Credit against security of real estate down

Kathmandu November 25- Fewer borrowers are now using land and buildings as security to acquire loans, as banks and financial institutions tightened the screws on extension of credit on the back of real estate in the aftermath of the earthquakes of April and May.

Only 44.24 per cent of the loans were extended against the security of land and buildings in the first quarter of this fiscal, the latest macroeconomic report of Nepal Rastra Bank shows. In the same period last year, 59.56 per cent of the loans were issued on the back of land and buildings.

Credit extension against security of real estate has fallen because banks have now made it mandatory for borrowers to submit documents such as building completion certificate. This provision was introduced after the devastating earthquakes caused damage to houses and buildings located in various parts of the country. But the problem is that not many owners of houses and buildings have this document, hence the fall. Source: THT