The Member of Parliament (MP) of Dewathang-Gomdar, Ugyen Dorji, raised a question concerning loans given to farmers by the Bhutan Development Bank Ltd. (BDBL). He asked for the loan lending strategies.
“BDBL was built with the hope of giving the farmers loans with lesser interest rates. However, it is now giving out the same lending rates as all other commercial banks of Bhutan. This has now made it difficult for farmers to reap any profit from their produces,” the MP said.
MP Ugyen Dorji said farmers lose the only property they own to the bank as the loans are hard to pay back. “When asked why it was so difficult to pay back the loan, the farmers replied that they would pay around Nu 2000 to Nu 3000 every month, but since the interests are so high, it becomes difficult,” he added.
He asked the Finance Minister about the plans and strategies to solve such matter during the Question Hour session of National Assembly (NA).
To this the Finance Minister, Namgay Tshering, said one of the most prominent problems of loans observed is that, while taking out loans, people accept the money easily, but it seems to pain them to pay the banks back what is owed. In 1988, the Fourth Druk Gyalpo introduced BDFC. During that time there weren’t many banks apart from BOB, he added.
“The strategies that we will be taking up is to provide loans with lesser interest rates than the current ones. We will also now do a more in-depth research on what kind of loans are being taken, and to educate the farmers on what they need and how they should follow through with the procedures of loans. We are also introducing CSI (Cottage and Small Industries) Bank, which we hope will provide the people with much better kinds of loans and interest rates.”
As of 2018, His Majesty established the Priority Sector Lending through RMA to encourage small business enterprises to the rural people. This Sector has helped and benefitted the people greatly, but the process of taking out loans is also very long and time consuming. MP. Tshering Choden of Khar Yurung Constituency raised a question about how the government was planning on making it a much simpler and convenient process for the people to access budgets.
The Finance Minister once again replied by stating that there are constant issues of loan takings. If the procedure was short it mightn’t have been as effective as it is now. “However, we are working on ways to shorten the duration of the process which could take up to five months to just a week or two. Additionally, we will make sure that after the Dzongkha Tshogdu approves of the loan; it will not be rejected in the later procedure.” The minister explained that all the current procedures are for the benefit of the people themselves and to ensure their rights. “Again, as I said before, we will be establishing the CSI bank, which will make it much convenient for the people to start their small businesses and enterprises.”