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National CSI Development Bank provided Nu 2bn worth of loans

December 22, 2021
in Business
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In less than two years after its launch, National Cottage and Small Industry Development Bank or CSI bank in Paro provided loans to more than 6,000 people. The loan amounted to nearly Nu 2bn. However, the bank says many borrowers do not repay the loans on time. 

Farmers took the highest share of loans from the CSI bank. Every day, the bank follows up with the clients for loan repayment.

In 2020, about nine per cent of the clients did not pay the loans. And this year, over seven per cent defaulted on the loan repayment.

Kinzang, the CEO of National Cottage and Small Industry Development Bank said, “The fact that the borrowers have ventured well in businesses and doing well and yet they don’t pay back the loan. They keep it for the last moment.”

“In this case, if they default beyond three months and till the end of the year, it increases our Non-Performing Loans. It affects our performance. And it affects our lending capacity in the future.”

As per the Royal Monetary Authority guidelines, the defaulters are liable to a five per cent penalty on the principal amount.

The bank says people defaulted on the loan repayment due to lack of market.

“Earlier, when I visited Udzorong and Wamrong I met with farmers who grew groundnuts and radish on a large scale and couldn’t sell it. The loans that we have released had served its purpose. And people had produced a bountiful harvest. But unfortunately, they couldn’t find a decent market,” added the CEO.

“So now we will lend loans to those who plans to work on value addition, like those who want to invest on machine that converts these groundnuts into oil, candles and other goods.”

The bank is targeting to release another Nu 700 M for the next financial year.

The bank was established in February last year to provide easy and affordable finance and diversify economic activities through the promotion of cottage and small industries.

Namgay Wangchuk, Paro

Edited by Sangay Chezom

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