Rural financing key to poverty reduction

Kathmandu, August 14:

South Asian experts including senior banking officials of Nepal called upon all concerned financial institutions and agencies to strengthen rural financing to reduce poverty in the region effectively. Speaking at an international seminar on ‘Development of Rural Financing Institutions and Cooperatives’ here today, Bijay Nath Bhattarai, governor of Nepal Rastra

Bank (NRB), said, “The contribution of agriculture sector for achieving economic growth in the subcontinent has remained much below our expectations, despite the engagement of sixty per cent populace.” “Transforming agriculture sector to get it commercialised has been a great challenge in the region,” he said adding that there was no alternative to making agriculture sector more productive to contribute in alleviating poverty in the entire region. He admitted that there has been very nominal investment in the agriculture sector and the financial services are largely urban centered leaving large rural population with a minimal access to any kind of formal financial services. This has left the agriculture sector quite behind in capital formation in comparision to other sectors, he said.

He informed that NRB is keen on exploring alternative models for rural financing. “With a view to better manage and facilitate rural financing, NRB has recently recommended for formulating national micro-finance policy, which will be announced soon.” Bhanu Prasad Acharya, finance secretary, on the occasion, opined that Centre for International Cooperation and Training in Agricultural Banking (CICTAB) has been instrumental in developing human resources in rural financing. “Despite continuous efforts to reduce poverty, the region remains host to unacceptably level of poverty. People become poor as they have less access to income earning sources such as land, credits, education, health and markets,” he said adding that human and income poverty persists in Nepal. “The policy and programmes of government are directed towards reduction of poverty by increasing effective investment to achieve growth and socio-economic development.”

“Public investment is crucial in strengthening rural infrastructure, agriculture and basic education with effective institutional arrangement,” said Acharya. Ram Chandra Maharjan, general manager of Agricultural Development Bank Ltd, Nepal (ADB-N) said that cooperatives and rural financing institutions play a crucial role in upgrading socio-economic status of the rural poor. Poverty in South Asian region as a whole is deeply rooted in rural parts, therefore,

to cure this ills, skilled, experience and committed manpower are needed, Maharjan commented. At the same function, D Ravi, associate consultant of CICTAB, informed the various activities of CICTAB. CICTAB was established in 1983 with the financial and technical assistance of the government of India in collaboration with Food and Agriculture Organisation (FAO) with a view to train employees in the member institutions in an environment of mutual cooperation between the SAARC member countries. The centre provides trainings in banking and cooperative development with an aim of ameliorating the socio-economic condition of rural populace in the region. During the five-day long programme held here, experts presented papers on various issues.