PMO says that NCGS could be taken beyond its stipulated time
One of the initiatives launched by the government to keep the economy running as the country battled the COVID-19 pandemic was the National Credit Guarantee Scheme (NCGS). Established to support small businesses, the scheme was launched as an interim measure for a period of three years. In September, it would be three years and the NCGS would close shop.
However, the Prime Minister’s Office (PMO) said that if taken forward it would benefit the people.
According to the PMO, NCGS could be improved upon and continued beyond as there are many successful projects that pave the way to professionalize the loan appraisal system and loan quality in the country. This is based on the fact that NCGS offers useful lessons that can be applied to other initiatives. According to the PMO, by offering collateral-free loans for investments in the cottage and small category, the NCGS set out to address one of the key barriers to obtaining credit facilities from financial institutions.
NCGS has also assisted in project creation, facilitated clearances and approvals for business setup, and ensured that the projects that were approved were implemented without incident.
Meanwhile, two and half years after the inception of the NSGS, a total amount of Nu 907.17mn loans have been approved for 213 projects.
The production and manufacturing sector saw the highest number of approved projects at 106, followed by 60 in services and 47 in agriculture and livestock.
Out of these, 47 are approved under the Bhutan Development Bank (BDBL), 73 under the Bank of Bhutan (BOBL), and 71 under the National Cottage and Small Industries (NCSI).
Of the total loan amount approved, Nu 217.81mn will be sanctioned by BDBL, Nu 492.7mn by BOBL, and Nu 196.6mn by NCSI.
However, the scheme has now halted lending.
The PMO’s official said, “We are not giving any new lending because, in September 2022, it was decided that the facility will exist until September 2023, but that is just to follow up the remaining projects and especially those at risk.”
She added that NCGS is a very special project that started at the peak of the pandemic and by any standard, gives collateral-free loans and at the same time there is a dedicated team that is guiding and giving technical support.
“This kind of scheme is a combination of cash and kind and it has served the purpose well.” She said adding that even during normal times, financing such a project is difficult but the government did it during the pandemic.
She further added that if the formal assistance is carried out in the manner that NCGS was rolled out, the timing and the kind of clients and projects that the scheme has covered, the overall environment of NCGS, it has served many intended purposes
“Overall it is a success story because it is one full package so the project that has worked well also covers a few projects that have not worked. You have to look at it from a broader perspective.” She said.
Tshering Pelden from Thimphu
