For many families in Tsirang, a loan from RENEW Microfinance is far more than a financial transaction, it is a turning point. It can put a power tiller in a farmer’s field, keep a struggling shop stocked through the lean months, or turn a single idea into a thriving small business and a path toward lasting economic independence.
Across the dzongkhag, modest amounts of borrowed capital are quietly reshaping livelihoods — financing power tillers, grass-cutting machines, poultry farms, grocery shops, restaurants and countless other ventures that anchor rural households.
Behind much of this transformation is RENEW Microfinance (RMF), which has served Tsirang’s communities for more than a decade. Cumulative data from establishment of the Tsirang branch in 2015 until August 2026 shows that 3,169 beneficiaries in Tsirang have received loans from RMF totaling Nu 282.96 million. Nationwide, RENEW has reached 35,640 beneficiaries and disbursed Nu 438 million capital that has flowed overwhelmingly to rural and low-income households, and to the women who so often hold them together. Tarayana Micro Finance Limited has supported another 179 clients in Tsirang, with loans sanctioned amounting to about Nu 20.88 million.
But the numbers tell only one story. The people behind them tell a far more powerful one.
For 50-year-old Dawa Tshering of Gomsoom Chiwog under Tsholingkhar Gewog, a single RENEW loan bought a power tiller and with it, a steady livelihood. Today the machine is hired by farmers across the community almost every day, giving Dawa a dependable, near-daily source of income. When he is away, his wife takes controls.
The loan did more than generate rental income; it strengthened the family’s own farm. Dawa has expanded vegetable production and now supplies fresh produce to primary schools in Tsirang and neighboring dzongkhags.
“The loan changed the way we earn our living,” Dawa said. “The power tiller gives us an income almost every day because farmers in the community hire it, and at the same time it has made our own farming easier.”
His story captures a defining feature of well-placed rural credit: its benefits ripple outward. A machine bought by one household becomes a service that lifts an entire farming community.
For 37-year-old Kancha Tisna Limbu of Tsholingkhar Gewog, a Nu 50,000 loan became the seed for an entire cluster of enterprises. He began with a grass-cutting machine, offering mowing services to farmers in his village and beyond. The income he earned allowed him to open a small eatery, and later to launch a poultry business with about 20 chickens.
“I attribute all these possessions to the microfinance loan I availed,” Kancha acknowledged.
Local Gup Passang Thingh Tamang said Kancha is now among the most experienced grass cutters in the area, regularly called on by farmers when their fields need work.
Stories like these raise a larger policy question: how can Bhutan widen financial inclusion while ensuring that the credit reaching rural households is affordable, appropriately sized and sustainable?
It is a question RMF and its peers confront every day, because rural businesses do not all need the same amount of money. A farmer may need financing for seeds, livestock or seasonal inputs, while a growing shop may require working capital to keep inventory on the shelves. A small enterprise may need machinery; an established business may need larger financing to expand.
A loan that is too small can leave a borrower unable to complete a planned investment. A loan that is too large can saddle a household with unnecessary debt and repayment pressure. The right loan must therefore match the borrower’s business requirements, income and capacity to repay.
RENEW’s own experience with Tsirang borrowers bears this out: smaller loans are often enough to start or expand a modest business, while growing enterprises need larger financing to generate the income and cash flow required to meet their obligations.
This balance matters especially in Tsirang, where agriculture remains the backbone of household livelihoods. Cardamom, oranges and ginger are vital sources of income, yet farm earnings are seasonal and exposed to weather, pests and volatile markets.
For entrepreneurs such as Pema Lhadon of Dekiling, Kilkhorthang Gewog, larger financing has powered real growth. She used a Nu 500,000 RMF Micro Business Loan to expand her restaurant and lodge in Tsirang town.
For others, microfinance has been a quiet safety net at the household level.
Sixty-five-year-old Sonam Lhamo borrowed Nu 100,000 to help her son build a house. The rental income now gives the family a modest but dependable cushion each month.
