June 15: Borrowers, who sought to take loans from banks and financial
institutions (BFIs) by maintaining land plots as collateral, have been unable
to get loans due to the recently-enforced Land Use Regulations 2022.
The
BFIs have stopped issuing loans against land collaterals after land revenue
offices denied to ‘put on hold’ the transaction of land plots that have been
used for securities. According to the new regulations, the land plots cannot
be used as securities unless they are classified as agriculture or
non-agriculture categories.
The new law has divided land into 10
categories based on their features and geographic situations. The land
categories include agricultural, residential, commercial, industrial, mines,
forests, public use and cultural-archeological, among others.
Previously,
the land revenue offices had been issuing ‘halt transactions’ orders against
any land plots that were considered fit for being kept as securities, based on
which BFIs would provide loans to their clients. Now, the land revenue offices
issue such orders only after the land plots receive the approval of being
classified from the local governments.
According to bankers,
the dilemma in the procedure to separate types of land plots at the local
levels has led to the difficulties in providing loans. The records of Nepal
Rastra Bank show out of collateral-based loans provided by the BFIs, about 90
percent use land plots as fixed assets for collaterals.
source:
republica, 15 June 2022
