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Tuesday, 16 July 2024

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Introduction and Deliberation on the Interim Review Report on Rural Credit Access.

Introduction and Deliberation on the Interim Review Report on Rural Credit Access.

During the fifth sitting, the Economic Affairs Committee (EAC) presented its interim review report on Rural Credit Access to the House.

The EAC recognized the need for this review report following His Majesty's address to the nation during the 109th National Day celebrations at Trongsa. The review is based on the mandates outlined in Article 10.2 and 11.2 of the Constitution of Bhutan, as well as Section 7 of the National Council Act.

The Economic Affairs Committee Chairperson, Hon’ble Tshewang Rinchen shared the report covering its background, objectives, regulations governing rural credit in Bhutan. And also presented the key rural lending institutions, sector allocation of rural credit over the last 10 years, and credit accessibility in agriculture.

Additionally, He also shared the constraints faced by lending institutions, including difficulties in assessing borrowers' creditworthiness, credit risks in agriculture, and inadequate agricultural insurance. Borrowers, on the other hand, encounter challenges such as low financial literacy, high interest rates, complex loan processes, and a lack of credit for innovative projects.

Furthermore, he highlighted that, despite agriculture being crucial for the economy, it receives less than 5% of total loans. In 2022/23, agricultural credit dropped by 24.5%, from Nu 6,330.6 million to Nu 4,779.9 million. Only about 21.79% of Bhutanese adults have access to loans.

Following the presentation, members provided additional valuable recommendations.

The EAC will further consult with relevant stakeholders and submit the final review report with recommendations to the House during the 34th session of the National Council in winter.

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