26 January, 2010 - The country’s sole development bank that caters to rural Bhutanese, the Bhutan development finance corporation Ltd. (BDFCL), is aiming to acquire 57,820 rural credit customers by the end of 2013 as part of its micro-financing mandate. In 2009, BDFCL had 18,627 rural credit customers.
Coupled with another projection of disbursing an average loan size of USD 4,724 for either individuals or groups, by December 2013, BDFCL’s plan is quite ambitious said Karma T Dorji, the company’s manager for agricultural credit operations. On where BDFCL would acquire the money to realize its plans, Karma T Dorji, said, the company is still exploring sources.
To help kick start its aggressive micro finance plan, BDFCL recently received USD 1.6mn from the United Nations capital development fund (UNCDF). The fund is part of the UNCDF’s efforts to reduce poverty in least developed countries by enabling large scale access to a variety of financial services for low income and poor people, including micro and small businesses.
BDFCL has also tied up with India’s Bhartiya Samruddhi Investments and Consulting Services Ltd. (BASIX), which will receive USD 679,116 of the UNCDF budget. BASIX will provide, among others, technical services to help strengthen and diversify BDFCL’s micro finance capacities, enhance rural outreach, and promote community based grass root collectives.
BASIX, since its establishment in 1996, has an outreach of around 20,000 villages in India, which includes the provision of agricultural business development services.
Almost USD 82,000 of the UNCDF fund will be reserved for exposure visits for rural credit customers, said Karma T Dorji. This will include visits abroad for 100 rural credit customers, and 500 for within Bhutan, to help them study micro finance experiences in other places and to incorporate ideas.
Meanwhile, Karma T Dorji, said, the need for a national micro finance policy had been acknowledged by the government and that stakeholders will commence on creating one this year. BDFCL officials had last year voiced the need for a national policy on micro finance so that it can operate separately from its commercial services.
More than 20 percent of Bhutan’s estimated 630,000 citizens live on less than US$ 1 a day, the threshold considered necessary to maintain an adequate standard of living. The government plans to reduce this poverty rate to less than 15 percent by 2013.
By Gyalsten K Dorji
