| Abstract | The Priority Sector Credit Programme re-formulated in 1981 and implemented through the selection of intensive banking branches of commercial banks in Nepal is based on the principles of area development approach, project viability and regular supervision. Various line agency offices of the government ministries are to work in coordination with the bank t o provide raw-materials, inputs and support for social services in order to promote the integrated area development concept. The study is an attempt to assess performance of Priority Sector Credit Programme in general, identify major problem areas impeding better achievement, examine the impact of the programme on activities undertaken by the rural borrowers and their perception of the credit programme. The findings of the study reveal that while the programme has an increasing trend in covering small sector and extending more number of intensive banking branches, it suffers from certain problems in many ways. Overall, the programme is still behind in attaining the target of investment , recovery, coverage and performing other supporting activities as envisaged by the priority sector credit policies as well as objectives, Specially , with the programme area expanding considerable number of problems have arisen and the pace of implementation has not improved significantly. Lack of coordination between line agencies and bank at all level of offices, lack of linkages of credit with marketing facilities, understaffing in bank offices at implementation level are among the major existing problems. It is a matter of concern to both line agencies and the commercial banks. However, the study reveals that the credit programme has positive impact in contributing benefit to the rural borrowers through increment in output from credit supported activities undertaken by them. The rural borrowers had positive attitudes towards the credit programme and are convinced of the comparative advantage of bank credit especially due to the low interest rate. But underfinancing of the projects, complicated and time consuming loan procedures, lack of provision for adequate and timely supply of inputs and procurement of outputs, and lack of consumption credit from bank are the major constraints felt by them. Based on the overall findings of the study, it can be concluded that the future course of the programme depends on continued motivation by all concerned groups/agencies. Given that gaps are filled and problems amended, the programme can be a viable modle for self-sustained rural development. A list of recommendations is presented both for further planning for more efficient implementation, and better achievement of the Priority Sector Credit Programme and for further studies. |