risks to expand their market shares, which in turn forced remaining banks to take similar risks.
Concerned about the rapidly increasing exposure of banks to real estate, the NRB intensified supervision and regulation activities. Recently, the NRB imposed a cap limiting commercial bank lending in the real estate sector through two directives. In January 2010, it raised the Statutory Liquidity Ratios for commercial banks to eight percent. In 2009, it limited real estate credit to 25 percent and residential loans to 15 percent of total credit. It also required banks to reduce combined real estate and housing loans to 30 percent and 25 percent in 2011 and 2012 respectively. Even though the NRB efforts had some intended effects, private credit kept on increasing. By December 2009 the average credit-to-deposit ratio of commercial banks was 89 percent—a historical high.
World Bank (2010) data reveals that much of the real estate boom was financed by credit—exactly in line with Minsky’s FIH. Commercial bank credit to real estate increased by 127 percent to Rs 39 billion by January of 2010, while credit to housing rose by 25 percent to Rs 37 billion. Credit to the construction sector doubled from 2007-2009 from Rs 19.7 billion to Rs 44.8 billion. Loans under other categories were also linked to land—in fact 70 percent of all commercial bank loans were collateralised by real estate.
In the meantime real estate prices have been rising rapidly since fiscal year 2007 when the peace process began. The average prices of commercial property increased six-fold from 2007 to January 2010. The higher land prices had a temporary positive impact on bank performance indicators, since many loans are collateralised by land. The inflated prices raised collateral value and turned many non-performing loans (NPL) to good loans—without actual repayments. With the rise of the collateral value the commercial bank, the NPL ratio is now three percent, compared to over 30 percent in 2002. However, with the reduction of land prices this ratio will be affected.
In this context, the NRB’s intervention is a small step towards correcting deregulation prevalent in the banking system. In addition to this, as suggested by Minsky, it is necessary to rely on income and not debt for financing investments. The government should favour small to medium size banks and should discourage predatory lending by profit seeking financial institutions. The government should come up with debt relief strategies for small household loans. Lessons must be learnt from the current real estate boom. The government must make an effort to de?financialise and downsize profit seeking financial institutions, discourage off?balance sheet activities, and follow institutions and practices that favour stability.
Khanal is a PhD student of economics, University of Missouri at Kansas City
kkmr6@mail.umkc.edu
source:The Kathmandu Post,10 March 2011
The phrase “Minsky moment” was a buzzword in financial news reports during the recent global financial crisis. The phrase refers to American economist Hyman Minsky (1919-1996), known as a rather pessimistic contrarian for arguing that markets are inherently unstable and long stretches of good times just end in bigger collapses. In other words, Minsky recognised that stability is unstable. Central to Minsky’s view of how financial meltdowns occur is his Financial Instability Hypothesis (FIH, 1985), which has come to be known as “an investment theory of the business cycle and a financial theory of investment.”
According to Minsky, investment in real capital assets is typically financed by borrowing funds from banks and other financial institutions—that is, by going into debt. This borrowing for investment sets up a two-way money flow: a cash inflow to the borrowing firm from earning on its (real) capital assets and a cash outflow from the same firm to pay debts to its creditors. Cash inflows from real capital assets fluctuate and are uncertain, whereas cash outflows to creditors are fixed and certain. Firms heavily dependent on external financing are especially vulnerable because of their high ratio of debt to income. A sharp fall in the value of capital assets, perhaps as a result of less-than-expected earnings, disrupts the cash inflow and may trigger widespread debt deflation.
Minsky’s best-known contribution is his three-way classification of income-debt relations for economic units into hedge, speculative, and Ponzi. A hedge position is one in which the cash flows arising from the liability structure can be fully met out of the prospective income flows from assets; both interest and principal payments can be met as they come due. A speculative position is one which can meet interest payments, but principal will have to be rolled-over until some date in the future, at which time income flows are expected to rise. Finally, a Ponzi unit cannot even make interest payments out of current and near-term income flows, so they are capitalised as outstanding debt grows. A Ponzi position can be fraudulent and there is no likely scenario in which all commitments can be fulfilled—as in a pyramid scheme. A Ponzi scheme more likely results from unanticipated events such as a rise in floating interest on liabilities, or expected cash flows which are not forthcoming. This classification scheme plays a major role in Minsky’s theory of the endogenous transformation of the financial structure of the economy to fragility, subject to a rising risk of financial crises.
