The Bhutan Development Bank says it will reopen its Micro and Small Enterprise (MSE) Loan scheme if it manages to bring down the number of non-performing loans.
The loan amount will also be increased to Nu 300,000 and will be provided to unemployed youth as well.
The BDB had to temporarily suspend its MSE loan scheme last year owing to a high number of non-performing loans (NPL). A loan is classified as non-performing when the borrower fails to pay the interest or the principal amount.
The issue was discussed at the 31st Annual General Meeting of the Bhutan Chamber of Commerce and Industry (BCCI).
The BCCI in collaboration with the Bhutan Development Bank initiated the Micro and Small Enterprise Loan Scheme in 2009 to promote micro entrepreneurs, particularity those in the trading business.
Since its introduction till its suspension, the BDB disbursed more than Nu 535m to over 4,100 clients. The loan was provided to groups of 3 to 5 members.
“A loan of Nu 100, 000 was given to each individual. It took off well and two years later, we enhanced the amount to Nu 150, 000.”
The CEO of Bhutan Development Bank Limited, Phub Dorji, said the scheme was started after they noticed that a lot people with business licenses had no means to get loans.
He said the scheme has benefited about 80 percent of the clients. But it had to be suspended after the bank found out that nearly 20 percent of the loans were non-performing.
The bank has over Nu 81m to recover from its clients.
“The agreement drawn up between BCCI sand BDB expired last year and we have not been able to renew the agreement mainly because of a high number of non-performing loans,” shared the CEO of BDB.
Business representatives from across the dzongkhags shared at the BCCI Annual General Meeting that the scheme has immensely benefited the people.
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