While applicants in the dzongkhags are waiting for the banks to release the loans, the priority sector-lending scheme (PSL) is gaining momentum, the second quarter report of the Royal Monetary Authority (RMA) claims.
A total of 681 applications were received, as of June end, of which 78 percent were agriculture CSI projects and the remaining 22 percent were for non-agriculture.
According to the report, the number of dzongkhags and financial institutions taking part in reviewing PSL proposals has increased.
From seven dzongkhags in the first quarter, a total of 19 dzongkhags were engaged in reviewing the proposal. Tashiyangtse did not receive any proposals to date. Thimphu received the highest numbers of PSL applications with 169 followed by 113 in Tsirang and 69 in Samtse.
Lhuentse’s lone application was rejected by the financial institution. Pemagatshel PSL committee received and approved two proposals but only one came to the financial institute. This also got rejected.
The banks rejected all proposals from Punakha, Samdrupjonglhar and Zhemgang. Among these three dzongkhags, Punakha received the highest number of applications at 11.
The number of financial institutions has also increased from two to seven. The total number of PSL applications received by dzongkhags increased from 97 in the first quarter to 584 in the second quarter. The dzongkhag PSL committees approved 513 projects.
Of the total approved by the dzongkhags, 278 has reached the financial institutions, of which loan approvals were given for 127 projects amounting to Nu 138.55M. As of June, Nu 41.69 million was disbursed by the financial institutions.
The report also stated that 13 projects were withdrawn by the clients themselves with few citing high livestock insurance costs and requirement to obtain a paid CSI license as reasons.
The RMA found that a majority of PSL applications are for agriculture-related projects with the highest concentration in primary production. Of the total projects approved by the dzongkhags until June 2018, 78 percent were for livestock and vegetable farming.
It was also stated that projects are clustered around similar ideas. In terms of the demographic profile, 38 percent are in the age group of 31-40 years followed by 36 percent in the 21-30 years age group. While 24 percent are above 40 years, the remaining two percent are in the age bracket of 17-20 years. Gender wise, 46 percent were female and 54 percent were male.
Almost half of the projects rejected by the bank were based on bad credit records of the applicants.
“Capacity development of the Dzongkhag PSL committee members remain critical to enable them to efficiently carry out the technical assessments of PSL proponents and identify business potential in their respective dzongkhags,” the report stated.