Itahari/Biratnagar Home Upgrading
- Status: Construction
- People Housed: 488
- Country: Nepal
- City: Itahari/Biratnagar
- Partner: Sewa
- Year Approved: 2015
This home loan project provides financial and technical assistance to families living on low incomes in informal settlements within the cities Itahari and Biratnagar. Sewa has successfully worked with a local bank to finance this project through a bank guarantee initiative. Sewa’s provision of bank guarantees lowers the perception of financial risk often attributed to people living on low incomes, giving the banks the confidence to lend. This demonstrates a positive example to other banks of the ability of individuals on low incomes to successfully repay loans. Significant achievements have already been seen in this; previous Reall-funded projects of this type have tended to require a guarantee of 50% from the partner, but Sewa were able to negotiate a 20% guarantee. Following successes with the initial phase of loans, Sewa negotiated with the bank for the money to be revolved for a second time, resulting in expected units doubling to 540.
Most clients work as labourers in construction or factories, or as small-scale business owners. Approximately 70% of the families use the funds to construct a new home, fully serviced with household water, sanitation and electricity. The remaining 30% will finance the extension or upgrading of their existing homes.
Client Data
Clients estimated to sit between 51st and 60th percentiles of incomes in Itahari/Biratnagar
| Description | Type | Number Expected | Number Completed | Monthly Cost (Local Currency) | Loan Length (months) |
|---|---|---|---|---|---|
| Loan guarantee project where Sewa provide a 20% guarantee to bank to provide a NPR 400,000 loan for construction. The rest of the cost is covered by the individual. | Self Build | 236 | 114 | 6744 | 84 |
| Loan guarantee project where Sewa provide a 20% guarantee to bank to provide a NPR 400,000 loan for construction. The rest of the cost is covered by the individual. | Loan | 4 | 8 | 6744 | 84 |
| Finance Description | Finance Source | Interest Rate (%) |
|---|---|---|
| Loan guarantee project where Sewa provide a 20% guarantee to bank to provide a NPR 400,000 loan for construction. The rest of the cost is covered by the individual. | Laxmi Bank | 11.0 |
| Loan guarantee project where Sewa provide a 20% guarantee to bank to provide a NPR 400,000 loan for construction. The rest of the cost is covered by the individual. | Laxmi Bank | 11.0 |
Project Finances
Investments — Reall to Affordable Housing Partners
Based on exchange rate on 31/10/2021
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Data last updated on 30/06/2022