Funding under YSEP put on hold
KATHMANDU, MAY 19 -
The government has put funding under the Youth Self-Employment Programme (YSEP) on hold for the time being. The government is currently working to revise the criteria for making available funds to banks and financial institutions and cooperatives.
Finance Minister Shankar Prasad Koirala said the funding has been suspended for the time being until the criteria are reviewed.
The government is particularly worried about the possible defaults of loans lent through cooperatives amid complaints that the cooperatives were selected based on political preference during the Baburam Bhattarai-led government.
“There is a need for reforms in the current system and we will make the selection criteria stringent and transparent,” Koirala told the Post, making it clear the programme will not be discontinued.
The government’s move has come at a time when cooperatives that have already received the first instalment of funds from the Youth and Small Entrepreneur Self Employment Fund (YSESEF) are seeking second instalment.
“A total of 559 cooperatives received Rs 600 million from YSESEF in first instalment and they are re-lending to the youths,” said Binod Kumar Guragain, executive director of YSESEF. “We are monitoring the cooperatives whether they have properly re-lent the funds to eligible youths. We have to make available the second instalment within the next two months.” The YSESEF provides financing in three instalments in the ratio of ratio of 30:30:40.
Guragain said almost all cooperatives have paid interest of the loans that went through them as of mid-April. He said revision of criteria should not be lengthy as it could hurt good projects awaiting second instalment.
As per the current criteria, unemployed youths aged between 18 and 50 years, irrespective of their education, can receive collateral-free loans of up to Rs 200,000 and a group of 25 youths can get up to Rs 5 million under the programme.
Banks and financial institutions and cooperatives have to re-lend the funds received from YSESEF to the youths at 12 percent interest rate. Banks and financial institutions and cooperatives have to pay 6-7 percent interest to the YSESEF.
Chief Economic Advisor at the Finance Ministry Chiranjeevi Nepal said the government sought to revise the criteria after complaints were received about the misuse of funds. He said the ministry has asked the YSESEF to submit a monitoring report and based on the report, discussions will be held and appropriate revision in the criteria will be made.
According to the YSESEF, besides Rs 600 million to cooperatives, it has sanctioned an additional Rs 600 million to the banks and financial institutions. Guragain said the programme has so far created 16,500 jobs.
The YSESEF still has Rs 3 billion remaining. The 50th annual report of the Auditor General Office has said 79.51 percent YSESEF resources has remained unused as of last fiscal year, and the fund has not monitored lending. The fund has not raised additional amount from banks and financial institutions under the deprived sector lending provision for the last five years. The YSESEF had last raised Rs 3.56 billion from banks and financial institutions in 2008-09.
“As existing resources have not been used adequately, we suspended raising extra funds,” said Guragain.
The Nepal Rastra Bank, however, has allowed banks and financial institutions to categorise investments made under this programme too as deprived sector lending.
Source: The Kathmandu Post
