The private sector is pushing for a comeback of the Group Guarantee Lending and Savings Scheme. The Bhutan Chamber of Commerce and Industry or BCCI say the scheme has been suspended in several districts amid rising non-performing loans. The BCCI say that reviving the scheme could boost small businesses and rural enterprises, giving a much-needed lift to the private sector.
The Group Guarantee Lending and Savings is a collateral-free loan given to groups of three to seven members who are jointly liable for their loans. The scheme also aims at encouraging saving habits, strengthening communities, and improving borrowers’ financial literacy.
Some of the scheme’s eligibility criteria include lack of access to credit through the formal lending system, being enterprising and willing to work in groups to improve livelihoods, among others.
During the Annual General Meeting of the private sector yesterday, the district business representatives raised issues about having no access to the Group Guarantee Lending Scheme.
Tandy Wangchuk, the president of Bhutan Chamber of Commerce and Industry said, “The issue is that, initially, people had access to the group scheme loan, which was provided in collaboration with BDBL and BCCI. We used to have the group scheme loan of Nu 300,000 per person. That scheme was closed two years ago, but they are still pursuing the possibility of having it reintroduced.”
He added that the organisation plans to propose an alternative window for the scheme under the Economic Stimulus Programme, coordinating with the government to implement it through the Bhutan Development Bank or BDBL.
Meanwhile, the BDBL told BBS that the Group Guarantee Lending and Savings scheme has never been suspended and has been implemented nationwide since 1998. The bank also said that it revised the scheme last year to make it more inclusive, customer-friendly, and effective in today’s context.
The bank, however, explained that their partnership with BCCI was discontinued after the MoU expired, and considering that similar group loan features are already available through banks.
The private sector is now seeking to renew their MoU with BDBL.
Kinzang Lhadon
Edited by Kipchu
