Yangchen C Rinzin

Five months after the national credit guarantee scheme (NCGS) was launched, 38 business projects worth Nu 128.1 million (M) have been approved under the scheme.

There were 174 total applicants.

The projects, from farming to media-tech to postal services are expected to churn more than 400 jobs, according to the Prime Minister’s Office.

However, only Nu 11.734M has been disbursed to 10 projects as of March 8.  The loan will be dispersed to the rest of the projects.

The loan was dispersed through three participating banks of Bhutan Development Bank Limited (BDBL), Bank of Bhutan Limited (BoB) and National CSI Development Bank (NCSIDB).

Banks will disperse loans in a phase-wise manner depending on the implementation of projects.

NCGS’s director, Sonam Penjor, told Kuensel that, while a few projects were waiting for some clearances, disbursement would keep happening as the projects meet banks’ requirement and documentation were complete.

“The disbursement starts as soon as the project is approved. We’ve already approved about 22 projects last week and by yesterday the disbursement would have started,” he added.   

Going by the sector, 13 projects are in agriculture amounting to Nu 13.78M approved loan, 16 are in production and manufacturing with 74.27M loan approved, and nine in the service sector with 40.05M loan approved.

Seven projects are approved under the BDBL, 23 projects under BoB, and eight projects under NCSIDB.

The projects are spread across 10 dzongkhags.

Of the 38 projects, 16 are based in Thimphu, seven in Paro, three each in Dagana and Punakha, two each in Sarpang, Tsirang, and Wangduephodrang, and one each in Bumthang, Zhemgang, and Samdrupjongkhar.

Sonam Penjor said that they aim to cover at least 15 dzongkhags in few months and 20 dzongkhags at least by June or July.

With current projects based mostly in the centre and west, Sonam Penjor said that the office had plans to go to the east to create awareness on the NCGS and create market demand. “We couldn’t go in January because of the lockdown. There was no proposal from the east, so perhaps we need to create awareness on the scheme, as well as partner with banks.”

However, Sonam Penjor said that based on the current approved projects, some proponents, although residing in Thimphu have permanent addresses like in Mongar or Trashigang and business is based in Thimphu, which could be because of market viability. “So, while the business is located in a particular location, in a way it’s inclusive. We have two projects in Sarpang, but proponents are residents of Thimphu.”

There were a total of 8,762 queries since the NCGS was launched on October 5 last year.

Sonam Penjor said that all those who called had business ideas and many asked about the eligibility criteria, procedures to apply for a loan, where or how to do the business and economic viability.

The proposals are screened and approved through screening tools like financial sustainability (35%), employment (25%), economic impact and value addition (30%), and technology and innovation (10%).

Sonam Penjor said that, in the beginning, the applications received were higher but approval rates were lower, as some of the projects proposed were “bogus”, too good to be true.

“But in the second phase, there was a good number of proposals even though the applicants are less and it has led to high approval rates. This shows that proponents with genuine proposals are applying for NCGS,” the director added.

The screening tools have also attributed to eliminating all forms of bogus proponents or proposals.

With Nu 128.1M as the total size of approved loans, the government’s guarantee coverage stands at Nu 78.38M.  Considering the equity requirement of 10 percent for existing entrepreneurs, the total investment is Nu 178.87M.

Sonam Penjor said that, to implement the scheme, NCGS had a support facility to facilitate proponents and disseminate the correct information including monitoring of projects once it took off.

The support facility through the terms of reference is authorised to approve up to Nu 1.5M to expedite approval of minor projects and conducts a pre-approval assessment through interviews and site visits at its level.