The Bhutan Development Bank Limited (BDBL) will take its women-focused lending scheme, Aumtsue Peljor Thabrig, nationwide in October, introducing a financing model that seeks to give women not just access to credit, but the knowledge, skills and business support needed to make that credit work.
First launched in Nganglam, the scheme will be rolled out through BDBL’s branch network across the country, with designated Women Banking Champions serving as focal points for the initiative.
Unlike conventional lending, where the primary relationship between a bank and borrower is centred on financing and repayment, Aumtsue Peljor Thabrig places financial literacy and business capacity building at the centre of the lending process.
According to BDBL’s project coordinator, the scheme was developed in response to the particular needs of women and the barriers they can face in accessing and effectively using financial services.
The objective is to help women move from unpaid or informal economic activities into productive and more formal business ventures by combining access to finance with financial knowledge, technical support and market opportunities.
But access to the scheme will not be determined simply by whether a woman is associated with a business. BDBL will assess the actual role women play in ownership, management and decision-making. Businesses will have to demonstrate meaningful female participation in ownership, operational control and strategic decisions throughout the project cycle.
This means the scheme is not restricted to enterprises owned entirely by women. Businesses with both male and female partners can qualify if women have a visible and substantive role in ownership, decision-making and operations.
The same principle will apply to groups, cooperatives and private limited companies. The approach is intended to encourage women to move beyond being nominal participants in businesses and take active leadership roles.
“Knowledge first” is a central feature of the initiative. Financial literacy training will be a prerequisite for borrowers, while additional training will be tailored to the nature of the business, the borrower’s background and the specific requirements of the proposed project.
BDBL will also provide competency building, technical assistance and support to improve market access during the project cycle. Applicants will be required to pitch their business ideas in person, allowing the bank to assess not only the financing requirement but also the viability and understanding of the proposed business.
Loan processing fees will be waived under the scheme. The bank has also stated that the scheme will carry an interest rate lower than prevailing rates, although the exact rate has not yet been announced.
Loan amounts will be determined based on project costs, while repayment arrangements can be structured around the income-generating capacity of the business.
Borrowers may have monthly, quarterly, half-yearly, annual or bullet repayment options, depending on the nature of the project. Where a business requires time before generating revenue, a gestation period can also be facilitated.
For women who are hesitant to borrow because of the risk of repayment, the approach could be particularly relevant.
The experience of the Bangyuel Cotton Cooperative illustrates one of the challenges facing small women-led economic activities. Despite receiving support from the Ministry of Industry, Commerce and Employment, Tarayana Foundation and the Royal Textile Academy, cooperative members have so far not borrowed from financial institutions.
Their reluctance has been driven largely by concerns about interest rates, repayment obligations and the uncertainty of finding a reliable market for their products.
“Since we do not have a reliable market, we are afraid of taking loans and ending up with non-performing loans (NPLs),” said Tashi Choden, chairperson of the Bangyuel Cotton Cooperative.
The cooperative members initially invested their own money to establish their operations, including constructing facilities. They hope to access financing in the future to strengthen their infrastructure and expand their activities.
Their experience highlights a broader challenge for small businesses: credit alone does not necessarily create a successful enterprise.
A loan can provide the capital to buy equipment, construct facilities or expand production, but without financial management, technical skills, market access and a viable revenue stream, borrowing can also create pressure on a small enterprise.
This is where BDBL intends its women’s banking initiative to be different. Rather than treating financing as the beginning and end of the relationship, the bank’s model seeks to prepare borrowers before they take on debt and support them as they implement their projects.
The emphasis on financial literacy is particularly important for first-time borrowers. Understanding cash flow, budgeting, pricing, profitability, debt servicing and financial risks can determine whether borrowed money becomes productive capital or an unsustainable obligation.
The bank’s support through the project cycle is therefore intended to connect financing with the practical realities of running a business.
For BDBL, the ambition is not simply to increase the number of women taking loans. It is to increase the number of women who understand the businesses they run, participate in financial decisions, control operations and are able to turn borrowed capital into sustainable economic activity.
Nidup Lhamo, Thimphu
