November 2: Although the monetary policy of the current fiscal year has introduced a provision for commercial banks to increase the minimum percentage of the total credit to be disbursed to the agricultural sector from 10 percent to 15 percent, the commercial banks have only been able to flow 5.85 percent of their total credit to the agricultural sector in the first two months of the current fiscal year.

By the end of Bhadra (mid-September) of the last year, a total credit of Rs 3 trillion 274 billion and 970 million was disbursed from commercial banks, development banks and finance companies. Out of the total loan, Rs 191.72 billion was been disbursed for the agricultural sector. In the past, 10 percent of credit for the agriculture sector was mandatory. However, the central bank is optimistic about the current credit flow to the agricultural sector.

Nepal Rastra Bank has stated that even amid the pandemic, the agricultural credit has increased by Rs 26.73 billion. According to the Banks and Financial Institutions Regulation Department of the central bank, the total sectoral credit stood at Rs 2 trillion 976 billion and 740 million out of which, Rs 164.98 billion was disbursed to the agricultural sector in the corresponding period of the previous year.

The monthly data published by the Department of Banking and Financial Institutions Regulation of NRB classifies credit for agriculture, forestry and fishery as agricultural loans. Namely, 'agricultural sector' covers grains, vegetables and other cash crops, tobacco, hemp, fruits and floriculture, poultry and bee keeping, manure and pesticides, cold storage, irrigation, forest, livestock or poultry farming, among others.

However, the statistics department of Nepal Rastra Bank informs that the statistics of concessional agricultural loans and priority agricultural loans have not been included in the data of agricultural credit flow. Preferential agricultural loans include pure agricultural loans as well as loans for the purchase of materials for production, tea and coffee production.

As per the data of Nepal Rastra Bank by the end of Bhadra (mid-September), the Agriculture Development Bank has the largest share in the disbursement of agriculture and forestry loans amongst all commercial banks, development banks and finance companies. The Agriculture Development Bank has the highest share of 16.57 percent (Rs 28.655 billion) of the total agricultural loans. 

Hemlal Poudyal, spokesperson of the bank, said that the bank has emphasized on the flow of agricultural loans without collateral under concessional loans by taking risks.

NIC Asia Bank has disbursed 9.1 percent (Rs 15.592 billion) of the total agricultural credit. The bank, which has been aggressive in credit flow, has also disbursed agricultural credit well.

NIC Asia Bank is also the first bank to disburse the most loans in the first quarter of the current fiscal year. Arjun Raj Khaniya, head of public relations at NIC Asia Bank, says that the overall loan investment of the bank has increased due to the increase in the number of branch offices and extension counters across the country.

Rastriya Banijya Bank has disbursed 7.74 percent (Rs 13.39 billion) of the total agricultural credit. The commercial banks that disburse more agricultural credit are Prime Bank, Nepal Investment Bank, Siddhartha Bank, Global IME Bank, Sunrise Bank and Nepal Bank respectively. Agricultural credit worth Rs 19.439 billion was disbursed from 19 development banks.