Youths yet to benefit from loan against academic certificates

2019-06-09

Republica National Daily


June 9, 2019, Republica, KATHMANDU- Only six youths have received subsidized loans so far for self-employment under the much-hyped scheme introduced by the government to give loans to educated youths against the collateral of their academic certificate.

Subsidized loans to educated youths for starting or running their enterprises was one of the major features of the budget speech presented by Finance Minister Yuba Raj Khatiwada for the current Fiscal Year 2018/19.

According to Nepal Rastra Bank (NRB) data, these youths have borrowed a total of Rs 2.5 million from bank and financial institutions (BFIs) under the scheme as of mid-April.

Along with this scheme, the government has introduced six other subsidized loan schemes for various groups to provide them credits. Under these schemes, the targeted groups can receive loans with the government subsidizing certain percentage of the interest.

An educated youth who has not crossed the age of 40 is eligible to get the loans up to the limit of Rs 700,000 by putting his/her academic certificate at least of a bachelor's degree. A brief proposal of the enterprise and the utilization of subsidized loans along with certificate of skills training are other documents required to get the loans. The government would subsidize five percentage points of the interest.

This means, if a bank charges 11 percent interest rate on such loans, the government will provide subsidy of 5 percent and the borrower will have to bear 6 percent of the interest rate.

Despite much hype about the scheme, these subsidized loan schemes have failed to attract the country's youth. According to the NRB data, a total of 14,923 borrowers have acquired Rs 25.32 billion in such loan, including the educated youth self-employment loans in the current fiscal year.

Over two-thirds of this loan amount are for commercial agriculture and livestock business, according to the NRB.

The data shows that 14,639 borrowers have acquired Rs 25.18 billion for loans under the commercial agriculture or livestock business.

Another large beneficiary of these subsidized loan schemes are women. A total of 170 women have received Rs 97.6 million in subsidized loans for running their enterprises under the scheme. The government subsidizes six percentage points of interest rates under this scheme.

Only 11 migrant returnees have acquired Rs 7.81 million in the first nine months of the current fiscal year. Those workers who have returned to Nepal in the last three years after staying abroad for at least six months are entitled to this scheme that offers subsidized loan up to Rs 1 million.

Similarly, 15 Dalit have borrowed Rs 7.87 million under the 'Dalit Community Enterprise Development Subsidized Loan' scheme. Fifty-five students have taken Rs 13.37 million in subsidized loans for higher education or vocational and technical education. For 27 earthquake survivors to rebuild their houses, BFIs have floated Rs 7.24 million in loans that is subsidized by the government.