Thukten Zangpo 

Most of the businesses would not be able to repay loans or operate if the relief or monetary measures are discontinued after June 2022, according to Bhutan Chamber of Commerce and Industry (BCCI) President Tandy Wangchuk.

The chamber has collected recommendations from various businesses on the way forward for the private sector to recover from the severe adverse impact of the pandemic.

The Druk Gyalpo’s Relief Kidu (DGRK) in the form of income support and 50 percent loan interest payment will continue until June 2022.

Similarly, the loan repayment was also deferred until June 2022 for all loans sanctioned as of June 30, 2020.

Tandy Wangchuk said that the businesses were hit hard by the pandemic and were expecting some regulatory package from the government.   

“The moratorium period for loans, rescheduling loan repayments, repaying interest accrued from loan deferment, facilitation of working capital are some of the measures.”

He said that the government could have a moratorium period for loans after June 2022 which means the businesses do not have to make the equated monthly instalments (EMI) payments as soon as the loan gets disbursed.

“Avail an EMI holiday and begin paying EMIs after a break,” Tandy Wangchuk said, adding that an education subsidy scheme could benefit lots of students.

Under the phase III monetary measures, the government announced the gestation period for bridging loans and soft term loans until June 2022.

Tandy Wangchuk said that the government could also reschedule loan repayments similar to the housing loan term that was increased from 20 years to 30 years. “We expect some time to repay.”

Under the monetary measures phase III, the financial service providers (FSPs) may extend the loan tenure by the deferred period or by up to five years depending on the repayment capacity of the borrowers in order to ease the burden of loan repayment on the borrowers.

Tandy Wangchuk also said that the businesses would not be able to pay the huge accrued interest from the loan deferment at the end of the deferment period and paying in installments would ease the businesses.

According to the Royal Monetary Authority (RMA), the interests accrued during the deferment period are not capitalised.

“The total accumulated interest from April 2020 to June 2022 (after the adjustment of 50 percent interest payment support) will be converted into fixed equated instalment facility payable in equal instalments within a period of up to five years,” the RMA stated.

As of September 2021, a total of Nu 12.6 billion was disbursed on interest payment support under the DGRK and by banks, according to the RMA.

Tandy Wangchuk said that easy access to working capital and the increased loan-to-value (LTV) limit to collateral value would be required.

Under phase III monetary measures, the FSPs are allowed to provide loans up to the LTV limit of 100 percent of the collateral value in case of financing or business loans.

The BCCI is planning to submit the proposal to the RMA and the finance ministry within a week.