Minsky believed that over periods of prolonged prosperity, the economy moves from financial relations that make for a stable system to relations that make for an unstable one. During good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure engaged in speculative and Ponzi finance. The net worth of Ponzi units quickly falls down. Consequently, units with cash flow shortfalls are forced to try to make a position by selling out a position. This is likely to lead to a collapse of asset values. FIH is a model of capitalist economy that doesn’t need outside shocks to generate business cycles.
In the midst of a real estate boom, Minsky’s FIH is relevant to Nepal’s context. Nepal’s liberal monetary policy, particularly from 2007 to 2010, encouraged the rapid expansion of private sector credit. With political uncertainty and a generally poor business climate, a large portion of additional financing went to the retail/commerce and real estate sectors. Much of real estate investment is seen to be speculative and was often funded by banks and under-regulated cooperatives. The liberal licensing policy of the Nepal Rastra Bank created tough competition among financial institutions. Newer banks attempted to take aggressive risks to expand their market shares, which in turn forced remaining banks to take similar risks.
Concerned about the rapidly increasing exposure of banks to real estate, the NRB intensified supervision and regulation activities. Recently, the NRB imposed a cap limiting commercial bank lending in the real estate sector through two directives. In January 2010, it raised the Statutory Liquidity Ratios for commercial banks to eight percent. In 2009, it limited real estate credit to 25 percent and residential loans to 15 percent of total credit. It also required banks to reduce combined real estate and housing loans to 30 percent and 25 percent in 2011 and 2012 respectively. Even though the NRB efforts had some intended effects, private credit kept on increasing. By December 2009 the average credit-to-deposit ratio of commercial banks was 89 percent—a historical high.
World Bank (2010) data reveals that much of the real estate boom was financed by credit—exactly in line with Minsky’s FIH. Commercial bank credit to real estate increased by 127 percent to Rs 39 billion by January of 2010, while credit to housing rose by 25 percent to Rs 37 billion. Credit to the construction sector doubled from 2007-2009 from Rs 19.7 billion to Rs 44.8 billion. Loans under other categories were also linked to land—in fact 70 percent of all commercial bank loans were collateralised by real estate.
In the meantime real estate prices have been rising rapidly since fiscal year 2007 when the peace process began. The average prices of commercial property increased six-fold from 2007 to January 2010. The higher land prices had a temporary positive impact on bank performance indicators, since many loans are collateralised by land. The inflated prices raised collateral value and turned many non-performing loans (NPL) to good loans—without actual repayments. With the rise of the collateral value the commercial bank, the NPL ratio is now three percent, compared to over 30 percent in 2002. However, with the reduction of land prices this ratio will be affected.
In this context, the NRB’s intervention is a small step towards correcting deregulation prevalent in the banking system. In addition to this, as suggested by Minsky, it is necessary to rely on income and not debt for financing investments. The government should favour small to medium size banks and should discourage predatory lending by profit seeking financial institutions. The government should come up with debt relief strategies for small household loans. Lessons must be learnt from the current real estate boom. The government must make an effort to de?financialise and downsize profit seeking financial institutions, discourage off?balance sheet activities, and follow institutions and practices that favour stability.
Khanal is a PhD student of economics, University of Missouri at Kansas City
kkmr6@mail.umkc.edu
source:The Kathmandu Post,10 March 2011
Contractors demand Rs 200m for project cost overruns
Nepali contractors have demanded that the Indian Embassy provide them Rs 200 million to compensate for the cost overruns on the projects funded by it. They said that delays in payment had hit the contractors and the projects under construction.
There are 32 infrastructure projects whose costs have gone up due to swelling prices of construction materials during the fiscal year 2007-08. The contractors have been saying that they will not hand over the projects until they receive payment in accordance with the increased costs.
The government has already decided to adjust the cost of the projects awarded between the period mid-December 2006 to mid-July 2008 keeping in mind the heavy hike in the price of building materials. During this period, the price of iron rods, bricks, cement and timber is reported to have increased by 30 to 100 percent.
