The Nu 500 mn term-based soft working capital was launched at the RMA conference hall on 21st of April for the months of April, May and June by the Finance Minister.
The support is for those industries identified by the Ministry of Economic Affairs for enabling the industries to keep being in business and to import and stock up on Raw materials.
The RMA governor Dasho Penjore reported that the first phase of working capital towards wholesalers launched for storing food items/essential items has been done very well as almost close to a billion ngultrums was given to FCB and 20 wholesalers for stocking essential items.
“Secondly, the launch of deferment of loans, gestation period and interest waiver and working capital to tourism industry which is gaining momentum of implementation and benefits being passed on to the most important beneficiaries” Dasho added.
He said that the soft working capital was first taken into heed by the Prime Minister when he had visited factories at Pasakha where the industries expressed that they wanted to continue doing business in these difficult times.
A letter from the industries was submitted by the Association of Bhutan Industries following requests from industry members that their concern is on import of raw material should India go back to stop lockdown to the point of stopping productions. Following that, the Economic Affairs Minister who had taken note previously had raised the requisition to high level committee chaired by the Prime Minister.
The RMA Governor said that there were commitments made on grounds of trust and providing additional benefits towards the industries by the Financial Institutions to carry it forward.
Dasho said “This will mean that industries will keep carrying on business, employment will not be affected and production will not stop”.
The eligibility for the industries to avail this soft working capital will be identified by the MoEA under two categories.
As per the presentation the verification for large and medium scale industries will be carried out by the Department of Industries under MoEA and for cottage industries the Department of Cottage and Small industries will be responsible.
Gestation period which is till June 30th 2020 is extendable depending on the evolving situation, while the repayment of loan after the gestation period is as per normal terms and conditions including the interest rate for the respective financial institution.
Under this the interest rate is to be applicable at a Minimum Lending Rate of 7.02 % or the institution specific rate whichever is higher.
The loan amount under this monetary measure will be solely validated by the MoEA based on the credibility of the borrower and the financial institution will carry out the due diligence report as per the institutional policies and procedures.
Loans up to the value of the 100% of the collateral value are required for the particular facility.
Other requirements for the industries include invoice and import authorization issue by the MoEA and the payment to be made directly to the supplier through the banking channel.