Bhutan Development Bank Ltd. (BDBL), which suspended providing loans to new commercial activities since January this year, expects to lift the suspension by July this year.
BDBL’s chief executive officer, Phub Dorji, said that the bank decided to temporarily hold giving loans for new commercial projects as the bank had been low on cash.
He said that the bank’s review found that the repayment of loans was poor.
“Due to bad repayment by the clients last year, we had to take this decision,” Phub Dorji said. “If we can’t collect, we cannot give loans.”
Local leaders and representatives from a few gewogs of Chukha asked why the bank suspended loans to villagers during the recent dzongkhag tshogdu. They said that the suspension was affecting villagers financially.
The bank officials clarified that the gewogs whose gups complained have a large proportion of defaulters, which is why loans were not given to them. But gups claimed that even those who did not default were not given loans.
BDBL’s CEO said that the bank has been working on the repayment and it would review the progress over the next few months to make a decision whether to lift the suspension.
Commercial loans include loans for construction of houses and businesses, among others.
Phub Dorji said that the bank has not stopped loans for agriculture, seasonal loans, and will give loans to priority sector lending projects.
“We also haven’t stopped loans for contractors who maintain over draft accounts with us,” he said.
For instance, the bank on February 5 disbursed Nu 29.6 million to 291 farmers as seasonal loans in Gangtey gewog in Wangdue.
The seasonal loans are important for farmers as they invest in buying inputs like seeds for commercial crops such as potato and cardamom.
“We’re a bank with a social mandate and catering to the rural people is our priority,” Phub Dorji said.