A question to the Finance Minister was addressed yesterday during the Question and Answer session in the National Assembly about how much loans had been disbursed so far by the Cottage and Small Industries (CSI) bank since its establishment.
The Finance Minister in response said that due to lowered interest rates for CSI businesses from that of 15% to 1% now, and in case of Agriculture loans from 7% previously to 4% currently, there have been a lot of loans applicants in just about the span of 10 months since the establishment of National Cottage and Small Industry Development (NCSID) Bank.
The Finance Minister stated that due to such interventions, both the genuine loan seekers and others trying to avail the opportunity showed up at the banks.
Lyonpo released the figures saying that until now the bank has disbursed about Nu 875 mn, of which 720 mn was injected by the Finance Ministry to the Bank.
He stated that about Nu 368 mn was disbursed to the Ministry of Agriculture and Forests (MoAF), around Nu 300 mn to the livestock sector, Nu 109 mn to manufacturing sectors, Nu 60 mn to construction projects, and Nu 30 mn as working capital loans.
Lyonpo highlighted that CSI project was initiated during the second government’s tenure under the name of Business Opportunity and Information Centre (BoIC) which disbursed Nu 315 mn for around 1,200 projects in between 2014 and 2016.
There on the Rural Enterprise Development Corporation Limited (REDCL) took over and in between 2016 and early 2020, the bank had disbursed loans up to Nu 1.3 bn for about 4,400 projects.
Lyonpo added that for the current NCSID bank in about just 10 month’s time about 5,500 proposals had been recorded.
Lyonpo stated that in between such a short span there were a lot of lenders as the government is supporting rural business establishments, providing lower interest rates on loans and businesses applying for loan up to Nu 0.5 mn being exempted from mortgages and other businesses applying for loan amounting to Nu 1 mn also do not require mortgages apart from the business assets.
Lyonpo said that NCSID being a non deposit-taking bank, will not have its own funds and instead it required injection from the government initially.
Lyonpo added that here on the government would issue corporate bonds to raise finance for the bank with the government helping out in the payment of the coupon interest rates in order to let the bank function as normally.
Lyonpo added that, the losses incurred by the NCSID would be borne equally by two participating banks Bank of Bhutan and Bhutan Development Bank under the National Credit Guarantee Scheme (NCGS) intervention.
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