Over 1,200 applicants have applied in two banks

Thukten Zangpo

Bank of Bhutan Limited (BoBL) and Bhutan National Bank Limited (BNBL) received over 1,200 applicants since the opening of the special education loans from November 16.

Special education loans include the visa fee, tuition fee and living expenses for overseas studies in Australia, Canada, United Kingdom, and the United States of America.

Both the banks have received more than 600 applicants.

Majority of the loans have qualified under the secured loans. However, the figures from the Druk PNB Bank Limited could not be assessed.

An official from the BoBL said that the number of applicants has decreased to 30 daily from about 200 in the beginning. The bank has processed loan for 200 applicants as of November 23.

Similarly, BNBL’s director of banking operations, Hem Kumar Acharya, said that the bank receives 60 applicants daily.

He added that the bank has temporarily stopped receiving the applicants on November 24 and 25 to clear the backlogs and it would be opened from November 28. The bank has disbursed around Nu 600 million (M) special education loans.

“Looking at the bank’s approximate total loan portfolio of Nu 42 billion (B), we can disburse up to Nu 6.3B, equivalent to about 2,000 clients for the special education loan.” Hem Kumar Acharya said.

The central bank has prescribed a lending cap for a special education loan of 10 percent of the total loan portfolio for the secured loans and 5 percent for the unsecured loans.

“If the loan reaches the saturation point, the next cycle could be started after three to six months,” Hem Kumar Acharya said.

The bank provides special education loans under the secured and unsecured category.

Secured loans are applicable to applicants above 18 years and can avail an amount of up to Nu 5M. Unsecured loan is for ages between 18 and 35 and can avail loan up to Nu 3.5M.

Unsecured loans are for those who do not have enough income or collateral from the household members amounting to Nu 3.5M.

The applicant has to submit a document of net annual taxable income of household members not more than Nu 1M; household members should not have a business draft facility or limit of more than 1M or non-performing loans, and has to submit land ownership letters of all members. Household members include the applicant, his or her spouse and both their parents.

However, if the applicants’ household members’ annual taxable income is more than 1M, he or she is qualified under the secured loan with collateral.

The BoBL charges 8.5 percent interest for secured loans and 9.5 percent for unsecured loans per annum. BNBL has set an interest rate of 10 percent for unsecured loans and 9 percent for secured loans. Druk PNB Bank Limited offers unsecured 10.5 percent interest, and 9.5 percent for secured loans.