Attraction on concessional loans increasing

The interest in concessional loans from banks and financial institutions has increased. Debtors who use concessional loans for interest subsidy have exceeded one lakh.

According to Nepal Rastra Bank, 111,471 people have taken soft loans. Most of the concessional loan programs of interest subsidy have been received by women entrepreneurs.

The number of women taking women entrepreneurship loans from banks and financial institutions has increased by 4,771 in the first month of 2078/07 alone. With the addition of women taking concessional loans, the number has reached 60,322. They have taken a soft loan of Rs 55.78 billion.

Under the title of Women Entrepreneurship, a loan of up to Rs. Rita Singh, president of the Federation of Women Entrepreneurs of Nepal, says that banks are reluctant to give loans without collateral despite the facility to take them without collateral.

“Real women entrepreneurs are still deprived of concessional credit facilities,” says Singh, the operator of Ama Nepal (Dhaka and Allo).

Chairman of the Nepal Bankers’ Association Bhuvan Kumar Dahal argues that the bank prefers loans on collateral as the risk is higher without collateral. Bankers say that the financial statements of some micro-entrepreneurs are not in a certain format and are not transparent.

Despite being in the second place in terms of number of borrowers, the number of borrowers using commercial agriculture and livestock business is higher. According to the Nepal Rastra Bank, 48,498 people have received 112.74 billion concessional loans till July. In agriculture, more investment has been made in collateral than in unsecured loans. Loans of this title can be obtained up to Rs 50 million with 5 percent interest subsidy. Loans above this will be given 2 percent interest subsidy.

Under the concession, the lowest number of trainees are from institutions that have obtained permission from CTVT. Two people have taken a loan of only 370,000 rupees. Bankers say demand for the title has fallen. Only nine people have used the youth self-employment loan. They have taken a loan of Rs 3.1 million.

So far, 145 people have taken loans of Rs 63.4 million under the title of ‘Educated Youth Self-Employment Loan’. There is a provision for students to take a loan by pledging a certificate. Bankers argue that it is difficult to believe in such a loan unless there is an excellent project plan and trust. They say that there is a risk in giving loan by pledging educational certificate.

So far, 859 people have taken loans under the title ‘Youth Project Loans Returning From Abroad’. They have used 607.7 million loans. There is an arrangement for educated youth to take self-employment loan up to Rs. 700,000 and youth project loan from abroad up to Rs.

A total of 1,015 Dalit community business development loans have taken Rs. 606.7 million. Similarly, 122 people have availed higher and technical and vocational education loans. They have taken a loan of Rs 289 million. A total of 233 earthquake victims have taken loans of Rs 54.2 million to build private houses.

A total of 266 textile industrialists have taken concessional loans of Rs 2.27 billion. The interest rate on concessional loans should be determined by the bank only by adding 2 percent to the base rate. When the subsidy is reduced to the added interest, the borrower has to pay only the remaining interest rate.

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