We all know that agriculture is the mainstay of the Nepalese economy employing more than two-thirds of the population and is contributing one-third to the national GDP.

After the major economic sectors of Nepal like tourism and industry were hit hard by the COVID-19 pandemic, agriculture emerged as one of the viable solutions and has become successful to grab the attention of government, stakeholders, and Nepalese citizens for enhancing the economic growth of the country. The agriculture sector was recognized as one of the priority sectors by the government in this year’s budget speech too, realizing its importance in the economic development of the country in the post-pandemic period.

Although the agriculture sector plays a vital role in the economic development of the country, it is still grabbing sluggish growth, being not prioritized by the concerned authority to the extent it deserves.

The majority of the farmers in Nepal are small landholders and poor due to which there couldn’t be seen any significant progress in this sector. Agriculture is mostly of subsistent type. The vicious cycle of poverty hits Nepalese farmers very hard. Because of small landholdings and less productivity, the income from farming is low due to fewer surplus products. Poor income implies that there is low to no saving thus decreasing the purchasing power of the people. Due to lack of purchasing power, there couldn’t be seen substantial progress in the adoption of new and improved technologies, which in turn reduce the productivity of the farm, thus reducing the income of the farmers from the limited landholding. And this cycle goes on and on every year making farmers more vulnerable to poverty.

This is the most common scenario observed among farmers in Nepalese society. This has greatly hindered the proper economic growth of the farmers making them poor and deprived, having its direct impact on the economic growth of the country. This condition of Nepalese farmers has discouraged the farmers involved in agricultural sectors and most of them are leaving the country in search of a stable source of income for their livelihood. This, in turn, has also discouraged the new generation from adopting this occupation since there are not enough luring programs and policies yet been launched to attract and absorb the energetic youths of the country. However, the scenario has been seen to be progressing in recent years.

One of the viable solutions for breaking the vicious cycle of poverty in farmers and boosting the agricultural sector could be proper and reliable access to agricultural credit. Agricultural credit plays a crucial role in agricultural development by the facilitation of the productive investment in the agricultural sector, this could be called the life-line of agribusiness sectors. Agricultural credit has a crucial role in the elimination of farmer’s financial constraints to invest in farm activities, increasing productivity, and improving technologies. Agricultural credit is generally utilized to procure needed inputs which play a crucial role in strengthening livelihoods, generating new options, and increasing confidence, self-image, and status in society for marginalized farmers. Its catalytic role strengthens the farming business and augments productivity by putting forth the access to introduce and adopt various technologies.

Despite being one of the major keys for progress in agricultural sectors, the agricultural credit facility is not much satisfactory, especially in rural areas. Credit needs in rural areas are generally made by informal sources of finances, mainly local lenders, landlords, traders, etc. which charge a very high rate of interest. They provide timely and adequate credit to rural poor without much paperwork because of which illiterate farmers find it quite easy and hassle-free. However, the physical, social, and economic exploitation of poor people is attached to this system. Because of which the majority of poor farmers are reluctantly taking credits for investment in production technologies needed for agriculture, which is hindering this scope of agricultural commercialization and intensification. Likewise, banks and financial institutions are also skeptical about the repayment of loans disbursed to agricultural sectors which caused them to demand more mortgages and interest, causing this service less accessible to poor farmers. Thus, farmers are more reluctant in taking credits due to higher interest rates on credit and a low rate of return from the agricultural sector.

Viewing the recent growth and attraction towards the agricultural sector, the Government of Nepal has realized the importance of enhancement of the flow of credit to the agricultural sector and reducing the dependence of farmers on non-institutional sources of credit. For making the credit flow better in the agricultural sector, Nepal Rastra Bank, the Central Bank of Nepal, has made the obligations to all the commercial banks to invest at least 15% of their total credit in the agricultural sector by mid-July 2023, as stated in monetary policy 2020/21. Various provisions are also being made by NRB For making agricultural credit more easy and accessible throughout the country.

One of the major steps taken by NRB is the introduction of the provision of issuing Kisan Credit Cards. The provision of Kisan Credit Card has been mentioned in monetary policy 2020/21 and has been planned to lead by Agriculture Development Bank Limited to avail the needed credit facility for the enhancement of agricultural productivity. Under the KCC scheme farmers will be provided with the facility to take loans at relatively low-interest rates, and a longer repayment period is provided. The provision of KCC has aroused an array of hope to all the farmers who were having difficulties in issuing agricultural credit either due to higher interest rates or due to complicated procedures for issuing the loan.

To make the KCC scheme easier, different arrangements are being made. The efficient and reliable software is being chosen and the payments are offered using the QR code.

Mega Bank has already launched Mega Smart Agriculture banking service with Mega credit card facility. Through Mega Kisan Credit Card, farmers will be able to purchase various items related to the agricultural products, including fertilizers and seeds, from the designated agricultural service centers. The bank has given priority to commercial agriculture and animal husbandry and women entrepreneurship. Similarly, Civil Bank has also launched Kisan Sambriddhi Card with the help of which farmers could get a loan facility of up to Rs 5 lakh at a subsidized interest rate. Similarly, other banks are also making provisions to launch this scheme.

Though the concept of the Kisan Credit Card is new in Nepal and has been recently announced in the current monetary policy, our neighboring country India had already started this scheme in 1998/99. They have many large numbers of satisfied farmers and beneficiaries who have been benefited a lot from this scheme for 18 years and many new interventions are being made continuously to make it more accessible. Recently, a mobile-enabled Kisan Credit Card service and online Kisan Credit Card service has been launched, making this credit facility more easily accessible and hassle-free to farmers throughout their nation.

Due to its colossal benefits, the KCC scheme is expected to address the needs of many farmers, especially in rural areas. It offers several advantages to the cardholders with some of its appealing features. This credit card allows numbers of withdrawal and repayment within a set limit. Limit of KCC Is best on land holdings, cropping pattern, and scale of finance. The card is generally made valid for up to 2 to 3 years. Minimum documents are required and maximum flexibility is provided to the farmers as opposed to the complex procedure in other credit facilities through financial institutions. Generally, farmers are charged a simple interest rate when they make prompt repayment while compound interest is charged when cardholders fail to make timely payments.

As we all know that for any scheme to be successful, the beneficiaries should have a thorough knowledge of the entire scheme. the details like the reason for the initiation of the scheme, its aim and motives, and all other aspects should be made known to end-users. So, the government and concerned authorities must spread the knowledge and awareness of end-users and target groups about this scheme. Similarly, proper identification of the needy farmer must be done. Some significant efforts need to be done to include vulnerable groups who are deprived of the facilities due to a lack of knowledge and resources, to make them financially inclusive and achieve inclusive and sustainable growth in the country.

Summing up, KCC could emerge in the coming future as an innovative credit requirement of the farmer in a timely and hassle-free manner. This increasing availability, flexibility, and security in the flow of credit to farmers may help to raise agricultural growth, making it one of the mainstays of the Nepalese economy. However, the concerned institutions must pay attention to making this scheme simplified and farmers friendly to reach out to the needy farmers throughout the nation. The prompt service with low-interest rates along with the dissemination of the technical know-how about how to utilize credit for the enhancement of farm productivity by using better farming inputs and better farming practices helps in increasing the efficiency and effectiveness of the Kisan Credit Card in the coming days.