Bank, private dairy team up to promote milk production

One of Nepal's leading commercial banks, Laxmi Bank Limited and Sujal Dairy, the private sector's first milk power producer, have come together to support a unique program to promote milk production in the rural part of the country.

According to an agreement inked Monday between the bank and Sujal Dairy amid a function, Laxmi Bank will extend low-interest loans to farmers in rural areas of the country to farm cows and buffalos whereas Sujal Dairy has assured that it will buy the entire milk production in cooperation with local milk cooperatives. Initially the program aims extend loans to buy 1,000 cows and/or buffalos. Later the volume of loans will be expanded be enough to buy 5,000 cows and/or buffalos.

A press statement issued on the occasion stated that the bank would provide loans at the rate of nine percent per annum for a maximum period of three years. “The maximum amount that the bank will extend currently stands at Rs 30,000 and the borrower will have to pay installments of Rs 900-1,000 per month,” said Niranjan Shrestha, managing director of Sujal Dairy.

He further elaborated that a farmer could, on an average, earn Rs 6,000 per month. 60 percent of the amount can be retained if the farmer chooses hybrid cows or buffaloes. He further added that the program would initially focus on Chitawan and Pokhara before it was extended to other areas that have animal farming prospects.

As per the procedures highlighted on the agreement, the bank has also agreed to extend loans to farmers on group commitment without collateral. Sujal Diary, which will buy the entire milk production, will also pay the monthly installments to the bank on behalf of the borrowers and the remaining amount will be handed-over to the farmers. In addition, the Deposit Insurance Corporation, Sujal Dairy and local farmers will also collaborate to implement insurance policies for the cows and buffalos, stated the release.

Talking at the signing ceremony, Laxmi Bank CEO Suman Joshi said that the program is a part of the bank’s strategy of promoting responsible banking initiatives and expressed hope that it would contribute to promote livelihood in the rural areas.
Source: eKantipur