Print Edition - 2015-01-01 | MONEY
Ministry to amend working procedure
- Subsidised agriculture loans to youth
Dec 31, 2014-
The Ministry of Finance (MoF) on Wednesday said it would amend the “Working Procedure on Interest Subsidy for Agriculture Loans to the Youth” within a week.
As per the existing provision, farmers aged 21-45 years can borrow such loans only from commercial banks at 6 percent interest rate. However, lawmakers had been demanding such a loan be provided without collateral and the age bar be eliminated.
The government, in coordination with the Nepal Rastra Bank (NRB), plans to make the working procedure more flexible in line with the lawmakers’ demand. “We plan to introduce the revised working procedure within a week,” said Baikuntha Aryal, joint secretary at the ministry, at the meeting of the Parliamentary Agriculture and Water Resources Committee on Wednesday.
NRB Governor Yubaraj Khatiwada had said the central bank was all set to open “limited window” for farmers aged above 45 years and even development banks, finance companies and micro-finance companies would be allowed to issue such credit. The governor had also said the central bank would put in place a provision under which the lenders could accept collateral of agriculture land without roads access, but had rejected idea of providing loans without collateral.
During Wednesday’s committee meeting, the lawmakers said banks should focus on extending the credit to farmers in rural areas instead of just concentrating on urban areas. They also questioned the massive undervaluation of land and property of rural areas.
“As the valuation of fixed property, including land, in the rural areas is very low, banks provide very small amount of loan. This prevents rural people from getting enough credit,” said Lawmaker Kunti Kumari Shahi.
Meanwhile, the parliamentary panel also asked the authorities concerned to hold a study on the slow progress on the agriculture insurance front and submit a report by February 3. Aryal said that insurance coverage must be interlinked with the subsidised agriculture loans. “If agriculture insurance is made compulsory to receive the subsidised loan, it could increase insurance coverage,” he said.
The government failed to spend most of the budget allocated for subsidising insurance premium for the agriculture sector. Lack of knowledge among farmers about the facility and absence of agents to sell insurance policies have been blamed.
Governor Khatiwada identified the lack of agents a sthe main problem. “At a time when there are inadequate number of agents related to non-life insurance sector, the government has to develop a separate mechanism to allow local government bodies and social mobilisers to sell the insurance policies,” he said.
Shree Man Karki, director at the Insurance Board, said a large number of farmers could be attracted towards agriculture insurance if insurance companies could make arrangements sell the policies on the spot in rural areas.
Published: 01-01-2015 09:20