Govt planning to reduce interest rate on farm loans
By Tariq Chaudhry

ISLAMABAD— Government is planning to reduce the interest rate on farm loans from 9 percent to the mark up rate for industrial loans which is only four percent in the next budget 2006-07 to facilitate the growers financially,” official sources in the Ministry of Food, Agriculture and Livestock informed on Saturday.
Official sources said that MINFAL had floated the proposals to the government and asked to reduce the interest rate on farm loans as the current mark up rate was not resulting in facilitation to the farmers who were under of the heavy burden of hike in prices of different items.
“Agriculture is a vital sector and the government must deal it the way it deal industries,” the proposal said. They said that earlier the growers were charged a 14 percent rate on the loans but the government had reduced the interest rate on farm loans to 9 percent.
“Now MINFAL has also sought from the government to reduce the rate of interest on farm loans from 9 percent to the ratio of mark up rate for industrial loans which is only four percent,” sources added. The official was of the view that indirect subsidies announced by the government for the agriculture sector never reached farmers.
“This step will help facilitate the farmers to get the fertilizer and pesticides,” they said. It said interest rate on farm loans should be reduced from the present 9 percent to the ratio of mark up rate for industrial loans, which is only four percent. (4 percent).
At present Zari Taraqiati Bank Ltd (ZTBL) can write off loans upto Rs 500,000 but not the principal amount but the total amount including interest, MINFAL has also proposed in its budgetary proposal for 2006-07. “Agriculture is a vital sector and the government must deal it the way it deal industries,” the proposal said.