After realty fiasco, banks eye agri sector

POKHARA, Nov 15:

Policies introduced by Nepal Rastra Bank (NRB) to discourage investments in the realty business are starting to bear fruits in Pokhara, where more and more banks and financial institutions are moving away from the real estate projects and are gradually increasing their lending in the agricultural sector.

Last fiscal year, a total of 152 banks and financial institutions (BFIs) operating here extended credit of Rs 3 billion to the agricultural sector.

This is almost 38 percent of the total lending of Rs 8 billion issued to the sector till the end of last fiscal year.

This is the first time that the agricultural sector in the country´s western city had attracted such a massive investment in a single year.

Prakash Thapa, manager of Research Department at NRB´s Pokhara branch, told the Republica that many BFIs, which focus on real estate, are now showing keen interest in diversifying the credit portfolio by extending credit to sectors such as trade and even agriculture.

This is because most of the BFIs are now flush with cash and with downturn in the real estate business, they haven´t been able to identify other lucrative areas where they could concentrate their lending, Bishwamohan Adhikari, CEO of City Development Bank, said

“Besides, the size of credit provided to the agricultural sector is generally small and considered safe. That´s why BFIs are getting attracted to this sector,” informed Adhikari, whose bank has already started network expansion in rural areas.

Om Finance is another financial institution which is gradually increasing lending to the agricultural sector. Its general manager Buddhi Malla said the financial institution has already offered credit of more than Rs 60 million to the sector.

“We have invested quite a lot in animal husbandry in Tanahu and Lamjung districts,” he said.

Other BFIs have also shown keen interest in increasing its lending in animal husbandry as well as other areas like commercial farming and fisheries, among others.

According to NRB, most of the banks that are currently showing interest in agriculture are those that had once been extremely reluctant to extend credit to the sector.

Source:myrepublica

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