Kathmandu. A $20 million (more than Rs 30.60 crore) credit protection fund will be set up for agricultural loans and risk appetite for small farmers.
This special fund is going to be set up under the leadership of the Deposit and Credit Protection Fund. This fund will guarantee easy agricultural loans to the farmers of selected municipalities of Far-West, Karnali and Bagmati provinces and loan security to financial institutions in the first phase. This scheme is being implemented on a pilot basis in Panchkhal Municipality of Kavrepalanchowk, Chandannath Municipality, Patarasi Rural Municipality and Tatopani Rural Municipality of Jumla, Birendranagar Municipality of Surkhet, Budhiganga Municipality and Triveni Municipality of Bajura and Dhangadhi Sub-Metropolitan City of Kailali.
It is being implemented as a master plan at the initiative of the United Nations Development Programme. The proposed plan aims to address the financial crunch faced by small farmers, cooperatives and agriculture-based small, medium and micro enterprises at the targeted local level.
The Deposit and Credit Guarantee Fund will implement this scheme as a model project. Under this, financial institutions are targeted to provide risk sharing security on loans of more than USD 10 million (Rs 1.53 billion) for agricultural and agricultural value chain activities. This is expected to increase the flow of credit in rural areas and directly benefit about 3,000 farmers from backward communities.
The project is being developed under the project ‘Innovative Financing Solutions for Food System Transformation in Nepal’ under the United Sustainable Development Goals Fund (SDGF) in coordination with the United Nations Resident Coordinator in Nepal and joint implementation of the United Nations Sustainable Development Goals (SDGs) and WFP.
Under this project, there is a plan to cover the farmers of nine local levels of three provinces in the agricultural loan program. The limit of the loan amount to be secured under this scheme will be from a minimum of Rs 2,50,000 to a maximum of Rs 3 crore per borrower. For loan disbursement and security, the fund has formulated and implemented the Agricultural Credit Guarantee Scheme, 2083.
Spokesperson of the Deposit and Credit Guarantee Fund Achyut Panta said that the government will increase financial access of businesses and individuals contributing to the agriculture sector and the entire value chain related to the agriculture sector.
Similarly, Pant said that the selection of the farmers will be done from among the borrowers who have sought loan from the bank as per the prevailing rules. “This will be facilitated by the concerned local level and UNDP (United Nations Assistance Agency),” he said. The maximum tenure of the loan has been fixed at 7 years. The interest rate will be as per the prevailing rules of the bank.
The loan facility will be provided in three ways: collateral, partial collateral or full collateral. After the implementation of this model program, the achievements will be reviewed in 2 years. “If the expected results are seen from the review, then the expansion can be done in more areas,” he said in a conversation with Insurance Khabar. ’
