The Youth and Small Entrepreneurs Self-Employment Fund (YSESEF) is all set to release funding to central cooperative associations along with commercial banks to implement the highly prioritised Youth Self-Employment Fund (YSEF).
The YSESEF has planned to call central cooperative associations to submit their proposals by mid-July with a clear roadmap stating the types of businesses the cooperatives under them could do in the areas of production, service and small industry, their financial capacity and adequate basis for loan recovery.
The government has decided to move the programme ahead on a massive scale through government-owned banks and other banks with large government investments as private sector banks have been reluctant to participate in it.
“The plan to go through central cooperative associations is intended to reach out to as many needy people as possible as government-owned banks are not present as extensively as would be desired,” said Binod Kumar Guragain, executive director of the YSESEF. “We will make central bank cooperatives responsible for recovering loans issued to cooperatives associated with them.”
Earlier, sanctioning of loans to cooperatives promoted by leaders of political parties had drawn protests from the Youth Association of Nepal which is affiliated to the CPN-UML. “We are not directly providing loans to individual cooperatives under the new mechanism, the central association will do that,” said Guragain. “We may provide loans directly to individual cooperatives too only where there are no central cooperatives.”
The YSESEF has also revised its regulations to enable lending to cooperatives by clearly mentioning that they will also be vehicles for lending to implement the YSEF. Guragain said that the decision was taken after officials of various cooperative associations related to tea, coffee and milk sought funds to implement the YSEF through them. The cooperative associations will have to sign an agreement with the YSESEF to get funds. They have to provide a guarantee that the collateral-free loans will be repaid as per the repayment table, according to the conditions proposed by the YSESEF.
Central cooperative associations have to submit monitoring reports to the YSESEF every three months. They have to disclose in the proposal the potential volume of production in a certain area and endorse the proposal on monitoring and recovering loans by their board of directors.
The YSESEF has planned to propose an interest rate of 6 percent for wholesale lending while the central cooperative associations will have to provide credit to the cooperatives under them at 12 percent.
Source:Kathmandu Post
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