Overall development of our country depends upon agriculture and rural sector infrastructure development. Rural sector development, in turn, depends on agriculture, and various kinds of industries, businesses and employment opportunities. Productivity of agriculture and industry is the combined result of technology being used or to be used, complimentary inputs such as irrigation, fertilizer, supply of raw materials and marketing and easy access to rural credit.
Though there were various programs operating in the past for agriculture and rural development, expected increase in production could not be realized. It is, therefore, necessary to increase the access of people to agriculture and rural credit by removing the constraints faced in the past.
Review of achievement in the Tenth Plan
Under the Plan, it was envisaged to mobilize all the banks and financial institutions involved in rural credit under a single coordinated system with the Agricultural Development Bank playing the lead role in providing agriculture credit. It was also intended that commercial banks and other development banks would be mobilized, for their participation in such credit operations. The Plan also envisaged women and the unemployed youth to use credit facilities. Besides, mobilization of Rural Self Reliance Fund (RSRF) with added long-term capital provision was expected to enable the deprived people’s access to micro finance, extending credit coverage to the maximum in rural areas through micro-finance institutions by reforming institutional structure. The program list also included gradual privatization of rural development banks, and the Nepal Rastra Bank to monitor the progress of the rural credit target.
During the Plan period, supply of agriculture’s target was by 5.5%, including credit supplied by the cooperatives. If cooperatives are excluded, the credit supply was 0.1% less than the target. Deprived sector credit ratio of 3% enforced as mandatory for the commercial banks also included credit made available to the individuals of this class going for overseas employment. Besides, the wholesale credit to the Nepal Rastra Bank licensed cooperatives and Rural Micro Finance Development Center (RMDC) and their deposits were also counted towards meeting the said mandatory credit ratio.