National Council to deliberate on rural credit accessibility

The 33rd session of the National Council (NC) of Bhutan will commence on June 12, 2024, with  focus on various policy reviews and acts. One of the key topics under discussion will be rural credit accessibility, a critical issue identified during research, interviews with citizens and aspiration  drawn from His Majesty’s vision on  free access to credit for rural people.

The chairperson of economic affair committee, Tshewang Rinchen, NC member from Samdrup Jongkhar said that the problem is particularly pronounced in rural areas, where access to credit is limited. “The issue emerged as a significant concern during our grassroots-level interactions across districts such as Haa, Zhemgang, Trashigang, Trashiyangtse, and Samdrup Jongkhar,” the chairperson said adding that Zhemgang known for its high poverty rates, and followed by Samdrup Jongkhar, these are areas that need to emphasized more.

The chairperson also highlighted that most of the rural loan are most accessible in Haa district. Going by the 2023 statistics, Trashigang had secured the highest loan amounts and Trashiyangtse the least. “The data reveal that only about 7% of Bhutan’s land are arable land with merely 2.9% utilized for agriculture, a significant portion of the population about 62.2% resides in rural areas, and 47% of this population engages in agricultural activities, as per the RNR report of 2017,” the chairperson said, adding that this stark reality underscores the need for action to address rural credit accessibility.

The chairperson said that there are about 18 departments where public can access loan but Bhutan Development Bank Limited (BDBL) emerges as a key institution for rural loans. “BDBL offers around 29 different loan schemes, with 11 specifically for agriculture, including seasonal, small-scale industrial, and agriculture/livestock loans.” The loan values range from Nu 1 million to 30 million, with interest rates between 10-15% and loan tenures from 1 to 30 years.

“During discussions with rural communities, one of the main concerns raised was the high interest rate. Many people expressed a desire to see interest rates reduced, which would greatly benefit those seeking loans. Moreover, an extension of loan tenure periods would also be beneficial for them,” the chairperson said, adding that they are in discussions with relevant stakeholders to address the issues.

The committee chairperson also shared information of loan from other financial institutions. “According to the Bank of Bhutan Limited’s report for 2023, only 5% of loans were allocated for agricultural purposes, with the remaining 95% directed towards business and construction loans,” the chairperson said, adding that to underscores this disparity they have conducted in-depth research and discussions on improving rural credit accessibility.

Nevertheless, the NC is also considering measures to support youth entrepreneurship in rural areas by providing conducive environment for those youth who wish to establish various enterprises in rural areas.

NC will also deliberate on review report on Satong and Gungtong, report on the 13th five year plan by finance minister, interim review report on compensation-related policies for human wildlife conflict and crop damage due to natural calamities, interim report on alternative dispute act of Bhutan 2013, interim review report on the education related legislation, review report on the state of persons with disabilities, introduction on the annual budget appropriation bill for FY 2024-2025 and supplementary Budget appropriation bill for FY 2023-2024.

The annual report on the State of Nation and public account committee will also be discussed during the joint sitting.

By Nidup Lhamo, Thimphu