The Central Bank has slashed the interest rates of the Agro Livestock Development Loan Scheme (ALDL) to encourage youth to start dairy projects as self-employment with a view to enhancing local liquid milk production. The interest rate for livestock development projects has been reduced from 12% to 8% per annum this year and the government will provide a 6% subsidy to participatory banks in the loan scheme through the Central Bank. The interest rate for the setting up of milk processing centres has also been reduced from 14% to 12% and the government’s subsidy for participatory banks is 2%, a top Central Bank official said.
Meanwhile Governor of the Central Bank Ajith Nivard Cabraal addressing bank officers Livestock Officers and instructors at a ceremony held at the Central Bank Training Institute in Rajagiriya this week, said a year ago interest rates were around 22 %.
“Today they are around 9 to 12 % and we are aiming for a single digit interest rate environment and we believe this would soon be possible," he added. He said lower interest rates generated additional savings for businesses as their interest costs would reduce. He urged the private sector not to waste time and to create feasible projects in order to attract bank loans at low rates because four to five years from now, interest rates would be higher and there would be more competition among investors.
Additional Director of the Central Bank, M.S.K. Dharmawardane told the Business Times that a sum of over Rs. 1 billion has been disbursed among 7,000 dairy farmers countrywide under the 50 billion-rupee ALDL. The loan limits extend from Rs.50,000 to Rs.40,000 per borrower and the maximum repayment period is 5 years. In addition, liquid milk processing industries are also eligible to receive bank loans under the credit scheme up to a maximum of Rs.300 million per industry, he added.
Twelve bank branches mainly in the North and East have disbursed Rs 656 million among 11,360 borrowers for rural animal husbandry, livestock and agriculture development projects, with a high level of recovery last year. Chavakachcheri Bank of Ceylon, Kalmunai People’s Bank and Dummalasuriya Wayamba Development Banks have disbursed a sum of Rs.47 million among 516 milch farmers under ALDL Mr. Dharmawardane said.
The Central Bank is implementing an incentive package for Livestock Officers and instructors. They have been given annual targets under four areas including the introducing of farmers to financial institutions, artificial insemination, tree and fodder cultivation and establishment of bio gas units. Officers who achieve their annual targets are eligible to receive the incentive payments from the Central Bank at the end of each year. The ceremony was organised to hand over incentive payments for 76 Livestock Officers and instructors who achieved the targets last year.
Farmers have been encouraged to adopt modern scientific animal husbandry practices with the support of the officers in the Livestock Development sector under the ALDL which was launched by the Central Bank in the 2008 Budget.