320 LEP students who defaulted on loan threatened with consequences for failure to update the loan

Parents and students who defaulted on loan payment are under tremendous pressure

Out of 760 students of the Learn and Earn Program (LEP) in Japan, who availed themselves of Nu 700,000 loan from Bhutan Development Bank Limited (BDBL), some 320 students who have defaulted on their loan received text messages and calls from the Ministry of Labour and Human Resources (MoLHR) and the BDBL, demanding for the loans to be paid before 20 December 2019.

The text message said students who are not able to pay the loan should sign the loan deferment facility provided by the bank, and failure to update the loan will compel the bank to take appropriate actions.

BDBL submitted a list of names of students who have defaulted on loan and has asked MoLHR to inform the students to pay the loan.

Each student was sanctioned a loan of Nu 700,000 with 8 percent interest for a period of five years. Out of 760 students, only 66 students have closed their accounts after paying the full amount, and while there are some who are paying Nu 14,000 every month. 320 students have defaulted on the loan.

BDBL took a loan of Nu 520 million from the National Pension and Provident Fund (NPPF) in order to provided the students with the loans, and with the government as the guarantor. However, if students are not able to pay back the loan, the bank said that it will have to take necessary actions.

The Students and Parents Committee lawyer, Ngawang Tobgay said that, though he is not certain, the students and parents are asked to sign the loan deferment form because when the Learn and Earn Program was initiated during the time of the former government, the government became the Guarantor, and the present government, after learning this, demanded that parents and students sign the deferment letter because with deferment, they are intending to change the guarantor, so that the burden of loan repayment does not fall on them.

He said, “If students and parents are not in the position to pay the loan then there is no option left for us then to face the court. As a lawyer, I really have to find out where Nu 700,000 from each child has been spent, as they got only Nu 55,000 and who all are the guarantor and what is the role of the government as the sovereign guarantor.”

Students and parents are willing to face any circumstances and they are ready to go to court if banks sue them, he said.

However, BDBL said that the student’s guarantor are their parents and siblings, and according to their rule if client’s guarantor are not able to pay the loan and if they are willing to change the guarantor, the bank shall allow it.

According to the Lawyer, most parents of the students have decided not to pay the loan nor sign the deferment letter as demanded by the ministry and the bank. Parents are ready to face the consequences even if BDBL plans to sue them.

One of the parents said that out of Nu 700,000 loan, his son only received a hard cash of Nu 55,000 and they are not aware how BOE or BDBL spent Nu 645,000.00 in their son’s name. Even ACC failed to detect the detailed expenditures documents of the individual children.

He said, “Loan repayment is deferred from 5 to 20 years, but what will happen if we sign the deferment letter, and what if we are not able to repay the loan even after signing the deferment letter?”

“I shall wait until Royal Court of Justice declare their verdicts and until such time, deferment letter shall not be signed,” he said.

When we proposed to the labour ministry on cost sharing of loan repayment, the government refused, and now we can’t even refuse their deferment proposal. We are not signing the deferment letter, he added.

Another parent, Singay Dorji, said, “I received a text message from the bank saying that I should pay the loan and if I am not able to pay the loan, I have to sign the deferment letter and to this I said that I don’t have money to pay the loan because the money that my son earned from this program is just sufficient to pay his Japan fees and other expenses.”

He said that the bank demanded for him to visit the office to sign the deferment letter but since the case is still ongoing he said he will not be able to comply by their deferment proposal until the case is settled.

He also received a call from the MoLHR to sign the deferment letter and as he was called by both the bank and the ministry, he discussed the issue with his son but his son insisted on waiting until the case is resolved.

He said, “Out of total loan of Nu 700,000, only Nu 55,000 was given to us while rest of the money was used by the agent in paying the tuition fees and other expenses.”

“The problem would not have become serious if the government had supported us when the problem initially started, but due to the lack of support from the government it has become a serious issue. Initially when we asked for the government’s support to defer the loan, the government turned their back on us, and now they want us to go for deferment. My son wouldn’t have returned home if they had listened to us and helped us in some way,” he said.

One of the students, Tenzin Tobgay, said that not all the students received a call from the ministry, while some were asked to sign the deferment letter other weren’t.

He said, “I received an email from the ministry and demanded me to either pay the loan or sign the deferment letter. I maintained that I will not sign the deferment until the cases are resolved.”

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