“Despite the government’s request and the provision to adjust the cost based on the price hike, the Indian Embassy is not showing any interest in doing so,” said Yakshya Dhwoj Karki, president of the Federation of Contractors Associations of Nepal (FCAN), addressing a press conference. He added that the government and the Indian Embassy must reach a decision to this effect at the earliest.
Three months ago, a committee comprising officials from the government and the Indian Embassy was formed to solve the dispute. However, it has not come up with any concrete decisions so far.
“We have been informed that the committee is holding a meeting on Thursday,” said Keshav Prasad Gautam, member secretary of the struggle committee of Indian Embassy-funded projects. He added that even though most of the projects had already been completed, they would not hand them over to India without resolving the issue.
All the projects had been funded by a grant assistance from the Indian Embassy and the costs were below Rs 50 million each. Contractors have been demanding extra payment ranging from Rs 700,000 to Rs 8 million based on the price hike of the construction materials and the size of the projects. The projects include schools, colleges, hostels and hospitals in various parts of the country.
FCAN has also demanded that the government implement the 45-point agreement reached last year and maintain peace and security to let them work freely. They said that the trend of kidnapping, thrashing, extortion, destruction of machinery and equipment were on the rise.
An unidentified group had torched two excavators and destroyed them completely at the Jorpati-Sankhu-Melamchi Road Project on Feb. 18, according to contactors. “There is no favourable condition to go to the field to work,” said Karki. “Two contractors, Kishor Sherpa and Surya Tamang, were kidnapped by a criminal gang in Dhankuta on Feb. 25. They are still out of contact.”
source: The Kathmandu Post
There are 32 infrastructure projects whose costs have gone up due to swelling prices of construction materials during the fiscal year 2007-08. The contractors have been saying that they will not hand over the projects until they receive payment in accordance with the increased costs.
The government has already decided to adjust the cost of the projects awarded between the period mid-December 2006 to mid-July 2008 keeping in mind the heavy hike in the price of building materials. During this period, the price of iron rods, bricks, cement and timber is reported to have increased by 30 to 100 percent.
“Despite the government’s request and the provision to adjust the cost based on the price hike, the Indian Embassy is not showing any interest in doing so,” said Yakshya Dhwoj Karki, president of the Federation of Contractors Associations of Nepal (FCAN), addressing a press conference. He added that the government and the Indian Embassy must reach a decision to this effect at the earliest.
Three months ago, a committee comprising officials from the government and the Indian Embassy was formed to solve the dispute. However, it has not come up with any concrete decisions so far.
“We have been informed that the committee is holding a meeting on Thursday,” said Keshav Prasad Gautam, member secretary of the struggle committee of Indian Embassy-funded projects. He added that even though most of the projects had already been completed, they would not hand them over to India without resolving the issue.
All the projects had been funded by a grant assistance from the Indian Embassy and the costs were below Rs 50 million each. Contractors have been demanding extra payment ranging from Rs 700,000 to Rs 8 million based on the price hike of the construction materials and the size of the projects. The projects include schools, colleges, hostels and hospitals in various parts of the country.
FCAN has also demanded that the government implement the 45-point agreement reached last year and maintain peace and security to let them work freely. They said that the trend of kidnapping, thrashing, extortion, destruction of machinery and equipment were on the rise.
An unidentified group had torched two excavators and destroyed them completely at the Jorpati-Sankhu-Melamchi Road Project on Feb. 18, according to contactors. “There is no favourable condition to go to the field to work,” said Karki. “Two contractors, Kishor Sherpa and Surya Tamang, were kidnapped by a criminal gang in Dhankuta on Feb. 25. They are still out of contact.”
source: The Kathmandu Post
REMA, Need of an Existing Real Estate Market
Realizing the need of the existing Real Estate market,Brihat Investments has established REMA to initiate ethical property dealings. From the presentation of Mr. Om Rajbhandary, Real Estate expert of Nepal on the occasion of closing ceremony of 3rd REMA Course on 24th September 2010, advocated that the REMA can play vital role in the existing Real Estate market.
In order to initiate REMA profession as a lucrative career, Mr. Rajbhandary, in his presentation, highlighted the major roles of different bodies as follows:
»Roles of Developers / NLHDA
»Roles of the Government Bodies
»Roles of Banks and Financial Institutions
»Roles of Media
Roles of Developers / NLHDA
Developers can involve REMA for creating the new dimension in Real Estate as mentioned below:
• Absorbing REMA as employees either as Marketing Officers or on an incentive basis in any Real Estate transactions.
