The Druk Punjab National Bank (Druk-PNB) has come up with a new scheme of Education Loan whereby the bank doesn’t charge any collateral up to Nu 400, 000 to those who wants to pursue degree inside the country or outside.

Druk PNB offers Nu 400, 000 per child for those who wants to study in Bhutan itself and Nu 1.5 million to those wanting to pursue their education outside the country.

To avail education loan a person should submit documents like the confirmation letter from the institute where he will be admitted.

The Druk PNB gives out the loan directly to the institute where the child would be admitted looking at the fee structure of the college. Say, if a student’s fee per year is Nu 30, 000. The bank pays exactly that amount directly to the institute/college.

Talking to BHUTAN TODAY, the Chief Executive Officer (CEO) of the bank, NK Arora said: “This scheme has been created keeping in mind what we went through ourselves and what many parents and children go through as well.”

“Children, especially from rural areas, come across a situation in their life when, no matter how good they are in their studies, they can not go for further studies because of financial constraints. Of course many parents, during such situation would want to take loans and send their children for further studies but can’t because of the issue of collateral,” the CEO said.

The CEO further said that the scheme of providing education loans without collateral was specially formulated to cater to the needs of such children and parents.

Talking about the repayment of the loan, the CEO said that the repayment will not start till the student completes his/her studies.

“We give a time period of one year. If the student gets a job soon after the completion of his/her education, then the payment will start. But, if s/he doesn’t get a job in a year, till one year we will not ask for the repayment of the loan,” he added.

Adding on to the CEO’s statement, the Deputy CEO of Druk PNB, Samdrup K Thinley said: “Our objective is to enable children to pursue their education. We are trying to help the disadvantaged children in a correct manner and our target client for this scheme is people who has the ability in them and wants to go for further studies but can’t because of the lack of finance.”

BHUTAN TODAy also found out about education loans in other banks in Bhutan.

According to the Credit Officer of Bank of Bhutan (BoB), Kesang Dema, the bank gives out education loan of Nu 300, 000 per child who will be pursuing his/her studies within the country and Nu 500, 000 to those who will be going outside for studies.

However, BoB sanctions the education loan against the salary of the borrower and with a mortgage (immovable assets such as land, building and so on).

Kesang Dema said: “Three children from a family who have passed out class X and wants to go for further studies can obtain this loan. The one who wants to take this loan must submit his/her pay slip and s/he must have a guarantor of the same grade or higher.”

Pema Wangmo, a civil servant, pointed out to BHUTAN TODAY that sometimes people misuse education loan and not use it for the purpose that it is supposed to be used in.

She said: “Sometimes people take education loan but they use it for other purposes. Some pay their debts and some even invest the amount in their business.”

A private employee who didn’t want to be named said: “The actual concept of education loan should be what the Druk PNB is doing- giving out the loan without collateral up to certain amount and giving the amount directly to the university where our children will be admitted. Education loan must be given according to the proper guidelines of Royal Monetary Authority, which is without mortgage, people should avail the loan not to use it themselves but to send their children to colleges. That is the actual system of education loan.”

Another private employee, Anita Gurung said: “I took this loan of Nu 100, 000 last year with which I sent my daughter to college. I had to mortgage my land to get the loan. Druk PNB has come out with this scheme of paying the amount directly to the institutes where our children would be admitted, which I feel is a good idea because this will avoid people from misusing the borrowed amount.”

When asked about the steps that would be taken if the borrower defaults during the repayment, the CEO said: “It is with trust that we are giving out this loan in such a manner. I am sure people who receive education through our loan will not cheat us at all.”

The loan can be availed by government, corporate and private employees.

By Kamala Rai in Thimphu