Credit to agriculture sector surges 60pc
KATHMANDU, JUL 29 - 2012
After seeing virtually no growth in agriculture lending in previous
five years, commercial banks’ credit to agriculture sector swelled in
the last fiscal year 2011-12, a central bank data shows.
According to the Nepal Rastra Bank (NRB), commercial banks’ lending
to the sector increased by 60 percent to Rs 22.70 billion over the first
11 months of the last fiscal year against the same period previous
year. The size of the loan in the sector rose by Rs 10.66 billion during
the period.
The central bank said that the positive outcome is being seen of the
government’s policy to encourage banks and financial institutions (BFIs)
to increase lending in the sector like agriculture and energy. The
central bank have made the mandatory provision that the BFIs must lend
10 percent of the total lending to agriculture and energy sectors since
last fiscal year.
NRB Deputy Governor Maha Prasad Adhikari claimed that it was the
indication that the central bank’s policy started to deliver the result.
“Increasing trend of commercial farming in the recent years, setback in
real estate and shares, and tendency of people to take loans from BFIs
are other reasons behind increased lending in the agriculture sector
this year,” he said.
According NRB data, there was a growth of 122.5 percent in lending in
forestry, fishery, farming and slaughter, while animal farming and
services witnessed a growth of 17.1 percent in the first 11 months last
year. Even the lending in agriculture related machineries which is not
categorised as agriculture sector loan, also witnessed a staggering
growth of 284 percent in the review period last fiscal year.
Bankers also admit that central bank’s policy encouraged investment
in agriculture. “Although I am suspicious the data about the growth of
lending it is really positive indicator,” said Sashin Joshi, chief
executive officer of NIC Bank.
He said that there has been emergence of new types of commercial
faming over the last 2-3 years, which also triggered increased demands
for loans in the sector.
Rastriya Banijya Bank is now planning to a substantial increase
agriculture loan this fiscal year after seeing rise in loan demands from
the sector.
According to Krishna Prasad Sharma, CEO of the country’s largest
bank, increased trend of commercial farming in both plants and livestock
in the recent days triggered loan demands from the sector.
“That’s why, we have planned to increase lending in the sector by Rs 2
billion this year,” he said, adding that the bank would also invest in
agriculture production and marketing.
Source: The Kathmandu Post
