The National Council’s Economic Affairs Committee today recommended the government and financial institutions increase the ceilings on personal loans. This according to the committee is to address rising goods prices and the financial needs of rural communities. The Committee presented a Review of Rural Credit Access in Bhutan to the National Council.
It is one of the 11 recommendations made by the committee to ease accessing credit for rural communities.
While presenting the committee’s review report, the chairperson of the Economic Affairs Committee highlighted the need to increase the loan ceiling. Currently, a borrower can avail themselves of personal loans up to Nu 500,000. The amount according to the committee is affecting personal economic growth.
“There is a need to increase the loan ceiling. Borrowers only get Nu 500,000 as a personal loan even if they can repay the loan. When there are such ceiling/caps, borrowers cannot borrow more money even if they have good business ideas,” said Tshewang Rinchen, Chairperson of the Economic Affairs Committee.
The committee, however, did not propose a new ceiling for personal loans.
Many of the National Council members supported the recommendation.
In addition, the committee said there is a need to streamline the documentation process.
The review report stated the need to simplify and expedite the loan application and documentation process, especially for residents in remote areas to reduce costs. The committee said financial institutions need to revisit and downsize the present documents required for availing loans.
“Initially the documentation and verification procedures in rural areas were handled by the gewog. It solved a lot of problems for the people. However, after the financial institutions started handling the procedures, it created inconveniences for people,” said Sonam Tobgyel, MP, Trashigang
The committee also recommended improving market access for rural communities, the importance of diversifying economic activities and enhancing financial education to empower rural residents.
The House asked the committee to revisit the report and consider the feedback provided by other members of parliament. The deliberation will continue on Wednesday.
Devika Pradhan
Edited by Sangay Chezom
