Nepal | August 17, 2019

BFIs asked to issue agriculture loan within a week of receiving application

Himalayan News Service

Kathmandu, August 6

Nepal Rastra Bank (NRB) issued a notice on Monday directing all banks and financial institutions (BFIs) to issue agriculture loans within a week of receiving such applications from clients.

As mentioned in the recently published Monetary Policy, NRB has directed all class A, B and C financial institutions to issue agriculture loans of up to Rs 1.5 million within the stipulated timeframe.

If any BFI is unable to issue the loan within the given timeframe, then it has to explain to the concerned client about why it was unable to provide the loan. Moreover, BFIs have to issue loans even if clients pledge a house or land that is not connected to a road as collateral. The notice has further added that from now on BFIs cannot charge any kind of fee from clients before providing the loan. Likewise, if the client pays back the loan before the scheduled time then BFIs cannot levy fees from clients in the name of advance clearance.

In the meantime, microfinance institutions have also been directed to invest one-third of their total investment in agriculture loans. If they fail to do so, the central bank could initiate action against them.

BFIs have also been directed to provide monthly details of the issuance of agriculture loans within 15 days of the end of the month to NRB.

Farmers have always been raising their voice regarding agriculture loans. Banks are being criticised by the farmers for not providing agriculture loans intentionally.

As per NRB, in the last fiscal year also, commercial banks had issued only 8.6 per cent as agriculture loan from their total loan flow, while the central bank had asked them to provide 10 per cent of their total loan portfolio as agriculture loan.

For this fiscal also the Monetary Policy has continued the provision of providing 10 per cent agriculture loan out of the total loan disbursement.

A version of this article appears in print on August 07, 2019 of The Himalayan Times.

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