Kathmandu: The High-Level Financial Sector Coordination Committee (HLFSCC) on Thursday took a number of measures to rejuvenate the faltering realty and stock markets. The committee headed by the finance minister decided to write to Nepal Rastra Bank (NRB) to expand the limit of home loans to Rs 10 million from Rs 8 million, a press release of the Ministry of Finance (MoF) stated.

Likewise, the committee also decided to write to the central bank to extend the deadline for banks and financial institutions (BFIs) to reduce their lending exposure to the realty sector to 25 percent by one more year until mid-July 2013.

As per the central bank’s directive, BFIs are required to reduce their lending exposure to the realty sector to 25 percent by mid-July this year. These measures have been long demanded by realty traders.

Given that the government has already allowed non-resident Nepalis (NRNs) and foreigners to purchase apartments in Nepal, the high-level committee decided request the Ministry of Land Reforms and Management (MoLRM) to submit the working procedures regarding this to the cabinet by mid-January.

As per the budgetary provision, NRNs can purchase apartments of any value but foreigners can only buy apartments or houses worth US$ 200,000 or more. The MoLRM was supposed to complete the working procedures by mid-October 2010.

With most housing and apartments projects struggling to sell their products, NRNs and foreigners were also allowed to purchase them so that they could repay their bank loans. The high-level committee also decided to write to the central bank to make the necessary policy arrangement regarding the process of converting apartments into service apartments so that they can be used for hotels and home-stay purposes.

The government is also holding internal discussions so that civil servants, VIPs and officials of constitutional bodies can purchase apartments and housing units with the offer of soft loans from institutions like the Employees Provident Fund (EPF) and the Citizens Investment Trust (CIT).

In order to study this possibility, the high-level committee also decided to form a committee under the coordination of the deputy governor of NRB in which the director general of the Department of Building and Urban Development, administrator of the Employees Provident Fund, president of the Nepal Bankers Association and chairman of the Nepal Real Estate Housing Development Association and executive director of the Citizens Investment Trust would be members.

The committee has been tasked to study the investments made in this sector at the moment, their market price and the procedure of making apartments and housing available to civil servants and officials of constitutional bodies and submit a report. These measures have made realty traders happy. “This is a welcome step of the government,” said Min Man Shrestha, general secretary of the Nepal Land and Housing Developers Association. “These policy measures will really help to revitalize the realty market, but it will take some time to see the effect.” In order to revitalize the share market that has been witnessing a bearish run for the last three years, the high-level committee has decided to implement the central depository system (CDS) beginning Jan 15.

However, a senior official of the Nepal Stock Exchange (Nepse) that formed the Central Depository System and Clearing for electronic clearing and settlement of stock trading said that bringing the CDS into operation by Jan 15 would be impossible because the bylaws are yet to be finalized.

The high-level committee also decided to expand Nepse regionally by mid-April.? Another decision taken by it is to carry out a feasibility study regarding the automation of Nepse by mid-February and to implement automation from April 3, 2012. It also decided to study how to reduce the cost of share transactions and implement recommendations from Feb 13.

“Although these measure are essential to revitalize the stock market, whether the said tasks will be completed within the set deadline is doubtful as far as the work culture of Nepal’s government agencies is concerned,”? said the Nepse official.

source: The Kathmandu Post, 5 Jan 2011