Thukten Zangpo  

To help small and medium enterprises (SMEs) self-sustain, the Bhutan Chamber of Commerce and Industry (BCCI) is working on a micro-finance loan scheme to be launched early next year.

BCCI’s President, Tandy Wangchuk said that the private sector members had strongly raised their voices on the need for micro-finance loans since the SMEs were badly affected by the pandemic for the past two years.

He said the collateral-free loans provided to the SMEs by the Bhutan Development Bank Limited have been stopped for the past three years.

“There were high non-performing loans (NPL) mainly caused by lack of proper documentation,” Tandy Wangchuk said.

Under the chamber’s loan scheme, SMEs can avail of a loan amount between Nu 0.3 million (M) to Nu 0.5M with no collateral. SMEs, constituting 90 percent of businesses in dzongkhags include small shops, restaurants, tailoring shops, and cobblers, among others.

Tandy Wangchuk said that the loan would have a lower interest rate compared to the existing microfinance institutions in the country.

Learning from the past NPL experience, he added that the chamber has instituted a mechanism where the Dzongkhag Business Development Committee members will visit the business establishments physically for verification before processing the loans.

The documentation and loan agreement upon approval from the regional secretary also needs to have a notarization from the court to authenticate that the business licence holder is genuine and operating in a particular dzongkhag.

Besides equated monthly instalments, Tandy Wangchuk said that the borrowers also have to compulsorily deposit Nu 500 every month, so that the amount could supplement the default later if any.

Currently, he said that the chamber lacks fund. The loan scheme would require about Nu 200M, to begin with.

“The chamber is in discussion with the Government of India through the Indian Embassy in Bhutan to avail the concessional loan,” Tandy Wangchuk said.