CSI bank will ease rural banking services: Finance minister

Phub Dem

Finance Minister Namgay Tshering announced the establishment of much-awaited Cottage and Small Industry (CSI) bank in next two weeks.

The bank will have its branch in all the 205 gewogs.

This was in response to MP for Dewathang-Gomdar, Ugyen Dorji’s question on the government’s plans and strategies to address the issues facing the rural communities while availing loans.

Lyonpo said that the bank would help rural borrowers with access to low-interest loans and to address the growing issues of farmers defaulting on loans.

The bank is expected to focus on efficient service system.

Ugyen Dorji said that although Bhutan Development Bank Limited (BDBL) was established to help farmers borrow at minimum lending rates, the bank’s lending rate was at par with other commercial banks. “The highest non-performing loan was so recorded with BDBL.”

He added that property such as houses and land were seized because the borrowers were not able to repay the loan. “Borrowers are so requesting the government to reduce interest rates.”  

He also asked whether proposals were verified and creditworthiness of the borrowers studied before sanctioning the loans.  

Due to increasing number of borrowers, BDBL to increase its lending capacity received deposit-taking licence from the Royal Monetary Authority in 2010.  

Lyonpo said that BDBL had disbursed Nu 6.2B as loan as of June last year and that the people should be a responsible borrower.

Priority Sector Lending (PSL)

MP for Khar-Yurung, Tshering Choden, said that PSL was introduced in 2018 to make access to finance easier for entrepreneurship and commercial farming. But the progress, she said, was slow and complicated for the people.

As per the PSL guideline, the proposal should route through Dzongkhag PSL Committee, then banks, and finally through Priority Sector Lending Council.

Lyonpo said that the PSL guideline was mandatory because of the rising defaulters and the risk associated with collateral-free repayments.

He said that the ministry was, however, working towards improving mutual trust between the dzongkhag officials and the banks. Besides, process of availing loans would be made convenient through a digital platform.

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