• Producing REMA professionals within the organization by providing REMA course to the staff members.
• Reserving certain quota of housing units to be sold by the certified Real Estate Marketing Agents in each project. For example, BI mobilized REMA to sell 10 units out of 70 during the first phase of Brihat Community Living Ramkot Project.
Roles of the Government Bodies
• Developing curriculum for REMA courses.
• Providing authoritative statuses and certificates to the REMA’s.
• Providing licenses to the registered REMA’s.
• Allowing the Real Estate transaction deals to be only made through and by the registered and authorized REMAs as in stock market.
• Presenting a certified REMA as a witness to every Real Estate transaction, like a certified medical doctor has a role in the medical world as well as an engineer has in construction sites.
Article contributed by Brihat Investments Pvt. Ltd.
New NRB directive for collateral evaluators
The central bank has expanded the criteria of blacklisting of the collateral evaluators in a fresh directive.
The latest regulation regarding the blacklisting of the collateral issued by Nepal Rastra Bank (NRB) said that in case a valuator evaluates unfit collateral as proper, then also such collateral valuators will be blacklisted by Credit Information Bureau (CIB).Earlier, if the auctioning of the collateral was able to fetch only two-thirds of the borrowed amount, the collateral valuators were blacklisted, as per NRB regulation.
The professional or agency that becomes blacklisted because of being involved in wrong valuation of collaterals will not be allowed to perform the collateral valuation for any licensed banks and financial institutions.
This directive is aimed at preventing the incidence of banks not being able to recover loans once the loans get defaulted.If a loan is floated against bad collateral, the numbers of willful defaulters might increase, piling the loss on the banks.
source:The Himalayan times
The latest regulation regarding the blacklisting of the collateral issued by Nepal Rastra Bank (NRB) said that in case a valuator evaluates unfit collateral as proper, then also such collateral valuators will be blacklisted by Credit Information Bureau (CIB).Earlier, if the auctioning of the collateral was able to fetch only two-thirds of the borrowed amount, the collateral valuators were blacklisted, as per NRB regulation.
The professional or agency that becomes blacklisted because of being involved in wrong valuation of collaterals will not be allowed to perform the collateral valuation for any licensed banks and financial institutions.
This directive is aimed at preventing the incidence of banks not being able to recover loans once the loans get defaulted.If a loan is floated against bad collateral, the numbers of willful defaulters might increase, piling the loss on the banks.
source:The Himalayan times
CG back in housing sector; announces Rs 1b project
After a decade-long hiatus, Chaudhary Group (CG) has re-entered into the housing sector. CG Group’s CG Developers, on Sunday announced three new projects with an investment of Rs 1 billion.
The company is developing two housing projects—Mount View Residency III (MVR III) in Harisiddhi, Lalitpur, and CG Hills in Hattigauda, Kathmandu—and a commercial complex—Bharatpur Hub—in Bharatpur, Chitwan.
CG was the first corporate house to foray into the housing sector in the country. It started with Kathmandu Residency in 2000, the country’s first apartment housing project. Its second project at Harisiddi in 2003—MVR I and II—included independent and duplex homes.
CG’s re-entry in this sector has happened at a time when the realty sector is going through a tough time. CG’s Managing Director Nirvana Chaudhary says the need for housing has remained the same despite the slowdown. “Common people’s need for housing has not slowed down and we are confident,” said Chaudhary.
The MVR III will have nine houses, while CG Hills will have 60 stand alone and row houses. Targeted at the middle class, the houses are priced between Rs 10 million and Rs 15 million.
CG Developers is investing Rs 540 million in these projects. Each house at CG Hills will be built on 4-6 aana of land. “Exterior design of the houses will give a glimpse of Patan and Bhaktapur Durbar squares,” said Aashish Sharma, chief executive officer of CG Developers.
Similarly, Bharatpur Hub will be the first of its kind in Nepal. It will have a luxury shopping mall, multiplex, food court and a hotel under one roof. Labeled as mixed development by the group, the 11-storied building will have a 56-room three-star hotel. The project is estimated to cost Rs 550 million.
