Author:
Prem Pandey, Ram Hari Timilsina, Shankar Paudel, Amrit Sharma, Ashish Pandey

Doi: 10.26480/faer.01.2025.01.06

This is an open access article distributed under the Creative Commons Attribution License CC BY 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited

Agricultural credit is crucial for the progress and advancement of the agricultural sector in Nepal. Despite the proliferation of formal financial institutions in Nepal, a significant proportion of agricultural households still encounter challenges in accessing credit for agri-business. Finding the barriers to agricultural credit availability and the variables affecting loan size in the Kailali district was the aim of this study. The study purposively selected Janaki Rural Municipality, Lamkichuwa Municipality, and Tikapur Municipality of the Kailali district. A random sampling method was employed to select a sample of 120 respondents and data collection involved utilizing a semi-structured interview schedule to gather information from the selected participants. The high-interest rate, preference for informal credit, and lack of mortgage were found as major challenges in credit access for credit nonusers. Similarly, higher interest rate was a major problem for taking a loan from banks, followed by a lack of mortgage and complex procedure. Furthermore, low volume of loan availability was a major problem for taking loans from micro-finance institutions followed by high-interest rates and a short repayment period. Sex of household head, cultivated land, and interest rate were the significant factors determining the loan size. Reducing elevated interest rates is crucial to expanding access to agricultural credit.