Mi­cro­fi­nance loans em­power ru­ral women

Business Bhutan - - Nation - Dechen Dolkar from Thim­phu

Thirty-three-year-old Pema has been run­ning a ho­tel since 2017 Trongsa. A sin­gle mother of three chil­dren, she got mar­ried at the age of 17 and stayed in Thim­phu with her hus­band and two chil­dren from him for eight years. When she got di­vorced, she re­turned to her vil­lage Langthel and mar­ried a sec­ond time. The re­la­tion­ship lasted only a cou­ple of months. She got preg­nant and di­vorced again.

Pema would have had a dif­fi­cult time sus­tain­ing her­self and her fam­ily through this or­deal had it not been for Re­spect, Ed­u­cate, Nur­ture, and Em­power Women’s (RE­NEW) mi­cro­fi­nance ser­vices. RE­NEW of­fi­cials vis­ited her vil­lage in 2012 of­fer­ing to sup­port ru­ral women en­trepreneurs.

She grabbed the op­por­tu­nity. “At our vil­lage, we don’t have enough land to cul­ti­vate so I de­cided to start a small busi­ness.”

She took a be­gin­ner­phase loan of Nu 25,000 from RNEW mi­cro-fi­nance to set up a gro­cery shop at Langthel. Since then, there has been no look­ing back for her. “I used to save a sum of Nu 150 daily for the loan re­pay­ment,” she said.

She re­paid the loan in six months and again she availed the sec­ond phase of the loan to up­grade her shop.

Pema has availed loan from RNEW mi­cro­fi­nance seven times so far. In 2017, Pema shifted to Trongsa and she up­graded her shop to a ho­tel. Now she is sav­ing money to ed­u­cate her chil­dren. “Now I am liv­ing in­de­pen­dently with my chil­dren and I do not want to get mar­ried again,” said Pema.

So far, the Royal Mon­e­tary Au­thor­ity (RMA) has ap­proved five mi­cro­fi­nance in­sti­tu­tions (MFIs) in the coun­try. They are RNEW, Bhutan As­so­ci­a­tion of Women En­trepreneurs (BAOWE), Tarayana Foun­da­tion, Bhutan Care Credit, and Ru­ral En­ter­prise De­vel­op­ment Cor­po­ra­tion Lim­ited (REDCL).

The cen­tral bank ini­ti­ated mi­cro­fi­nance in 2014 and also out­lined the rules and reg­u­la­tions of de­posit-tak­ing mi­cro-fi­nance in­sti­tu­tions and reg­u­la­tions on mi­croloans in­sti­tu­tions.

Most women in the ru­ral com­mu­ni­ties do not have ac­cess to fi­nan­cial ser­vices but this ini­tia­tive by RMA has been a turn­ing point for many.

RNEW’s mi­cro-fi­nance project was ini­ti­ated in 2012. As of Novem­ber 2018, RNEW mi­cro­fi­nance had more than 15,500 clients in nine dif­fer­ent dzongkhags and around 2,200 bor­row­ers who have been lent around Nu 79mn. The dzongkhags in­clude Samtse, Trashigang, Da­gana, Trongsa, Bumthang, Pu­nakha, Thim­phu, Wang­duepho­drang and Tsir­ang.

RE­NEW’s mi­cro-fi­nance project strives to im­prove the liv­ing sta­tus of women and their fam­i­lies, es­pe­cially those liv­ing un­der ex­treme cir­cum­stances. As­sis­tance is ex­tended to vul­ner­a­ble women to help them be­come eco­nom­i­cally sus­tain­able and in­de­pen­dent.

Chief Op­er­at­ing Of­fi­cer of RNEW Mi­cro­fi­nance Pri­vate Lim­ited, Tsh­er­ing Dema said like any other bank, clients have to open an ac­count with RNEW to avail the loan but the loan is col­lat­eral free. Since it is an un­se­cure loan, to mit­i­gate risks of de­fault­ing, the mem­bers need to form a group of a min­i­mum of five mem­bers.

The field of­fi­cers of RNEW go to each vil­lage every sin­gle day, so a lot of cost is in­volved. They have des­ig­nated spots where peo­ple can avail loans and de­posit the money. If one mem­ber needs to avail a loan, four mem­bers need to sign as guar­an­tors.

Tsh­er­ing Dema said that most of their clients are women in­clud­ing housewives. “We don’t want any kind of com­pli­ca­tion aris­ing be­tween the cou­ple and fam­ily, so hus­band or fam­ily are also in­volved as ex­ter­nal guar­an­tor be­cause most of the loans are for house­holds,” she said.

Clients who avail mi­cro­fi­nance ser­vices should be aged 18 to 60. They need to save money in their sav­ings ac­count for at least four months be­fore they avail the first loan. This is to min­i­mize risks and know the clients bet­ter.

The clients can save a min­i­mum of Nu 100 and max­i­mum of Nu 3000 and by the time they avail the loan they must have 10% of the loan amount in the vol­un­tary ac­count.

The max­i­mum loan ceil­ing is Nu 120,000 while min­i­mum is Nu 5,000. The re­pay­ment du­ra­tion is 12 months for loans rang­ing from Nu 5,000 to Nu 80,000 while it is 18 months for Nu 100,000 to Nu 120,000.

