Increase in subsidised agri lending limit demanded
KATHMANDU, NOV 05 - The business community on Tuesday urged the government to increase the limit of the subsidised loans offered to youths wanting to engage in commercial farming. It has also demanded a revision of the age limit for beneficiaries.
The Working Procedure on Interest Subsidy for Agriculture Loans to the Youth issued on Sunday has fixed the ceiling of the subsidised loans at Rs 10 million and the age limit for eligible recipients at 21-45 years.
As per the working procedure, commercial banks charge 10 percent interest on the agro loans provided to targeted youths. The borrower pays 6 percent interest and the government pays the rest.
Organising an interaction on Tuesday, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said the credit limit of Rs 10 million would be inadequate for big projects including the construction of cold storage. “It will not address the needs of big investors in the farm sector,” said the FNCCI in a press release.
Similarly, agro entrepreneurs said that the age limit was impractical. “A majority of Nepali farmers are over the age of 45 years. The age limit has ignored the aspects of a large number of old farmers,” said Durga Adhikari, general secretary of Seed Entrepreneurs’ Association of Nepal, presenting a paper. “It largely aims to involve only new farmers.”
He also expressed scepticism that the subsidised loan scheme would be effectively implemented even in rural areas. “As commercial banks demand collateral worth three times the loan amount, loan utilisation in rural areas may not reach the optimum level.”
The government has aimed through this plan to encourage youths to engage in commercial agriculture instead of going abroad to work.
The business community also expressed dissatisfaction over the maturity period of the loan which has been set at five years. Adhikari said the repayment period was too short under present conditions where entrepreneurs have to face stiff competition in terms of quality, price and technology.
Gyaneshwor Acharya of the Nepal Bankers’ Association said the maturity period of five years was inadequate to clear the loan. He added that the provision of barring farmers from receiving subsidised loans if they fall behind in paying interest for three months was also inappropriate.
The government has specified subsidised loans for production in 12 farm areas. They are vegetable production, processing and storage; seed production, processing and storage; floriculture; livestock; fruits production, processing and storage; and dairy production, processing and sales and any other area fixed by the government.
Similarly, the other targeted sectors are 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.
The FNCCI criticised the government for not including fodder production and fertiliser manufacturing in the subsidised loan scheme.
Meanwhile, Nepal Rastra Bank said the government had launched the programme as an incentive to encourage youths to engage in commercial farming.
“However, it is not a complete package for the promotion of the sector,” said Basudev Adhikari, director at the central bank. He added that the programme had mainly targeted disadvantaged rural youth.
Lawmaker Gagan Thapa said there was enough room for making amendments to the working procedure after holding discussions with the stakeholders. “Apart from identifying farmers eligible to receive the subsidised loans, the time has now come for a proper assessment of whether such loans have yielded the desired results,” he added.
Source: The Kathmandu Post