“It is not much, but we have something to rely upon at the end of the month since the loan has already been repaid,” she said.
In Mendrelgang Gewog, sisters Kinzang Lhamo and Tshering Lhamo turned a Nu 150,000 loan into a general shop, built on land their elderly mother had given them. With few other sources of income and a mother to care for, the shop became the family’s mainstay.
“The income is not much, but it helped us clear our loans and now the three of us rely upon it,” Kinzang said.
The business has since allowed the sisters to buy a small utility vehicle — the very vehicle they now use to take their mother to hospital when she needs care.
Yet behind these success stories lies a harder reality: credit has a cost.
According to the Royal Monetary Authority, seven MFIs currently lend to individuals, households and microenterprises, with nominal or contractual interest rates ranging from 9.5 to 24 percent. The average rate is 17.43 percent, while the weighted average stands at 20.48 percent.
For households living on seasonal and fluctuating incomes, borrowing at such rates can be the difference between an investment that becomes an asset and one that becomes a liability.
At the same time, MFIs point out that rural lending is genuinely expensive to deliver. Borrowers are scattered across remote villages, requiring loan officers to travel long distances for assessment, documentation, monitoring and repayment collection. Transport, staff, administration, communication and the cost of capital all feed into the final price of a loan.
That makes simply cutting interest rates an imperfect answer. If lending rates fall below the cost of providing financial services, MFIs risk losses and, ultimately, the loss of their ability to serve the very communities that depend on them.
The real policy challenge, then, is not merely to make credit cheaper, but to make rural lending more efficient, more transparent and better matched to borrowers’ needs.
The RMA is moving in that direction. Amendments to the regulatory framework are expected to introduce Effective Interest Rate requirements for both deposit-taking and non-deposit-taking MFIs, and the regulator is developing a Microfinance Institutions Strategy Paper, with interest-rate policy among the issues under review. The aim is to ensure borrowers understand the true cost of borrowing rather than relying on nominal rates alone, a transparency agenda that responsible providers such as RMF are positioned to lead.
The need for such reforms is underscored by Bhutan’s wider credit gap. Agriculture employs more than 44 percent of the workforce but receives less than five percent of the country’s total credit portfolio, according to a recent National Assembly review. Agricultural loan disbursements peaked at Nu 1.54 billion in 2021 before falling to Nu 258.3 million.
For rural households, then, access to finance is only part of the challenge. They also need suitable products, financial literacy, markets, infrastructure and protection against agricultural risk.
A Public Accounts Committee member of the National Assembly said many farmers, women, youth and small entrepreneurs remain unfamiliar with the loan products, interest rates and collateral requirements available to them.
“People often approach us for help in securing loans. They don’t know the type of loans, the interest rates or collateral requirements,” he lamented.
Mendrelgang Gup Yeshi said financial education should begin before people borrow.
For MFIs, meanwhile, greater access to government grants or concessional financing, stronger digital systems and deeper staff capacity could lower operating costs and widen outreach. Digital and agent banking could also spare borrowers in remote areas the long journeys they now make for basic financial services.
Ultimately, Tsirang’s experience shows that financial inclusion matters most when credit builds sustainable livelihoods — and by that measure, RENEW’s fingerprints are visible across the dzongkhag. A power tiller becomes both a business and a community service. A Nu 50,000 loan grows into several income-generating ventures. A small shop supports a family and helps care for an ageing parent.
Yet the success of microfinance cannot be measured by the number of loans disbursed alone. The deeper test is whether those loans are appropriately sized, transparently priced, productively invested and realistically repayable — the very standards RMF works to uphold as it deepens its reach into Bhutan’s rural economy.
For Tsirang’s borrowers, the promise of microfinance is already tangible — in machines, shops, farms and family incomes. The challenge ahead is to ensure that the cost and conditions of that capital never undermine the livelihoods it was created to build.
This story is published under an EU-Funded project managed by Save the Children Bhutan in partnership with the Bhutan Transparency Initiative and RENEW.
Tashi Namgyal, Tsirang
