Laxmi Capital News
5,794 Farmers Get Rs 6.46b in Subsidized Loans

Bank and financial institutions (BFIs)have extended a total of Rs 6.46 billion in loans to farmers with thegovernment-subsidized interest. 

According to Nepal Rastra Bank (NRB),5,794 beneficiaries have received loans under this scheme, of which the governmentprovides 5 percent interest subsidy. With 5 percent subsidy in interest, BFIscan charge up to 10 percent interest on loans extended for commercial farming. 

According to the NRB, BFIs have availedsubsidized loans for selected agriculture and livestock businesses of over sixbillion as of mid-October. The central bank has provided Rs 311 millioninterest subsidy so far under the scheme. 

Through the budget speech of the fiscalyear 2014/15, the government had announced subsidized farm loans to farmers.While the loan scheme was introduced two years ago to encourage small farmersand youths to start commercial farming through cheaper credit, there has notbeen much attraction toward such loan.

A farmer or a firm can borrow up to Rs 10million under this scheme which should be utilized on commercial farming andproduction, storage, and distribution of vegetables, coffee, and ginger, amongothers. Similarly, credit disbursement under this scheme is targeted for dairybusiness, fishery, beekeeping, livestock, and poultry, operating slaughterhouseand running cold storage and processing of meat items. But, a borrower isentitled to get higher amount of loan based on the rationale of the project andthe decision of the coordination and monitoring committee headed by a deputygovernor of the NRB. 

Youths between the age of 21 and 45 aswell as small farmers or firms owned and operated by them are eligible forborrowing of loan under this scheme. 

The central bank has defined a smallfarmer as a farmer or firm who operate farming business with a maximum loan ofRs 10 million. These loans can be extended upon the collateral of farming landand crops as well as group guarantee on certain amount of credit. 

These loans should be paid back withinfive years with a possible extension of up to two years.

Though such loans were available onlythrough commercial banks, the government later decided to allow developmentbanks and finance companies also to provide such loans following the complaintsthat there was not presence of 'A' class commercial banks in all places acrossthe country. 

There have also been complaints that BFIscreate hassles for applicants of the loans under the scheme. NRB officials,however, say that those facing such hassles can register their complaints andgrievances with the coordination and monitoring committee that facilitatesfarmers to access such loans.

Source: MyRepublica, 26th December 2017

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