Cen­tral bank approves two mi­cro fi­nance in­sti­tu­tions

Business Bhutan - - Money - Dechen Dolkar from Phuentshol­ing

The cen­tral bank, Royal Mon­e­tary Au­thor­ity (RMA.) li­censed two mi­cro fi­nan­cial in­sti­tu­tions re­cently in a bid to make credit more ac­ces­si­ble to ru­ral com­mu­ni­ties.

Ru­ral En­ter­prise Devel­op­ment Cor­po­ra­tion Limited (REDCL) and mi­cro fi­nance unit of Re­spect, Ed­u­cate, Nur­ture, Em­power, Women (RE­NEW) have been regis­tered with RMA to pro­vide mi­cro fi­nance ser­vices, par­tic­u­larly to en­cour­age in­vest­ments in ru­ral en­ter­prises.

Ac­cord­ing to the RMA Gov­er­nor, Dasho Pen­jore, this ini­tia­tive is part of the cen­tral bank’s In­clu­sive Fi­nan­cial Pol­icy, which is cur­rently in draft stage. The pol­icy aims to im­prove the liveli­hood of ru­ral com­mu­ni­ties by pro­vid­ing credit fa­cil­i­ties.

The RMA Gov­er­nor said following the ad­dress made by His Majesty The King dur­ing the 109th Na­tional Day, the pol­icy will also in­clude pro­vi­sions to pro­vide credit fa­cil­i­ties to youth and ru­ral com­mu­ni­ties.

“We are ex­pect­ing more or­ga­ni­za­tions and pri­vate in­di­vid­u­als to come up once the new pol­icy is in place,” said Dasho Pen­jore. “More mi­cro fi­nance in­sti­tu­tions will be able to pen­e­trate into the ru­ral com­mu­ni­ties to make credit ac­ces­si­ble.”

To reg­is­ter for the mi­cro fi­nance ser­vices with the RMA, in­di­vid­u­als and or­ga­ni­za­tions would have to ob­tain a trade li­cense and sub­mit a de­tailed proposal out­lin­ing the op­er­a­tional struc­ture and pro­ce­dures to of­fer mi­cro fi­nance ser­vices. The loan ceil­ing will be up to Nu 500,000.

The cen­tral bank is yet to iden­tify the pri­or­ity sec­tors for pro­vid­ing loans through mi­cro fi­nance in­sti­tu­tions.

“We are think­ing to ac­com­plish the com­mand of His Majesty The King to pro­vide credit in agri­cul­ture sec­tors in ru­ral ar­eas,” said Dasho Pen­jore,

The cen­tral bank will work with the agri­cul­ture min­istry to iden­tify pri­or­ity sec­tors. The pri­or­ity ar­eas un­der the agri­cul­ture sec­tor will be ready in about three months.

“In­ter­est rates can­not be preempted. It has to be cal­cu­lated by the mi­cro fi­nance in­sti­tu­tions. They have to fol­low cer­tain norms,” said the RMA Gov­er­nor.

The fi­nan­cial in­clu­sion pol­icy as a broad pol­icy in­stru­ment aims to cover the en­tire coun­try.

“If fi­nan­cial in­clu­sion is put into the sys­tem, it will cre­ate em­ploy­ment op­por­tu­nity to the youth in ru­ral ar­eas and con­trib­ute to gross do­mes­tic prod­uct growth,” added the Gov­er­nor.

The cen­tral bank will also be li­cens­ing de­posit tak­ing mi­cro fi­nance in­sti­tu­tions. These in­sti­tu­tions can take de­posits from the public and lend money to the public up to Nu 500,000 at the same time. The de­posit tak­ing mi­cro fi­nance in­sti­tu­tions can take de­posits and lend only within the dzongkhag.

“This is a new op­por­tu­nity which will come in to ef­fect from the quar­ter of next year,” said the Gov­er­nor.

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