Exploring the alternative
To put it aptly, rural people have access to banks, but no access to loans or finance. Perhaps, it’s this notion that hydropower and tourism sectors would be the solution to all our problems that we have forgotten this most rudimentary and essential sector. Agriculture could be our alternative.
It’s quite ironical but none the less true. Rhetorically, we claim ourselves as an agrarian society and that about 70 percent of the population thrives on agriculture, but investment or support in terms of access to finance in this sector is ostensibly negligible.
Take for example the lending from financial institutions to the agricultural sector. It’s a meager four percent. The predicament of our rural folks in such a scenario is to thus lend money from a few loan sharks back in the village after paying exorbitant interest rate. This has been happening and continues to do so even now. Some pay as high as 30 percent interest.
While it’s definitely helping the farmers in the short term especially during the time of death, crop damages, insurance payment, but it has its nemesis too. Rural farmers are being exploited. Money lenders eventually end up at the borrower’s farm and sometimes take away all that they find.
Even if there were drawbacks, informal money lending is proving to be more beneficial in rural areas. Such system in the villages apparently helps them to get direct access to finance without having to worry about collateral and banking rigmarole.
Indubitably, we could also contemplate whether the agricultural sector is getting the due it deserves. Why such a meager lending to this sector which claims to be the source of livelihood for a majority of the country’s people? It’s also time to revisit some of the modalities of the financial institutions in the country.
While there has been a proliferation of banks recently in terms of numbers, but little has it helped rural farmers in terms of access to loans. Banking red tape and the need for mortgage or collateral are norms with any bank in the country. Similarly, while branches are being taken to most remote places, but the interest rates levied by the banks are really not different from each other.
To put it aptly, rural people have access to banks, but no access to loans or finance. Perhaps, it’s this notion that hydropower and tourism sectors would be the solution to all our problems that we have forgotten this most rudimentary and essential sector. Agriculture could be our alternative.
Lobzang Dorji
