Even as debates over its legality continues, the Rural Enterprise Development Corporation Limited (REDCL) has disbursed a total of Nu 204 million (M) from Revolving Fund (RF) II until November 2017.

After the Opposition and the National Council repeatedly questioned the legality of Business Opportunity and Information Centre (BOiC), it was closed and reopened as REDCL under the Companies Act in 2016.

The company approved 2,668 project proposals from a total of 6,364 applications. This means that about 40 percent of the proposals or four out of 10 proposals were approved.

Some of the approved projects, however, are awaiting release of funds. Those clients, REDCL officials said, would receive funds on the fulfilment of documents.

Dzongkhag wise, Paro is the biggest beneficiary in terms of the amount of funds received at Nu 30.77M, followed by Bumthang at Nu 22M, and Mongar at Nu 20M. Pemagatshel received the lowest, Nu 2.2M.

CEO of REDCL, Pema Wangdi, said accusations that REDCL loans did not benefit the people and that they were approved based on party lines are untrue.

“The statements made in the parliament by the Opposition and the National Council are not correct. There is no interference from the ruling party on the functioning of the company,” he said, adding that the company does not give loans based on party affiliations.

“We are ready to be audited. Anyone can review the documents of who all have availed loans from REDCL,” he said.

Pema Wangdi said that the company has been able to reduce its non-performing loans (NPL) from 27.5 percent a year ago to 18 percent today. He cited lack of monitoring and inspection behind the high NPL rate.

Company Secretary Sonam Choden said, “There were only three to four people remaining in the office after the government decided to close BOiC. We could monitor and inspect the projects after the recruitment of new employees for REDCL.”

She said that the company has functioned actively only for two years although it was established three years ago in 2014. Almost a year was lost,s he claimed, in setting up the office and recruitment of employees.

Although concerns that lengthy procedures were affecting the service were raised, REDCL officials said it takes just a month to approve a proposal if the client produces all the required documents.

The CEO said that salary of employees were also reduced after the incorporation of REDCL and that they get less than that of their peers of their grade in the civil service. “It is only the corporate allowance that our employees get besides their basic pay,” he said.

The company has 38 employees.

However, the CEO said that it would not be sustainable for the company to continue providing the service at the rate of 4 percent per annum. “The government needs to interfere for the sustenance of REDCL,” he said, adding that the company’s returns at the current rate of interest are hardly adequate to meet operating expenses.

Unlike BOiC, which was established as a time-bound company, REDCL is a perpetual company.

RF I, one of the two components of the Nu 5 billion economic stimulus plan funded by the Government of India, is being managed by Bhutan Development Bank Limited (BDBL) after the closure of BOiC.

As a micro-finance institution, REDCL currently approves loans up to Nu 500,000 only, which is the maximum ceiling for RF II schemes. Loans exceeding Nu 500,000 are permitted under RF I only after obtaining a license of a financial institution.

Prime Minister Tshering Tobgay recently said that REDCL would be able to lend from RF I after obtaining a “cottage and small industries (CSI)” licence, which he said REDCL has applied for with the Royal Monetary Authority of Bhutan (RMA).

After the launch of the Priority Sector Lending (PSL) Guidelines 2017 at the Simtokha Dzong on December 13, the prime minister said that the PSL Guidelines would be applicable to REDCL after it obtains a CSI license. “REDCL will automatically be a financial institution and will have to abide by the guidelines of RMA,” he said.

“However, unlike that of other banks and as the name suggests, all of the REDCL’s proceeds would be ploughed back to rural Bhutan,” he said.

The prime minister said RF I would be reverted to REDCL as soon as it obtains a CSI license.

According records with REDCL, a total of 179 gewogs have received at least a project.

Twenty-six gewogs that do not have projects are Lokchina and Metebkha in Chhukha, Athang in Wangdue, Sengey in Sarpang, Lingzhi and Soe in Thimphu, Kangpar, Sakten and Thrimshing in Trashigang. Chimoong, Nanong and Norbugang gewogs in Pemagatshel also do not have a REDCL project.

The other gewogs that have not benefited from the REDCL fund are Bjoka in Zhemgang, Khoma in Lhuentse, Drepong and Jurmey in Mongar, Serthi in Samdrupjongkhar. Serthing and Tsirangtoe gewogs in Tsirang and Sangacholing, Tading and Dophuchen of Samtse are also yet to receive a proposal.

Ramjar in Trashiyangtse, Nichula in Dagana, and Laya and Lunana in Gasa also haven’t received a project.

MB Subba