Many of those who have applied for the Economic Stimulus Programme (ESP) loans are left dejected by the enormous amount of running they have to do and complex procedures to follow while applying for the loan.
Applicants, especially the ones from rural parts, opine that the procedure to apply for the ESP loan is very challenging. The ESP loan, which started receiving applications beginning September 2024, kept the application window period till 31st December 2024.
A businessman from Thimphu, Sonam Dorji said, “Those who have applied for loan at other financial institutions have to start from the very beginning when they apply at BDBL even though the projects were almost approved. Secondly, their regulations are too much. Therefore, many do not qualify for it.”
Some businessman shared that that most of the businesses who are first timers are not able to access the loans.
“The government should have diversified the ESP loans and could have made it more convenient for the people as many were confused with long procedures,” said Pema from Trashigang.
Similarly, Phuntsho Namgyal from Zhemgamg said, “I just wasted my time collecting the documents where the procedures were too long and there were many criteria to be fulfilled. If we miss even one document, our proposal gets cancelled.”
A risk officer from one of the financial institutions said that in the past some clients have not repaid their loans on time as agreed, resulting in significant losses for the bank.
“This can lead to a risk-averse approach, making it difficult for potential borrowers to secure funding,” said the risk officer.
In addition, the risk officer said that Banks use credit scoring models to evaluate borrowers’ credit worthiness where any deviations from expected outcomes can lead to stricter lending criteria to avoid losses.
The risk officer also highlighted that banks may have internal risk management policies that dictate conservative lending practices to maintain a safe and stable portfolio.
According to the ESP Secretariat, the Participating Financial Institutions (PFIs) have rejected 21 applications under ESP reinvigoration funds as of December 31st last year.
Amongst the PFIs, Royal Insurance Corporation of Bhutan Limited (RICBL) has rejected the highest application accounting to 14 numbers, followed by Bhutan National Bank Limited (BNBL) with six applications.
Similarly, the ESP secretariat stated that as of December last year, there were about 137 applications under assessment where 77 applications were approved by PFIs from 225 applications received.
Meanwhile, the opposition party during a meet with the press earlier this week said that the ESP seems irrelevant, and that the economy is reviving itself slowly.
“We had our economy at 10% contraction point during the pandemic. Then it grew upto 4% last year and the Central Bank projects 10% growth next year. So where is the need for stimulating the economy,” an opposition MP remarked.
“If the government really wants to stimulate the economy, then they should be injecting the Nu 15 Billion into clearing the non-performing loans (NPLs) with the banks.”
As of April 2024, NPLs in Bhutan were Nu 19.3 Billion. However, the central bank has written off Nu 12.4 Billion of these loans, which means they are no longer considered NPLs. This leaves the actual NPL at Nu 6.93 billion.
Sherab Dorji from Thimphu