Lending to the agriculture sector by financial institutions has doubled in the last two years. However, achieving the regulator’s prescribed mark still seems to be far off target.
By November 2011, financial institutions’ exposure to agro projects stood at Rs 20 billion, which has crossed Rs 40 billion by November 2013. Financing received by the sector has grown extensively in the last couple of years since Nepal Rastra Bank’s announced mandatory lending to productive sectors — agro and energy.
The agriculture sector has received loans worth Rs 41.2 billion till mid-November, which is a mere 4.1 per cent of the total lending of commercial banks, development banks and finance companies. Moreover, since the beginning of the current fiscal year, loans to the agriculture sector has increased by 3.8 per cent, which had gone up by 18 per cent in the corresponding period last fiscal year, according to NRB statistics.
Moreover, according to the central bank’s regulations, commercial banks have to float a minimum of 10 per cent of their total lending to agriculture and energy sectors, by the end of the current fiscal year which does not look attainable at the current pace.
During the period, commercial banks need to have lent about Rs 78 billion to meet the regulatory target to agro and energy sectors because by mid-November, total lending by class ‘A’ financial institutions stood at Rs 783 billion. Lending by financial institutions to the energy sector stood at two per cent of the total lending till mid-August.
By mid-July 2013, commercial banks, development banks and finance companies floated loans worth Rs 39.7 billion to agriculture and farming projects. By the end of fiscal year 2011-12, financial institutions had provided loans worth Rs 28.5 billion.
NRB governor Dr Yubaraj Khatiwada has stressed the need to increase financing in agriculture to improve the sector’s productivity. More than 75 per cent of Nepalis are employed in the agriculture sector but it contributes less than 35 per cent to the gross domestic product.
The central bank had increased the mandatory lending to agro and hydro in this year’s monetary policy. According to a recent directive, commercial banks will have to maintain at least 12 per cent credit flow to agriculture and energy sectors by mid-July 2015. Likewise, by mid-July 2016, class ‘B’ development banks will have to increase lending to these sectors to 15 per cent of its total loan portfolio, while class ‘C’ finance companies have to lend up to 10 per cent of total lending to these sectors.
Moreover, the central bank has also asked financial institutions to provide collateral-less loans of up to Rs one million to projects such as agriculture business activities like coffee, orange, tea, and livestock and dairy products based on the business plan’s viability. In addition, it has offered the banks refinancing facility against agro loans at five per cent interest to promote the sector.
source: the himalayan times,13 Dec 2013
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By November 2011, financial institutions’ exposure to agro projects stood at Rs 20 billion, which has crossed Rs 40 billion by November 2013. Financing received by the sector has grown extensively in the last couple of years since Nepal Rastra Bank’s announced mandatory lending to productive sectors — agro and energy.
The agriculture sector has received loans worth Rs 41.2 billion till mid-November, which is a mere 4.1 per cent of the total lending of commercial banks, development banks and finance companies. Moreover, since the beginning of the current fiscal year, loans to the agriculture sector has increased by 3.8 per cent, which had gone up by 18 per cent in the corresponding period last fiscal year, according to NRB statistics.
Moreover, according to the central bank’s regulations, commercial banks have to float a minimum of 10 per cent of their total lending to agriculture and energy sectors, by the end of the current fiscal year which does not look attainable at the current pace.
During the period, commercial banks need to have lent about Rs 78 billion to meet the regulatory target to agro and energy sectors because by mid-November, total lending by class ‘A’ financial institutions stood at Rs 783 billion. Lending by financial institutions to the energy sector stood at two per cent of the total lending till mid-August.
By mid-July 2013, commercial banks, development banks and finance companies floated loans worth Rs 39.7 billion to agriculture and farming projects. By the end of fiscal year 2011-12, financial institutions had provided loans worth Rs 28.5 billion.
NRB governor Dr Yubaraj Khatiwada has stressed the need to increase financing in agriculture to improve the sector’s productivity. More than 75 per cent of Nepalis are employed in the agriculture sector but it contributes less than 35 per cent to the gross domestic product.
The central bank had increased the mandatory lending to agro and hydro in this year’s monetary policy. According to a recent directive, commercial banks will have to maintain at least 12 per cent credit flow to agriculture and energy sectors by mid-July 2015. Likewise, by mid-July 2016, class ‘B’ development banks will have to increase lending to these sectors to 15 per cent of its total loan portfolio, while class ‘C’ finance companies have to lend up to 10 per cent of total lending to these sectors.
Moreover, the central bank has also asked financial institutions to provide collateral-less loans of up to Rs one million to projects such as agriculture business activities like coffee, orange, tea, and livestock and dairy products based on the business plan’s viability. In addition, it has offered the banks refinancing facility against agro loans at five per cent interest to promote the sector.
source: the himalayan times,13 Dec 2013
LINK
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