Agriculture is the main source of food, income, and employment for the majority of people in Nepal. But one big hurdle for most farmers is financing. Loans tend to be too expensive for smallholder farmers. They often involve a lengthy application process, and farmers can rarely meet the rigid collateral requirementsrural land is neither recognized nor accepted as collateral by many banks. Without access to credit, farmers often have little opportunity to expand.
According to a recently published National Sample Census of Agriculture Nepal (2011/12), only 21.8 percent of households in the country have access to agricultural loans37 percent of farmers borrow from relatives, 17 percent borrow from cooperatives, 14 percent from women's groups, 13 percent from the Nepal Agricultural Development Bank Limited, 10 percent from farmers' groups, and 9 percent from financial institutions. This lack of access to loans raises some key questions. How can smallholder farmers and youth access finance? How can innovative solutions stimulate access to finance for smallholder farmers? And what are the policies at the national level that enable smallholder farmers to access loans?
In addition, informal credit markets through farmers groups can still be important for small farmers. Jal Kanya Farmers Group is a farmers' group in the Dhankuta district and is made up of 21 female members.