The group is also planning to replicate this concept in other cities like Pokhara, Itahari and Butwal. “This is the high time to develop infrastructure in other places than Kathmandu,” said Chaudary.
CG says it will launch more projects in future. “So far, our projects have targeted the middle and upper middle classes,” said Chaudhary. “Now, we will come up with projects for all groups.”
source:The Kathmandu Post
The company is developing two housing projects—Mount View Residency III (MVR III) in Harisiddhi, Lalitpur, and CG Hills in Hattigauda, Kathmandu—and a commercial complex—Bharatpur Hub—in Bharatpur, Chitwan.
CG was the first corporate house to foray into the housing sector in the country. It started with Kathmandu Residency in 2000, the country’s first apartment housing project. Its second project at Harisiddi in 2003—MVR I and II—included independent and duplex homes.
CG’s re-entry in this sector has happened at a time when the realty sector is going through a tough time. CG’s Managing Director Nirvana Chaudhary says the need for housing has remained the same despite the slowdown. “Common people’s need for housing has not slowed down and we are confident,” said Chaudhary.
The MVR III will have nine houses, while CG Hills will have 60 stand alone and row houses. Targeted at the middle class, the houses are priced between Rs 10 million and Rs 15 million.
CG Developers is investing Rs 540 million in these projects. Each house at CG Hills will be built on 4-6 aana of land. “Exterior design of the houses will give a glimpse of Patan and Bhaktapur Durbar squares,” said Aashish Sharma, chief executive officer of CG Developers.
Similarly, Bharatpur Hub will be the first of its kind in Nepal. It will have a luxury shopping mall, multiplex, food court and a hotel under one roof. Labeled as mixed development by the group, the 11-storied building will have a 56-room three-star hotel. The project is estimated to cost Rs 550 million.
The group is also planning to replicate this concept in other cities like Pokhara, Itahari and Butwal. “This is the high time to develop infrastructure in other places than Kathmandu,” said Chaudary.
CG says it will launch more projects in future. “So far, our projects have targeted the middle and upper middle classes,” said Chaudhary. “Now, we will come up with projects for all groups.”
source:The Kathmandu Post
Manpower crunch hits construction
The construction industry is facing acute labour shortage.“Nepali workers hardly fill up 60 per cent of total demand,” said Yakshya Dhoj Karki, president of Federation of Contractors Association of Nepal (FCAN) at a programme aimed to balance demand and supply of construction sector workforce. Large construction projects are largely dependent on workers from India, he said.
Nepali construction industry needs 11,00,000 workers for large construction projects but the supply is limited to around 6,00,000 to 7,00,000. “We don’t have a database of Nepali workers with their skill-set, said Saroj Kumar Upadhaya, executive chairperson of CEMECA Human Resource Academy Pvt Ltd. “Therefore, we are going to build a strong database with the help of government and non-government organisations,” he said.
According to Council for Technical Education & Vocational Training (CTEVT), 80,000 Nepalis have received training in various vocational programmes and another 51,000 have got skill license from National Skill Testing Board (NSTB). But there is little information on the whereabouts of those who received training. “We don’t know where they are? We are looking for them to give them work,” said Upadhaya. Nepal does not have a prosperous future without managing the labour force properly,” he said.
Five agencies including the government have joined hands to promote training and relevant work. Nepali construction sector needs up to 400,000 skilled workers — overseers, sub-overseers and others. But only half the number is available in the market. Nepali construction sector does not face much problem in recruiting skilled professionals but middle and lower level professionals are hard to find. “Current, lower grade workers can be upgraded by providing training to them,” said Karki.
“The government is aware of its role. Strategic employment training will be started from next fiscal year,” said Kamal Raj Pandey, Joint-Secretary in the Ministry of Physical Planning and Works. Employment Fund (EF) has joined hands with FCAN, NGOs and governmental agencies to support the training programme.
EF willingly supports any training that creates employment and supports people directly, said Siroco Messerli, team leader of the fund. Around 450,000 Nepalis enter job market every year and 300,000 leave the country for overseas jobs. Nepali industry and the service sector employ around 40,000 workers nearly 60,000 remain without work every year.
source:The Himalayan Times
Nepali construction industry needs 11,00,000 workers for large construction projects but the supply is limited to around 6,00,000 to 7,00,000. “We don’t have a database of Nepali workers with their skill-set, said Saroj Kumar Upadhaya, executive chairperson of CEMECA Human Resource Academy Pvt Ltd. “Therefore, we are going to build a strong database with the help of government and non-government organisations,” he said.
