Out of the six performance audit reports submitted by RAA during the 9th session of the parliament, the Public Accounts Committee’s (PAC) presented its findings on Business Opportunity and Information Centre (BoIC) from the date of its inception (December 4th 2013) till its closure (May 31st 2016) during the Joint sitting.
After the centre’s legality kept surfacing, the government decided to close the centre last year to put an end to the repeated criticisms which affected in fulfilling its mandate and launched Rural Enterprise Development Corporation Limited (REDCL) to take forward the centre’s intermediate works. REDCL has an approved license from the Royal Monetary Authority and has been integrated under the Companies Act of Bhutan, 2016.
The Committee’s main recommendation from their observation for REDCL was the need to immediately implement efficient monitoring in coordination with relevant stakeholders and to institute measures to strictly comply on recovery of funds given by BoIC and the succeeding entity (REDCL).
A non-performing loan is an amount on which the borrower is not able to make interest payments or repay any principal back.
Member of Parliament for Panbang, Dorji Wangdi expressed his concern over the fact that the corporation’s non-performing loans stands at more than 30% which he said is alarming as the latest report on the non-performing loan for European Union is 10%. To this the Education Minister Norbu Wangchuk said that the initial centre saw huge success within a very short span of its operation where around 3000 projects have been approved, which according to him is a huge hurdle even for the well established financial institutions in the country to approve projects on such a large scale. He however cleared that that non-performing loan stood at 27% and not 30%.
“With interest rates at just 4% without any collateral for the loans, the government has already foreseen and anticipated similar issues on the non-performing loans as raised by some of the members in the house. “A special task force was formed to study the situation on non-performing loans and they have set the maximum limit to 30% after taking into consideration all the factors. However, I am glad to inform the house that the non-performing loans today has been reduced to 18% from the earlier 27% after introducing several measures and reforms,” said Lyonpo Norbu Wangchuk.
Apart from the recommendation by the Committee, an additional recommendation which ensued after several deliberations in the house was also endorsed which was to, stipulate more efficient turnaround time to expedite the services provided by the RECDL. The Education Minister acknowledged that REDCL is trying to improve its service delivery, but he however pointed out the contradiction in the concerns raised by the members in the house. “On one hand, some of the members expressed their concerns over the non-performing loans, while on the other hand it is recommended that the corporation expedite its service delivery.
“There are lots of risks and the proposals need to be well scrutinized. Out of the 5000 proposals put forward so far, 3000 projects have been approved and the rest 2000 had to be rejected after it was found that almost 90% of those individuals who’ve applied for the loan where found with a bad Credit Information Report with outstanding debts in other financial institutions.”
Lyonpo Norbu Wangchuk also informed the house that to ensure public convenience, regional officers have been designated to provide necessary support to those wishing to avail the service.