Trashigang MP Sonam Kinga

NATIONAL COUNCIL8 January, 2009 - Bhutan is readying for two more commercial banks and an insurance bank, but the immediate need, according to National Council parliamentarians, is banking facilities for rural development.

Members of the upper house discussed and suggested to the government the need of banks that would directly offer schemes and benefits to villagers.

On the rural and agricultural credit schemes, Trashigang MP Sonam Kinga said that about 28 percent of the population lived in poverty.

He said that Bhutan development financial corporation (BDFC) was the only financial institution in the country with schemes for rural development.

“The two schemes offered by BDFC (group guarantee scheme and the small individual scheme) charged about 15 percent interest, which was too much for the villagers,” he said.

Sonam Kinga said that other financial institutions like Bhutan national bank (BNB) and royal insurance corporation of Bhutan (RICB) did not provide such schemes and carried out mostly commercial banking facilities.

While the bank of Bhutan (BoB) provided one such scheme, it charged as high as 13 percent interest. It also charged higher interest rates on tractor loans (13%) than private cars (12%).

Samdrupjongkhar MP Jigme Wangchuk said that people, who own property and land, get loans more easily than those who don’t. “So the interest should be kept low and more schemes introduced so that other small villagers can also claim loans from the financial institutions,” he said.

Pemagatshel MP Jigme Rinzin said that there must be a policy whereby, during the annual asset declaration, a percentage of it must go for rural development. MP Sonam Kinga said there should also be some corporate social responsibility from the financial institutions towards rural development.

Most MPs agreed that lower interest rate loans should be introduced in all the financial institutions without clearance or keeping any mortgage as security. The MPs also agreed that separate banking like GNH banking and rural banking should be opened so that that it would directly benefit rural people.

The council members also submitted that farm road construction be handed from ministry of agriculture (MoA) to the department of roads (DoR).

Trongsa MP Jakar Dorji said that farm roads and side roads were no different and that the farm roads should be facilitated with soling, black-topping and drainage system, so that it remain strong and unmoved during the monsoon. He said that the public should also be involved during the construction period, so that the villagers do not raise issues later after the construction. “A committee should be formed before the construction,” he said.

Many MPs agreed that farm roads constructed under MoA were not maintained properly and washed away by heavy downpours. The MPs said that farm roads should be made double-lane.