According to Council for Technical Education & Vocational Training (CTEVT), 80,000 Nepalis have received training in various vocational programmes and another 51,000 have got skill license from National Skill Testing Board (NSTB). But there is little information on the whereabouts of those who received training. “We don’t know where they are? We are looking for them to give them work,” said Upadhaya. Nepal does not have a prosperous future without managing the labour force properly,” he said.
Five agencies including the government have joined hands to promote training and relevant work. Nepali construction sector needs up to 400,000 skilled workers — overseers, sub-overseers and others. But only half the number is available in the market. Nepali construction sector does not face much problem in recruiting skilled professionals but middle and lower level professionals are hard to find. “Current, lower grade workers can be upgraded by providing training to them,” said Karki.
“The government is aware of its role. Strategic employment training will be started from next fiscal year,” said Kamal Raj Pandey, Joint-Secretary in the Ministry of Physical Planning and Works. Employment Fund (EF) has joined hands with FCAN, NGOs and governmental agencies to support the training programme.
EF willingly supports any training that creates employment and supports people directly, said Siroco Messerli, team leader of the fund. Around 450,000 Nepalis enter job market every year and 300,000 leave the country for overseas jobs. Nepali industry and the service sector employ around 40,000 workers nearly 60,000 remain without work every year.
source:The Himalayan Times
Land ownership details drive suspended
Citing practical difficulties, the Ministry of Land Reform and Management (MoLRM) has suspended its much-hyped plan to collect land-ownership details from all land owners across the country.
The ministry´s decision not to collect land details until the Land Reform Act is amended means the Supreme Court (SC) order to the government to complete collection of land ownership detials within six months stands grossly flouted.
About a year ago, the SC had ordered government authorities to complete collecting the land details within six months.
Nearly five months ago, MoLRM had issued a public notice asking all land owners to submit their land ownership details to the land reform and land revenue offices of their respective districts.
"Our drive has been suspended due to practical difficulties. We issued notices to collect details of land holdings from both those possessing land in excess of the legal ceiling and those with land below the ceiling," said MoLRM Secretary Keshav Bhattarai, adding, "However, collecting land details from all land owners is quite impractical, costly and time-consuming."
According to Secretary Bhattarai, the ministry will resume its move once the Land Reform Act is amended, paving the way for the government to collect land details only from those who possess land exceeding the legal ceiling.
The present Act says that the government is required to collect land details from all land owners. After the Act is amended, those owning land less than the legal ceiling will not have to submit their land details.
"We have been informed that billions could be spent if we had to collect land details from both those possessing land over the legal ceiling and those with land less than the ceiling," said Secretary Bhattarai, adding, "Collecting land details only from those who possess properties exceeding the legal limit seems to be more practical, less expensive and more effective."
Advocate Madhav Basnet had filed a writ petition at the SC demanding enforcement of the Land Reform Act (Fifth Amendment)-2001, that prohibits possession of land in excess of ceiling. Asked to comment on the MoLRM decision to suspend the whole exercise, Advocate Basnet said, "This is a clear example how the government violates its own commitment."
MoLRM had initiated a move to enforce the Land Reform Act (Fifth Amendment)-2001 with the issuing of a 35-day notice nearly six months ago.
According to Secretary Bhattarai, the process of amending the Act has already been initiated.
The government´s bid to enforce the land reform act would mean distributing land in excess of ceiling to the landless. "If the legal provisions are implemented sincerely, he landless would get land and the trend of deforestation would be controlled," Basnet added.
As per the Land Reform Act (Fifth Amendment), a person can own 20 ropanis of land in Kathmandu Valley, 10 bighas in the Tarai districts and 70 ropanis in Hill districts. Likewise, a person can own five ropanis in Kathmandu Valley and the Hill districts and one bigha in the Tarai for homestead purposes.
Before the amendment to the act, an individual could own a maximum of 50 ropanis in Kathmandu Valley and 20 bighas in the Tarai.
