The Nepal Police Welfare Fund is set to provide loans to serving and former police personnel under its micro finance programme at 4.5 percent interest in a bid to improve their livelihoods.

According to a deal signed between the Nepal Police Welfare Fund and Sanima Bank on Wednesday, serving and former police personnel, families of deceased personnel and disabled personnel are eligible to borrow capital under the programme.

The pact states that loans will be provided only for agro businesses under the deprived sector lending of Nepal Rastra Bank. They include farming, processing and storing vegetables; producing, processing and storing seeds; floriculture and animal husbandry; fruits production; dairy products and fishery, among others.

Likewise, loans will be granted to establish slaughterhouses, produce herbs and grow cash crops like sugarcane, ginger and cardamom. Nepal Police Headquarters said that loans of Rs100,000 to Rs300,000 would be issued for up to two years.

Sanima Bank CEO Bhuvan Dahal said the Police Welfare Fund would facilitate in extending and recovery of loans. “The bank will, however, directly lend the money to the police personnel,” he said.

According to Additional Inspector General of Police Ramesh Shekhar Bajracharya, coordination desks will be established under Zonal Police Offices to help police personnel borrow money. The coordination units will be established in Birtamod, Itahari, Janakpur, Narayangarh, Pokhara, Butwal, Ghorahi, Nepalgunj, Dhangadhi and Kathmandu in the first phase.

The agreement states that if the borrowers misuse the money or fail to make timely repayments, they will be charged a penalty of 8.5 percent extra interest. It also says the Police Welfare Division will help banks to recover the principal and interest.