They also agreed that the loan was safe and were yielding good returns. But the lawmakers expressed wariness over EPF issuing such a huge loan to Civil Estates Pvt Ltd, especially at a time when the central bank has restricted banks from exposing their loans in the realty sector. [break]
They had also raised question over upfront disbursement of over Rs 510 million to the company for constructing Civil Trade Center, saying that the borrower could use the same for purpose other than construction for which it was issued.
Lawmakers like Dr Ram Sharan Mahat of Nepali Congress also cautioned the EPF from issuing further loans in the realty sector.
However, EPF officials said that the decision to issue loans to the Civil Estate was taken prior to the central bank´s intervention in the market.
“We had received the loans application on June 17 last year and forwarded it to the board for decision after conducting a thorough analysis of the project on December 8, 2009,” said Ramesh Raj Bhattarai, chief administrator of EPF.
He also said the loan was pledged against the collateral of 3052.42 sq.m of land, which even on conservative valuation is worth Rs 790 million.
“We have charged interest of 11.5 percent per annum for this project financing and this rate was higher than the rate that prevailed in the market then by a percentage point,” Bhattarai said.
Going by the agreement, he said the party needs to repay loans in 15 years, including 2 and half years of construction period, and would not receive more than Rs 660.40 million for completing the project worth Rs 1.38 billion.
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