At the recent Dzongkhag Tshogdu in Zhemgang, local leaders deliberated on ways to ease procedures for rural loan applications from the Bhutan Development Bank. According to the local leaders, the current loan application procedures, which involve obtaining a no objection certificate from family members are quite tedious and time-consuming, especially for rural residents. For individuals applying for a loan from the district’s BDBL branch, all family members have to be present in the branch office to sign the no objection clearance.
During the meeting, local leaders said applying for rural loans from the BDBL takes unusually long.
They said that the new system for rural loan applications is complex and makes loans inaccessible for applicants.
The BDBL started mandating family members to be present for signing from last year. The bank gives rural loans depending on the applicant’s family landholding.
Rinchen Khando, Bardo Gup said “family members above the age of 18, who live in other parts of the country or elsewhere abroad, have to be present to sign the no objection certificate. This needs to be looked into. For instance, if we want to apply for a loan from the Zhemgang BDBL branch, my people have to travel from Khomshar to Zhemgang for the signing. Therefore, my concern is, is it mandatory for people to come in person or can they authorise the gewog authority to sign on behalf of the applicants?”
Tshering Lhendup, Shingkhar Gup said “the main problem is that rural people are unaware of BDBL bank’s existence. In addition, when people from far-flung villages need to visit the bank, getting a vehicle is a major issue for them. Even if they are able to hire a vehicle, the charges are too high for them to afford.”
“For example, if our people were to take Nu 100,000 loan from the bank, the expenses incurred is almost the same as the loan amount. I do not understand how the new system is implemented. Policies and systems are often changed by the authority or by the individual heads. We are often told to come the next day or after a few days, which results in a lengthy procedure. I think the bank officials themselves do not have a proper system to clearly communicate with people,” said Tashi, Phangkhar Gup.
Tshering Tenzin, Bardo Mangmi said “The loan application procedure used to be very efficient before because applicants do not have to come in person to sign as everything was taken care by the gewog authority. Now the procedure has changed, perhaps for their own convenience. The main problem we are facing now is obtaining the no objection clearance.”
The Bhutan Development Bank’s Zhemgang branch which deals with rural loans stated that they are aware of the issue.
However, the bank’s manager said, seeking family’s no objection clearance is mandatory as per the Central Bank’s revised Prudential Policy 2024.
Jamyang Tenzin, Manager of BDBL in Zhemgang said “not only to resolve this issue here, but RMA has also developed a policy to protect against non-performance of loans and address family related issues while giving loan. Banks often encounter difficulties when families have issue over signing and this policy intends to mitigate those problems. The policy’s main goal is to prevent such problems within the family, as well as to lessen the burden on both the parties. As per the RMA, all banks must adhere to the policy, and it is not BDBL’s policy.”
The house recommended that the BDBL’s branch office should inform their head office about the issue.
Pema Samdrup, Zhemgang
Edited by Phub Gyem