Advocate Basnet had filed a contempt case after government officials failed to collect within 180 days particulars concerning those owing land over the ceiling, as directed by the apex court on January 20, 2010. The contempt case is pending at the SC.
source:Gautam, Bimal(2011),"Land ownership details drive suspended ", republica, 6 March 2011
The ministry´s decision not to collect land details until the Land Reform Act is amended means the Supreme Court (SC) order to the government to complete collection of land ownership detials within six months stands grossly flouted.
About a year ago, the SC had ordered government authorities to complete collecting the land details within six months.
Nearly five months ago, MoLRM had issued a public notice asking all land owners to submit their land ownership details to the land reform and land revenue offices of their respective districts.
"Our drive has been suspended due to practical difficulties. We issued notices to collect details of land holdings from both those possessing land in excess of the legal ceiling and those with land below the ceiling," said MoLRM Secretary Keshav Bhattarai, adding, "However, collecting land details from all land owners is quite impractical, costly and time-consuming."
According to Secretary Bhattarai, the ministry will resume its move once the Land Reform Act is amended, paving the way for the government to collect land details only from those who possess land exceeding the legal ceiling.
The present Act says that the government is required to collect land details from all land owners. After the Act is amended, those owning land less than the legal ceiling will not have to submit their land details.
"We have been informed that billions could be spent if we had to collect land details from both those possessing land over the legal ceiling and those with land less than the ceiling," said Secretary Bhattarai, adding, "Collecting land details only from those who possess properties exceeding the legal limit seems to be more practical, less expensive and more effective."
Advocate Madhav Basnet had filed a writ petition at the SC demanding enforcement of the Land Reform Act (Fifth Amendment)-2001, that prohibits possession of land in excess of ceiling. Asked to comment on the MoLRM decision to suspend the whole exercise, Advocate Basnet said, "This is a clear example how the government violates its own commitment."
MoLRM had initiated a move to enforce the Land Reform Act (Fifth Amendment)-2001 with the issuing of a 35-day notice nearly six months ago.
According to Secretary Bhattarai, the process of amending the Act has already been initiated.
The government´s bid to enforce the land reform act would mean distributing land in excess of ceiling to the landless. "If the legal provisions are implemented sincerely, he landless would get land and the trend of deforestation would be controlled," Basnet added.
As per the Land Reform Act (Fifth Amendment), a person can own 20 ropanis of land in Kathmandu Valley, 10 bighas in the Tarai districts and 70 ropanis in Hill districts. Likewise, a person can own five ropanis in Kathmandu Valley and the Hill districts and one bigha in the Tarai for homestead purposes.
Before the amendment to the act, an individual could own a maximum of 50 ropanis in Kathmandu Valley and 20 bighas in the Tarai.
Advocate Basnet had filed a contempt case after government officials failed to collect within 180 days particulars concerning those owing land over the ceiling, as directed by the apex court on January 20, 2010. The contempt case is pending at the SC.
source:Gautam, Bimal(2011),"Land ownership details drive suspended ", republica, 6 March 2011
Booking Open from Star Mall
Star Mall,a seven-storied building in the heart of Kathmandu's business district, has opened its booking for its spaces.According to star mall, it promises to change the way Kathmandu residents shop. Constructed by Sharma & Co, A-class contractor, the new mall will provide its customers a shopping experience of international standards, while businesses will be assured of utmost privileges and facilities.
Shop area(sq.ft.) Floor
300-500 1st and 2nd Floor
1000-2200 1st and 2nd Floor
Green Village Homes from 58 lakhs
Kasthamandap Land Developers will soon launch its housing projects, Green Village Homes, located at Syuchatar, Kathmandu.The price range of individual homes starts from NRs. 58 Lakhs onwards.
Features of Project:
> About 204km far from the ringroad(Bafal Chowk, Soltee Dobato)
> Area: 3 aana to 7 aana
> No.of Floors: 2 1/2
> Modern Design
> Treated Water Supply.
> Provision of telephone, cable and internt
> Enough greenery and open spaces.
> Provision of Septic Tank.
> Street Lamps.
> Well managed sanitary and sewerage system.
NRB to ease home loans
Nepal Rastra Bank on Tuesday announced that it will soon relax its policy on realty loans, separating home loans from real estate lending, in a bid to give a new lease of life to the troubled housing industry.