The min­i­mum in­ter­est rate for loan is 18% per an­num and max­i­mum is 24%.

Most of the loans are for busi­ness pur­poses, agri­cul­ture loan, mul­ti­pur­pose loans and emer­gency loans. “Most of the loans are busi­ness loans be­cause we want our clients to gen­er­ate in­come,” said Tsh­er­ing Dema.

RNEW mi­cro-fi­nance also gives loan to sin­gle fa­thers who com­prise around 15 male clients.

It is man­dated by the cen­tral bank that 80% of the mi­cro­fi­nance ser­vices should cover ru­ral ar­eas and 20% the ur­ban ar­eas.

So far, RE­NEW’s sav­ing amount has reached to Nu 100mn.

Sim­i­larly, Khandu Sherpa, 50, from Pat­shal­ing Ge­wog in Tsir­ang has availed a loan from RNEW mi­cro-fi­nance to grow and sell veg­eta­bles. The mother of five availed a loan of Nu 40,000 and bought seeds and cul­ti­vated the veg­eta­bles.

She sells her pro­duce at Tsir­ang, Gele­phu and some­times in Thim­phu. She availed loan thrice and has re­paid her loans.

She said though the in­ter­est rates are higher than the other banks it is more con­ve­nient for them be­cause RNEW of­fi­cials come to their door steps to col­lect the loans whereas at other banks, it takes two to three months to dis­burse the loan and land and build­ing are re­quired as mort­gage.

Sim­i­larly, BAOWE also fo­cuses on women in ru­ral ar­eas. They give busi­ness, ed­u­ca­tional and sea­sonal agri­cul­ture loans.

BAOWE has given loans up to Nu 300,000 to Lu­mung Feed Co­op­er­a­tive in Trashigang – a group of 16 mem­bers pro­duc­ing cow feed and chicken feed in 2016.

Tsh­ey­chey, 50, the chair­man of the co­op­er­a­tive said that the loan helped them set up busi­ness and they bought ma­chiner­ies.

He said that now the prod­ucts are ready and they sell in the mar­ket.

Tashi Wangchuk, 53, from Khengkhar ge­wog in Mon­gar said that they have availed group loan of Nu 100,000 from Tarayana Foun­da­tion. The group con­sists of 25 peo­ple.

Tashi Wangchuk said that they availed the loan to open a shop in their vil­lage, and some to fund their chil­dren’s ed­u­ca­tion. “One of the mem­bers has even bought a ve­hi­cle through the loan. It helps us to reach our agri­cul­ture prod­ucts to the mar­ket,” said Tashi Wangchuk.

Fi­nance of­fi­cer of BAOWE, Nam­gay Wangmo said so far they have dis­bursed around Nu 1mn to around 30 clients.

They give loans to in­di­vid­u­als and groups. The in­ter­est rate for loans is 10% per an­num and 6% for sav­ings.

How­ever, Tarayana Foun­da­tion fo­cuses on gen­eral loans in ru­ral ar­eas. They also give loans for busi­ness and agri­cul­ture ven­tures.

Pro­gram Of­fi­cer of the Tarayana Foun­da­tion, Dhendup Tsh­er­ing said so far they have dis­bursed loan amount of Nu 2.4mn to around 258 clients.

The in­ter­est rate of Tarayana mi­cro­fi­nance loan is 7 % per an­num.

He said the very small loans pro­vided by the Tarayana Foun­da­tion have helped small groups and house­holds im­prove their liv­ing stan­dards.

Mean­while, RMA of­fi­cials stated that MFIs pro­vide a range of fi­nan­cial prod­ucts such as mi­croloans, mi­crosav­ings and mi­cro-in­sur­ance prod­ucts to their clients. There­fore, MFIs will be in a po­si­tion to pro­mote fi­nan­cial in­clu­sion among the ru­ral pop­u­la­tion, low­in­come groups and young en­trepreneurs.

Ac­cord­ing to the mi­cro­fi­nance rules and reg­u­la­tions 2016, MFIs will have lend­ing ac­tiv­i­ties con­sti­tuted by 80% in ru­ral ar­eas and only 20% in Yen­lag Thromde.

One of the ob­jec­tives of MFI is to in­crease fi­nan­cial ser­vices pen­e­tra­tion in ru­ral pop­u­la­tion. The client should con­sist of mi­cro­client, ru­ral in­hab­i­tants, farm­ers and low-in­come groups un­like banks and in­sur­ance com­pa­nies.

RMA also said that MFIs gives loan with­out col­lat­eral un­like banks, which re­quire col­lat­eral such as fixed as­sets to get loans. MFIs are not al­lowed to give loans for con­sump­tion whereas banks are al­lowed to give per­sonal loans.

“MFIs are ex­pected to ad­dress the gap be­tween rich and poor, cre­ate em­ploy­ment and pro­mote ac­cess to fi­nance par­tic­u­larly amongst the ru­ral pop­u­lace and un­em­ployed youths,” said an RMA of­fi­cial.

Pema Ho­tel at Trongsa

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