REDCL likely to increase rural lending

Fund: The Rural Enterprise Development Corporation Ltd (REDCL) is likely to increase its rural lending limit to Nu 500,000 from Nu 100,000. REDCL announced this on January 16 during the ongoing ninth Local Government Chairpersons’ Conference (LGCC) in Phuentsholing.

Although not yet confirmed, REDCL CEO Pema Wangdi said that the lending amount would increase. “This has been proposed to the government after many aspiring entrepreneurs suggested increasing the fund,” he said.

Finance minister Namgay Dorji also informed the gups about the likely increase during the first day of the conference. Depending on the projects and feasibility, Lyonpo said even loans higher than Nu 500,000 could be provided.

With increase in the lending limit, REDCL is hoping to encourage more young graduates and women into manufacturing and production businesses. Since its establishment, REDCL provided only up to Nu 100,000 at four percent interest for the manufacturing and production sectors.

REDCL officials pointed out that a few people had previously taken loans under the Revolving Fund-I (RF-I) scheme when the corporation functioned as the Bhutan Opportunity and Information Centre.  “We had approximately 33 percent of non-performing loans,” said Pema Wangdi, adding that the office is following up and that cases have dramatically declined.

Pema Wangdi pointed out to the gups that there were people who had taken loans and did not work, while some spent the money on non-business activities. He said that the gups would play an important role in educating and verifying that the people are using the loans for the intended purpose.

The Bhutan Development Bank Ltd (BDBL) currently looks after the RF-I fund as the Royal Monetary Authority (RMA) is yet to come with a guideline for small- and medium-sized enterprises (SMEs). Once the guideline is finalised, RF-I projects would be placed under REDCL.

Awareness 

The increase in the lending amount has been welcomed by the gups but there is a need for more awareness on the facility.

Many gups Kuensel spoke  to said they are not familiar with REDCL. They said people in their gewogs are not aware about the organisation.

Sakteng gup, Sangay Dorji, said that his gewog has not received any awareness on REDCL’s rural lending.

“I have heard of projects in other places but there is none in my gewog,” he said. However, he added there are BDBL-funded projects in the gewog. “It may be because there was no one to educate us on REDCL.” Sangay Dorji, however, said that he would inform the villagers in his gewog about REDCL when he returns from the conference.

Samkhar gup, Karma, attributed a lack of awareness to not many villagers availing REDCL’s loans. He said he would raise more awareness so that more villagers can benefit.

Another gup from Trashigang, Dorji Tshering of Udzorong Gewog, said REDCL should also engage in raising awareness. “I haven’t seen much REDCL-funded projects here,” he said.

Chuzargang gup, Sangay Tshering, said a few people could not avail of the loan facility as BDBL had asked for collateral, while the villagers had been informed that it was not required. “I think there is some misunderstanding,” the gup said.

Gelephu gup, Ugyen Wangchuk, also said that the move to increase the lending amount to Nu 500,000 would attract more takers. He said that he would encourage more people to start their own businesses.

Meanwhile, to ensure enough awareness and services are provided, REDCL has now placed a focal person each in all the dzongkhags.

The REDCL made a presentation to the gups on how they can access micro finance for the RF-II on January 16.

Rajesh Rai, Phuentsholing

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