Banking News— Nepal’s agricultural financing system continues to face major structural challenges because even banks that prioritize agricultural lending lack personnel with adequate agricultural expertise, according to former National Planning Commission Vice-Chair Dr. Swarnim Shrestha.

Speaking during the second session of the National Banking Discourse 2026, titled “Expanding Investment in Agriculture: The Role of Banks, Government and the Private Sector,” Shrestha emphasized that modernizing agriculture requires not only financial resources but also technical knowledge, policy reforms, and institutional capacity.

Describing agriculture as the foundation of human civilization and Nepal’s traditional occupation, he said the sector has yet to transform into a modern and commercially attractive industry.

“In Nepal, agriculture is still viewed as a last career option,” he said. “Even students who study agriculture often seek opportunities abroad instead of pursuing commercial farming at home.”

Shrestha noted that Nepal’s diverse geography from the fertile plains of the Terai to the Himalayan region offers tremendous potential for producing a wide range of high-value agricultural products. However, this potential remains largely untapped due to inadequate modernization and weak implementation of supportive policies.

Although the government has introduced concessional agricultural loan programs and other financial incentives, he argued that these initiatives have largely been supply-driven rather than responding to actual market demand.

“Nearly 60 percent of Nepali households remain engaged in agriculture, but most are involved in subsistence farming simply because they have limited alternative employment opportunities,” he said.

He pointed out that vast areas of cultivable land in Nepal’s hill regions are being abandoned as rural populations migrate to urban centers, while young people continue to lose interest in farming.

According to Shrestha, climate change has increased production risks, particularly in areas lacking reliable irrigation systems. Nevertheless, he believes Nepal’s natural resources and geographical diversity still provide significant opportunities for profitable agricultural production if supported by modern technology and appropriate investment.

Looking at global economic development, he observed that countries typically progress from agriculture to manufacturing and eventually to service-based economies. Nepal, he said, should also pursue agricultural transformation by increasing productivity rather than simply expanding the agricultural workforce.

“A modern agricultural economy requires fewer people producing significantly more output,” he said. “Productivity not the number of people engaged in farming should be our focus.”

Shrestha called for comprehensive reforms on both the supply and demand sides of the agricultural sector. Existing regulations, he said, fail to recognize the unique characteristics of agriculture, as the same policy framework is often applied to agriculture, industry, and trade alike.

He also expressed concern that Nepal has very few banks genuinely specialized in agricultural financing, and even those institutions often lack employees with the technical knowledge needed to assess agricultural projects effectively.

“Professionals with accounting or business administration backgrounds alone cannot fully evaluate agricultural investments,” he said. “Agricultural lending requires people who understand farming, production cycles, and agricultural technologies.”

Recalling the earlier model of the Agricultural Development Bank, Shrestha said the institution had traditionally recruited graduates with agricultural backgrounds, enabling it to better understand farmers’ needs and provide more appropriate financial services.

“You cannot successfully market agricultural financial products without professionals who understand agriculture itself,” he added.

To improve productivity and market access, Shrestha advocated for shifting Nepal’s agricultural sector toward a company-based commercial farming model. He suggested consolidating abandoned farmland in the hills under corporate management, allowing large-scale agricultural enterprises to achieve economies of scale and strengthen supply chains.

Such a model, he said, would help overcome the marketing challenges currently faced by smallholder farmers, who often struggle to bring their products to market.

Shrestha concluded by emphasizing that while government policies remain important, long-term agricultural transformation will ultimately require stronger institutional commitment and greater investment from the private sector.

“Agriculture cannot be transformed through politics alone,” he said. “It requires capable institutions, knowledgeable professionals, and sustained private-sector participation to unlock Nepal’s agricultural potential.”