Nepal credit mechanisms for financing low-income housing

This study addresses the need to facilitate home construction and improvement through the development of community-based housing finance systems. The report analyzes Nepal"s existing credit mechanisms, identifies key housing issues, describes financing options, and provides recommendations for project development and training. Currently, Nepal has neither specialized housing finance institutions nor a significant number of community-based thrift and credit mechanisms. The only existing credit sources are the limited shelter loans made by the two major commercial banks and the Agricultural Development Bank of Nepal and various informal financing mechanisms. High demand for housing credit is evident in the estimated increase of Nepalese households by 100,000 in 1988/89. In addition, there is a substantial need for home improvement, since only half of urban houses and even fewer rural houses have toilet facilities, private water supply, electricity, or permanent building materials. The proposed strategy is to expand Nepal"s existing funding mechanisms to establish a country-wide network of viable, self-reliant, community-based organizations for housing finance purposes.