Banks to allocate 10 p.c. of lending portfolio to agriculture

COLOMBO: The Central Bank's decision requesting commercial banks to dedicate 10 per cent of their lending portfolio to agriculture would have far reaching benefits to the economy, Deputy Government Central Bank Dr. Uthum Herath said. Herath said such a decision has not been taken before.

"Though over 30 per cent of the public is engaged in agriculture banks were not giving preferential treatment when it comes to borrowing.

With this decision the banks would be compelled to provide more lending to the agricultural sector which will stimulate agricultural development." With new investments coming in to the agricultural sector, farmers would be able to reinvest in modern machinery, technology and advanced scientific methods such as tissue culture.

It is a known fact that agriculture yields are low and farmers would now be able to invest in genetically modified vegetables and also seek methods to minimise post harvest loss.

The decision would also help more people to get involved in the agricultural sector and generate more employment, he said.

With the global food prices raising this is a step taken in the right direction to increase production. Herath said 10 years down the line, Sri Lanka would be in a position to export more fruits and vegetables. Another key sector that would benefit is the dairy sector and dairy farmers would now be able to reinvest, he said.

An official of the banking sector said such a guideline was not in place earlier. "This proposal would also help the banking sector as it helps them to extend their lending portfolio and most importantly contribute towards the economy," he said. (SS)