How does the Cash-Transfer Mechanism work?

Community Meeting in Rural Nepal. Photo credit: World Bank

A uniform subsidy of Nepalese Rupees (NPR) 300,000 (about US$3,000) for housing reconstruction is being provided to the eligible beneficiaries in multiple tranches based on proper completion of various stages of construction milestones to encourage owner-driven reconstruction aligned with the Reconstruction Guidelines issued by National Reconstruction Authority. 

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 construction up to roof-band level

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‚Äôs 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:

Five years after the devastating 2015 earthquake, out of 827,167 eligible program beneficiaries, 781,176 beneficiaries (94%) have enrolled in the program by signing the participation agreement. While 776,953 enrolled beneficiaries (99%) have already received first tranche, 641,994 beneficiaries have received the second (82%) and 550,532 beneficiaries have received the third tranches (70%) of housing grant.

Housing Grant Tranche Payment Process-flow:

Housing Grant Payment Process-flow