However, it made clear it will continue to tighten loans going into real estate business, particularly land trading.
“We will soon take steps whereby banks and financial institutions will be able to issue home loans up to a certain specified amount without any restrictions,” said NRB Governor Dr Yuva Raj Khatiwada.
Khatiwada did not explicitly spell out what that ´specified loans amount´ will be.
Deputy Governor Maha Prasad Adhikari too elaborated that the central bank was planning to exclude home loans issued on the basis of personal income from the broader category of ´real estate loans´.“We believe this exclusion will enable banks and financial institutions (BFIs) to issue home loans with relative ease, as they will not worry about the cap the central bank has imposed on real estate loans,” he stated. The central bank had last year imposed a cap on realty loans, to force BFIs into limiting their loans in the sector at 25 percent or less of their total lending portfolio. While the policy was enforced to cool overheated realty market, it had led the market to stagnation, mainly hurting the housing industry.
During the mid-term evaluation of monetary policy, Dr Khatiwada on Tuesday also promised to loosen its directives on margin lending in a bid to support share market regain confidence.
He also promised to relax provisions on refinancing, so that more BFIs could avail of the facility, supporting increased credit flow to productive sectors like tourism, hydropower, small and medium enterprises and agriculture.Dr Khatiwada also said that the central will issue more repo, through which BFIs can acquire loans against securities they hold, to address the current liquidity crunch.
“Compared to a few months ago, liquidity in the banking system has now eased. Nonetheless, we will use all possible instruments to bring the situation back to normal,” said he. Bankers welcomed the changes Governor Khatiwada promised.
“We had long sought the central bank to treat home loans as different from speculative real estate loans and relax provisions on margin lending. We welcome the relaxation the governor promised during the review of monetary policy,” said Ashok Rana, president of Nepal Bankers´ Association.
source:republica
However, it made clear it will continue to tighten loans going into real estate business, particularly land trading.
“We will soon take steps whereby banks and financial institutions will be able to issue home loans up to a certain specified amount without any restrictions,” said NRB Governor Dr Yuva Raj Khatiwada.
Khatiwada did not explicitly spell out what that ´specified loans amount´ will be.
Deputy Governor Maha Prasad Adhikari too elaborated that the central bank was planning to exclude home loans issued on the basis of personal income from the broader category of ´real estate loans´.“We believe this exclusion will enable banks and financial institutions (BFIs) to issue home loans with relative ease, as they will not worry about the cap the central bank has imposed on real estate loans,” he stated. The central bank had last year imposed a cap on realty loans, to force BFIs into limiting their loans in the sector at 25 percent or less of their total lending portfolio. While the policy was enforced to cool overheated realty market, it had led the market to stagnation, mainly hurting the housing industry.
During the mid-term evaluation of monetary policy, Dr Khatiwada on Tuesday also promised to loosen its directives on margin lending in a bid to support share market regain confidence.
He also promised to relax provisions on refinancing, so that more BFIs could avail of the facility, supporting increased credit flow to productive sectors like tourism, hydropower, small and medium enterprises and agriculture.Dr Khatiwada also said that the central will issue more repo, through which BFIs can acquire loans against securities they hold, to address the current liquidity crunch.
“Compared to a few months ago, liquidity in the banking system has now eased. Nonetheless, we will use all possible instruments to bring the situation back to normal,” said he. Bankers welcomed the changes Governor Khatiwada promised.
“We had long sought the central bank to treat home loans as different from speculative real estate loans and relax provisions on margin lending. We welcome the relaxation the governor promised during the review of monetary policy,” said Ashok Rana, president of Nepal Bankers´ Association.
source:republica
Sunrise Apartments Carnival Offer
Latest figures on revenue collection from Land Revenue Offices
Latest figures on revenue collection from Land Revenue Offices in the first seven months of the current fiscal year. According to the Department of Land Reforms and Management, revenue collection at the Dilli Bazaar LRO was down 52.95 percent, Chabahil LRO down 61.41 percent and Kalanki LRO down 63.22 percent. The Lalitpur and Bhaktapur LROs also reported a fall in income.
According to realty traders, small developers had been forced to sell their lands with a small profit margin after BFIs pressured them to pay back their loans. However, big land developers are still holding on to their lands.
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