KATHMANDU, 03 NOV 2014Â Â – Finance Minister Ram Sharan Mahat on Sunday said the government ensured loans at lower interest rates to increase farmersâ€™ access to credit.
In line with the budgetary provision, Nepal Rastra Bank last week introduced a working procedure for providing interest subsidy to youth farmers. Under the scheme, youths aged between 21 and 45 can get a 4 percent interest subsidy on loans from commercial banks. The banks will charge 10 percent interest rate, while youth farmers will have to pay just 6 percent.
The government has so far been providing subsidised loans only through Small Farmersâ€™ Development Bank (SFDB).
Speaking at the Small Farmersâ€™ Conference 2014 here, Mahat stressed on the need for focusing on achieving economic prosperity through agriculture development. â€œThe slogan of economic inclusion has to be now translated into action by promoting small farmers,â€ he said. As growing fragmentation of land has pushed productivity down, Mahat said there is a need for classifying land based on the uses. â€œAgriculture commercialisation through small farmers could also boost productivity.â€
With suitable climate and topography, Nepal has comparative advantage in products like large cardamom,ginger and coffee. Mahat asked small farmers to focus on exporting such produces.
Stating the farmers lacked access to financial services due to the lack of knowledge, Nepal Rastra Bank Governor Yuvaraj Khatiwada said there is a need for increasing financial literacy among farmers. â€œAlthough microfinance institutions are helping farmers to some extent, most of them are still deprived of financial services.â€
Presenting a paper, Nepal Agriculture Central Cooperatives Federation General Manager Rudra Bhattarai said the SFDB was successful in promoting cooperatives of small farmers. â€œOf the total capital invested to small farmers, 65 percent came from farmers, while the bank contributed rest,â€ he said.
Narayan Nar Singh Khatry, a microfinance expert, said the programme has been hindered by unfavourable political situation. â€œAlthough it has helped to some extent in providing financial services to the rural people, it has failed to reduce the gap among the rich and the poor,â€ he said.
Professor Jaya Raj Acharya underscored the need for devising a policy to provide loans only to the needy. â€œSetting criteria for preventing loansâ€™ flow to farmers engaging in conspicuous consumption like gambling and alcohol, among others, could help reduce defaults,â€ he said.
The two-day meet being organised by the SFDB will end Monday. The event will see 24 paper presentations by researchers, scholars and experts.