National Credit Guarantee Scheme (NCGS) working on its set up before disbursing loans

Loans may be disbursed by mid-December

Sonam Penjor, the Director, National Credit Guarantee (NCG) Support Facility for the Nationl Credit Guarantee Scheme (NCGS) office incorporated on 17th October this year said that the office is still in the process of institutionalizing and it would require sometime to properly setup the procedures and processes.

He stated that many people are not yet aware of the establishment and in order to have prospective clients they need to properly understand the situation and there is need for advertisements, marketing and promotion time for the office.

  He added, “It is not easy to take off instantly as it is not a regular product in the market.”

He cited, “If we look at a certain product, for example a new brand of tissue paper, I am sure it will take some time for it to capture the market, because it has to establish itself, people have to be aware of its existence.”

 The Director said, “For an intervention to start, we have to be really careful, as first we have to ensure that every aspiring entrepreneur gets the opportunity, we do not want it to be concentrated only in one specific area.”

 He added, “Therefore we have been assessing the situation very carefully and actually drawing up eligible and non-eligible lists, which is very dynamic and may change based on the situation.”

 He said that taking up such intervention needs laying of strong foundations and ground work needs to be setup carefully or else it would become a risk for the Government, the Office and the Banks to lose out on money.

He added, “Not just money, but failure could deteriorate the state of the economy.”

 The Director stated that at the juncture, the office has the eligible and non-eligible list on their website, and supposing that there is adequate demand from the eligible list going into the revival of the economy then it should stand.

However, if that eligible list does not have much demand, then the office will have to reform and revise the criteria as there is a provision for change to be robust and dynamic.

He added, “We cannot go against the existing norms, however if there is an opportunity we are trying to find the ways and means to relax the conditions on which people can have better accessibility to finances.”

 He said, “Whatever we are doing we are doing it in consultation with three participating banks, namely; BOBL, BDBL and CSI Bank.”

He added that the office has been in conversation with the banks on alternate days in an attempt to enhance advocacy.

 He foresees that by mid December the office might be able to disburse the loans.

According to the Director, so far there have been more than 700 walk-in clients to the office, countless phone calls on daily basis out of which there have been more than 49 applications at the BoBL, 8 applications at the BDBL and about 2 applications at the CSI Bank. He said that till date the office has not dispersed a single ngultrum.

He added, “Technically speaking, this office was established on 17th October which has just been a month and within this short span to roll out credit which is very unconventional is a huge risk, therefore firstly we have to prepare ourselves well.”

 The office expects that even if half of the prospective clients turn to the office for loans and meet the criteria for availing them, there would be more than 400 to 500 people seeking loans.

He said, “Interventions come as a surprise and people will not have ready-made proposal at the initial instance.”

 He added, “People have to know the procedures, the requirements, and for us too, we have to know the existing systems as we are not bankers, we are being sent here from the government as representatives.”

  He said that currently the office is working on how they can ease implementation, make it more accessible to people and make it convenient for people to apply.

 The NCGS was brought in as an intervention by the government in line with 4 main objectives: boosting exports, substituting imports, promoting technology and innovation and generating employment.

The government initiated the NCGS to create and enable the private sector by easing access to finance.

Through the scheme, the government will guarantee a portion of the loans accessed by private sector entities and will be limited to debt financing portion of the project.

For medium and large industries, the guarantee coverage will not exceed Nu 30 mn.

In addition, under the start ups in CSI category equity contribution will be exempted.

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