Government plans to buy accommodations to civil servants to rescue housing sector

The government is planning to purchase housing units and apartments for residential purpose of civil servants to help boost the confidence of ailing real estate sector.
The High Level Financial Sector Coordination Committee meeting today decided to form a committee to conduct a comprehensive study on the plausibility of purchasing housing units and apartments with soft loans for civil servants, special class officials and constitutional bodies’ chives. A committee will have central bank deputy governor, director general of Department of Housing and Urban Development, administrator of Employees Provident Fund (EPF), president of Nepal Bankers Association, president of Nepal Land and Housing Development Association (NLHDA) and executive director of Citizens Investment Trust.
"It will conduct a study on necessary steps required to implement the process that will not only give boost to the housing sector but also relief to the civil servants," said finance secretary Krishna Hari Baskota.
The package offered by the high level committee to revive the real estate sector also decided to ask the central bank to revise the ceiling of personal home loans from the current ceiling of Rs 8 million to Rs 10 million. "The central bank has responded positively," said a high level central bank official after the central bank's board meeting today evening. "We are bringing a package to boost the confidence of the housing sector that has seen its low in recent months."
The realtors have been putting pressure on the government and the central bank to come up with plan to salvage them from the bust. They have been demanding refinancing and restructuring facility from the central bank on the loans they have borrowed to construct the buildings. Increasing the personal home loan's ceiling was also a major demand of the realtors as a measure to stimulate the demand.
Likewise, the high level committee has also decided to recommend the central bank to extend the deadline for the banks and financial institutions to bring down the exposure to real estate loans within 25 per cent of total lending by the end of fiscal year 2013.
The central bank board meeting that had in December 2009 capped the lending capacity of financial institutions to real estate directing the financial institutions to bring down loans floated to the sector to 25 per cent of total loans by the end of current fiscal year has also responded positively today evening.
Currently, the class A, B and C banks and financial institutions have lent Rs 98 billion, according to the central bank, "The class A commercial banks' reported exposure to the sector stands at Rs 68 billion."If the realtors fail to pay back interest and principle amount many financial institutions will also land in trouble, according to the realtors, who claim that the second quarters' balance sheets of the banks and financial institutions will reflect the current trouble in the real estate sector.
The meeting today also instructed Land Reform and Management Department to prepare an action plan to allow foreigners to buy apartment and submit it to the cabinet by next week.
The budget of the current fiscal year had opened up purchase of apartments by foreigners in Nepal for certain period of time.