Govt removes age restriction--Subsidised agri loans to youth

KATHMANDU, JAN 18 -

The government has removed the age limit in the revised “Working Procedure on Interest Subsidy for Agriculture Loans to the Youth”.

The amendment, which was endorsed by the Cabinet on Friday, allows all types of banks and financial institutions (BFIs) licensed by the Nepal Rastra Bank (NRB) to offer loans under the scheme. Finance Secretary Suman Shrama said the removal of the age limit enables even small farmers to get the loans at cheaper interest rates.

Earlier, a working procedure introduced in October had only enabled youths aged 21-45 years to get the loans at a subsidised interest rate of 6 percent.

The working procedure was introduced in line with the government’s announcement in the budget for this fiscal year that it would ensure availability of loans at 6 percent interest rate to attract the youths to commercial farming.

Under the scheme, the government will offer a 4 percent subsidy on the interest on the loans. Banks charge 10 percent interest on such loans. So farmers have to pay only 6 percent interest.

After farmers’ groups and lawmakers sought more flexibility in the loan terms, the government revised the working procedure.

With the existing working procedure categorising 12 areas of agriculture as eligible for the facility, the amendment has added bee keeping and a few other horticulture-related areas, Sharma said.

The maximum limit of the loans has also been increased for cold storage projects. “The upper limit has been hiked up to Rs 30 million as such businesses need more resources,” said Sharma.

In the previous working procedure, the upper limit was Rs 10 million.

Under the scheme, farmers working in various areas including vegetable production, processing and storage; seed production, processing and storage; floriculture; livestock; fruits production, processing and storage; and dairy production, processing and sales can get the subsidised loans.

Fishery, production and sales; mushroom production, processing and storage; animal slaughter house and meat business; herbal production, processing and storage; sugarcane, cardamom and ginger farming, storage and processing; and agriculture business are other areas eligible for the subsidy.

With the lawmakers at the Parliamentary Committee seeking more flexibility on the collateral provision, the revised working procedure has allowed BFIs to provide loans against the projects, according to Sharma.

With banks usually preferring to accept land with road access as collateral, the revision has asked BFIs to adopt flexibility in this regard, according to government officials.

Source: The Kathmandu Post