for agriculture and livestock projects
In their effort to enhance food security by providing access to finance, the newly established National Cottage and Small Industry (CSI) Development Bank approved 36 projects worth over Nu25.8 million (M) yesterday.
The approved projects are all agriculture and livestock-related that includes vegetable production, collection, and distribution of vegetables and fruits, procuring agriculture equipment, aquaculture farming, and dairy production.
Under the small and cottage industry financing—project funding more than Nu 500,000—the bank received 24 applicants as of yesterday. The project was worth Nu 295.075 million (M).
However, only eight projects worth Nu 20.319M was approved based on priority lending.
Although the bank received 156 loan applications under non-formal loan sector with a ceiling of Nu 500,000, the bank approved only 28 projects worth Nu 5.5 M.
The projects were approved in Paro yesterday.
Chief Executive Officer of National CSI Development Bank, Pema Wangdi, said that bank had planned to sanction loan worth Nu 100M, however, the bank was able to approve only 36 projects worth Nu 25.812M.
He said to alleviate Non-Performing Loan (NPL), the bank would sanction loan in phases depending on the project proposal. He added that the clients would get the remaining loan only when they complete the targeted task.
Otherwise, he said that there were cases of clients applying loan for poultry but ended up buying bolero.
On the possibility of reducing the interest rate, Pema Wangdi said there was informal discussion to reduce the interest rate to two percent for priority sector lending particularly in areas to agriculture farming and livestock production for a period of six months.
However, he said that the bank did not get any directives from the government to decrease the interest rate.
The bank is currently disbursing five percent interest rate per annum for non-formal rural financing and seasonal export financing at eight percent per annum.
The interest rate for small and cottage industry financing is seven percent per annum.