How does the Cash-Transfer Mechanism work?

Community Meeting in Rural Nepal. Photo credit: World Bank

A uniform subsidy of NRs 300,000 (about US$3,000) for housing reconstruction is being provided in multiple tranches based on proper completion of various stages of construction milestones to encourage owner-driven reconstruction aligned with the Nepal National Building Code’s (NBC) earthquake-safer construction guidelines.

The payment system is designed to: 1) channel funds quickly, reliably and transparently and 2) ensure accountability in the form of traceability of the flow of funds (all the way down to individual beneficiaries, while avoiding excessive inconvenience for the beneficiaries or heavy administrative burden on the Government). The Government has signed agreements with Banks to facilitate the establishment of individual bank accounts for all beneficiaries and clarity in the flow of funds for subsidy payments.

The following table summarizes the present milestones for the issuance of each tranche payment to beneficiaries:

Construction Stage

Tranche Amount

1. Eligibility, verification and enrollment

NPR 50,000

2. Completion of foundation up to plinth level

NPR 150,000

3. Completion of roof

NPR 100,000

 

Inspection of each housing structure is being performed at each milestone. Once an inspection is conducted, the information is uploaded in the system, and verified, and the housing grants are being directly deposited into the individual beneficiary’s bank account from the central level without having the funds go through the district level.This will ensure a clear flow of funds and promote greater transparency and accountability. Relevant training will also be available to beneficiaries and/or construction workers at each respective milestone.

Current Status of the Program:

As of March 2017, 540,856 beneficiaries (approximately 96% of enrolled beneficiaries) have received the first tranche of the housing subsidy. This is helping beneficiaries to start the reconstruction of their homes.