Bhutan Chamber of Commerce & Industry

BCCI’s Private Sector COVID-19 Taskforce requests loan deferral till end of 2021

With less than three months left for the loan deferment to end in 30th June 2021 businesses are already worried about how they could pay their loans on a given schedule while the pandemic still impacts the economy of the country.

The Chairman of the Private Sector COVID-19 Task Force of BCCI, Ugen Tshechup, said that they have already requested the government if the deferment can be extended till the end of the year stating that if they don’t defer the loans then people will not be able to repay the loan since business has not got back to normal yet.

The taskforce has said that as a result, the banks will be in trouble because of the high rate of Non Performing Loans and it would adversely affect the economic development of the country.

“There is a difference between ‘don’t want to pay back’ and ‘can’t pay back’ and the present situation is ‘can’t pay back and when you can’t pay back’ and give a deferment there is breathing space, but if the deferment ends in June then there is not enough breathing space for businesses to come back to their normal operations,” said the Chairman.

He said there is going to be a lot of negative impact if the deferment is not continued. He said that the banks and private sector should sit and plan together to come up with a final plan with the government on how help will be given to prevent the problem.

However, the Financial Institutions in a report submitted to the Royal Monetary Authority (RMA) and the government say that they do not favor a blanket deferral for all but only for certain impacted sectors like tourism and hotels, construction, manufacturing etc.

They, for example, do not support deferrals for housing loans as rents are being paid or consumer loans as salaries are being paid. The banks are also not keen to take anymore losses given their poor performance in 2020.

Sangay Dorji the Secretary General of BCCI said, “We have not had a meeting but the Hotel and Restaurant Association of Bhutan has already reached out to us and they are working on a proposal.”

As interest wavier has already stopped and in June loan deferment will be lifted the various Associations have been asked by the BCCI to make an analysis on how it is going to impact their businesses and what kind of help they will require so that BCCI could come with a plan to try and resolve the problem.

“The associations have not reached out to the us but we are reaching out to the associations regarding the matter,” said Sangay Dorji.

BCCI is in process of finding out how the associations will be able to sustain or they will require further assistance if the loan deferment is being lifted.

Sangay Dorji said that by the end of April BCCI will be able to get a clear picture of what kind of situation the various associations are in.

He also said that if they don’t raise the situation and start planning immediately, there will be a huge problem when the loan deferment is lifted.

Singye Namgyal Dorji, proprietor of RSA Private Ltd said that he is very grateful to the government and His Majesty since he has been benefiting a lot from the interest wavier and the loan deferment.  He also said that one factory of his is hardly running at 30% capacity, one company of his is running at 40% capacity and his hotel which has been constructed has not even been operated once.  “I lost over 60% of my business,” said Singye.

However, he said that by the generosity and support of the government and His Majesty he said they have managed to survive and he has not let any of his employees get effected by the pandemic.

Singye said that he is not sure if he should further expect any more support from the government since he is already honored enough by the help he has received with the interest wavier and the loan deferment, but since the pandemic is still continuing he said he is hoping for further consideration from the government till the situation is normal.

Tshering Yonten, Executive Director of Construction Association of Bhutan said that the interest wavier and the loan deferment has been of great help to all the contractors. He said some construction companies were not able to pay the loan on scheduled time and had defaulted as Non Performing Loan and so the the construction companies are grateful for the interest wavier and loan deferment.

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