Local leaders in Trashigang are happy that the central bank will launch a priority sector lending (PSL) policy next month.
As a dzongkhag driven by agricultural activities, commercial farming and large-scale agricultural and livestock practices in the dzongkhag remained restricted until now because of lack of access to finance.
To date, the Bhutan Development Bank Ltd and micro financial institutions like the Rural Enterprise Development Corporation Limited (REDCL) have been key sources of finance for farmers and entrepreneurs in the dzongkhag.
During a financial literacy programme in Trashigang on November 22, the governor of Royal Monetary Authority (RMA), Dasho Penjore, said that the PSL policy would act as a stimulus for economic transformation, targeting critical sectors under the cottage and small industries (CSI) to become more business oriented.
He said that the policy, which would come into effect beginning next year, would facilitate commercial banks in the country to provide collateral-free loan for CSIs.
He also said that interest rates would also be slashed and there would be no requirement of a guarantor.
Phongmey gup, Palden Dorji, said farmers and aspiring entrepreneurs were unable to afford the loans provided by other commercial banks. “Development in villages were restricted because of lack of capital for any sort of large or small scale businesses,” he said. “Now with the PSL policy in place, we can see uniform development across the dzongkhag.”
The gup said that the existing procedures to avail loan were troublesome, especially for farmers with limited knowledge on financial literacy and aspiring youth who wanted to pursue business. “Only those who had collaterals were given the loan and people without any properties struggled.”
Palden Dorji said that his gewog proposed several commercial agriculture and livestock activities in the 12th Plan. “But there is a ceiling to the gewog budget activities and now I’m confident that my proposal would come through.”
The gup plans to establish a dairy group with 15 jersey cows to begin with and revive the cultivation of kidney beans on a commercial scale. “I’ve also planned to start turmeric and refine oil production.”
PSL, according to local leaders, would also help in curbing the dzongkhag’s empty households (gungtong) issue.
Of the 15 gewogs, Bartsham, with 150 empty households, recorded the highest number of gungtong in 2013.
Gup Kelzang Dawa said that few people have returned home today and the number of empty households is 83 today. “The number is still high and gungtong remains a concern for the gewog,” he said.
He said that with the new policy of loans without collateral and low-interest rates in place, more people would return and start businesses in the villages.
Younten Tshedup | Trashigang