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Benefits trickled down to tenants

MB Subba

In Bhutan, the Covid-19 hit the private sector the hardest.  The situation would have been much worse, had it not been for His Majesty The King’s many kidu programmes.

Interest waivers on all loans beginning April last year was one.  The interest waivers were substantial; the bigger the loan amount, the bigger was the benefit.

Tshering Bidha from Thimphu who had availed a loan of about Nu 54 million (M) was worried about loan repayment after the economy was hit hard by the Covid-19 since March last year.  Her equated monthly interest (EMI) came to about Nu 1M.

However, she was pleasantly surprised with the announcement of the interest waiver kidu in April last year. “I can’t be more thankful to His Majesty The King for the gracious kidu,” she said.

A Thimphu-based businessperson said that she had availed loans amounting to about Nu 500 million (M) for the construction of hotels and resorts.  The total EMI on the loans, according to her, came to about Nu 3M.

“That means 5 percent penalty for defaulting, which would have been heavy. We benefited immensely from the interest waivers,” she said.

A 100 percent interest waiver was granted from April until September of last year.  The rate of interest reduced by 50 percent from October 2020 to March 2021.

Secretary General of the Bhutan Chamber of Commerce and Industry (BCCI), Sangay Dorji, said that the situation would have been worse had it not been for the interest waivers. “We can see smiles on people’s faces despite the Covid-19 situation.”

He said that many would have been out of business had there been no monetary measures, including the interest waivers.  She said that people in the private sector were grateful for the Royal Kidu.

The benefits of the interest waivers also trickled down to many tenants as many landlords waived house rents, either partially or fully during the difficult time.

Tshering Bidha said that she provided from 30 to 50 percent rent waivers to her tenants.  She has both commercial and residential occupants in her buildings.

A Thimphu-based private employee said that he received a 20 percent waiver in rent during the first lockdown.  He said that the rent waiver was helpful as he was receiving a reduced salary due to the pandemic.

A corporate employee, Tashi, said that his landlord granted a rent waiver of 50 percent for three months after the first lockdown. “I didn’t need the waiver but the landlord was thoughtful and kind,” he said.

The cost of the interest payment (waiver) for the period of nine months (100 percent waiver from July to September and 50 percent waiver from October 2020 to March 2021) is estimated at Nu 7.5 billion (B).  The fund will be fully granted from the National Resilience Fund.

Non-performing loan (NPL) also benefited from the waiver and some 19,126 accounts benefited under the category.

As per RMA figures, hotel and construction sector together account for 30 percent NPL.  In total, the interest waiver benefited about 112,024 individuals across the 20 dzongkhags. 

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