Thimphu receives highest number of PSL applications

Thimphu received and approved the highest number of Priority Sector Lending (PSL) applications so far, according to the Royal Monetary Authority’s (RMA) third quarterly report.

Thimphu dzongkhag continued to receive the highest number of PSL applications at 216 projects and an approved 165 projects.

Sarpang dzongkhag received 106 applications and approved 101 while Tsirang received 115 projects and approved 91. Lhuntse and Trashiyangtse received the lowest applications and both the dzongkhags received and approved four projects.

The RMA quarterly report states that PSL initiative saw increased participation in the third quarter of 2018. As of September this year, a total of 1,161 applications received and approved 906 projects, of which 80% were agricultural- Cottage and Small Industries (CSI) projects and the remaining 20% were non-agricultural CSIs.

Financial institutions collectively received 440 applications of which loan approvals were given for 216 projects and Nu 233.1mn was sanctioned. As of September this year, the financial institutions disbursed Nu 181.78mn.

Bank of Bhutan sanctioned loans worth of Nu 65.67mn for 104 projects. Bhutan National Bank sanctioned loans worth Nu 140.42mn for 90 projects while Bhutan Development Bank Limited sanctioned worth of Nu 3.45mn for six projects and Druk PNB sanctioned worth of Nu 3.66 for eight projects. T bank sanctioned worth Nu 15.20mn for six projects and Royal Insurance Corporation of Bhutan Limited sanctioned worth of Nu 4.70mn for two projects.

With 71 projects, Thimphu accounted for one-third of the total projects cleared by the financial institutions, followed by Chhukha, Samtse and Tsirang with 18 projects each.

The report also states that 30 projects were withdrawn by the clients themselves with a few citing high livestock insurance costs and requirement to obtain a paid CSI license as reasons.

In the first nine months of the implementation of PSL, the majority of PSL applications were for agriculture-related projects with the highest concentration in primary production.

It was also found that out of the 906 projects approved by the dzongkhags until September 2018, 80% are agricultural CSI projects dominated by livestock and vegetable farming.

Projects are clustered around similar ideas while proponents are all individuals with only a handful of groups. In terms of the demographic profile, 36% of the total applicants are above 40 years of age, followed by 34% in the 31-40 years age group and 28% in 21-30 years age group. The remaining 2% are in the 17-20 years age group of which 44% were female and 56% male.

Close to half of the projects that were rejected by the financial institutions were on account of bad Credit Information Bureau records of the applicants and existing loans with other banks.

The RMA also started the dzongkhag field visit from November 3 this year and has so far covered 11 dzongkhags. The feedback and insights received from these visits will assist in improving the PSL Guidelines for 2019.

Dechen Dolkar from Thimphu