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BoB launches collateral-free loan for DSP De-Suups

Thousands of De-Suups will now have access to collateral-free loans for their start-ups, Bank of Bhutan has launched a loan scheme for skilled De-Suups.

DSP Start-Up Loan is a cash flow based loan where no collateral is required. Instead of a collateral, a guarantee by another eligible De-Suup applying for the Start-Up loan will be required. 

The loan ceiling is Nu 500,000 for individuals and Nu 1,000,000 per partner in a partnership venture up to a maximum of Nu 5,000,000 for five or more partners.

Additionally, for cooperatives, with 15 or more individuals can avail loan amounting to Nu 5,000,000.

The loan tenure will depend on the nature of the loan and the maximum tenure will be 20 years.

The loan scheme has been launched by the Bank of Bhutan, and the bank provides the loan at the lowest interest rate of 8 percent. This scheme has been recognized by the Royal Monetary Authority as priority sector lending.

Launching this loan, the Chief Executive Officer of BoB Dorji Kadin says that the banks need to think beyond the traditional ways of financing and lending, banks should be innovative. “This loan product is designed without collateral requirements unlike the usual other loan products,” he said.

The reason for this scheme, Dorji Kadin says, ‘De-Suung has contributed tremendously sacrificing their own lives during the pandemic and beyond for security of the country, and her people’. “This start-up loan is targeted to skilled De-Suups, and we see lots of benefits from this loan scheme to them,” he added.

Listing the benefits, the BoB CEO said that it will help DSP De-Suups to start micro-business and be self-employed, the other, he said is that it will help the country in building the small-scale businesses to minimize dependency on imports of labour, services and products.

Additionally, he said that it will contribute toward self-sufficiency and it will ultimately contribute to the economic progress of the country.  

To be eligible for the loan, a De-Suup needs to undergo one of the various 45 skilling programmes under De-Suung Skilling Programme (DSP), and also, the Financial Literacy Programme.

However, a De-Suup wishing to avail loan under the scheme will have to produce a letter of recommendation from the De-Suung Headquarter and also have a clean credit record.

Highlighting the exceptional services rendered by De-Suups during the pandemic, and the skills they have acquired so far, BoB’s Chairman Karma Yonten said that he is optimistic that De-Suups will do well in business, and that BoB looked forward to a successful long-term partnership with De-Suung.

During the launch, three De-Suups signed loan agreements for purchase of computers. “I am eternally grateful to His Majesty for granting me the opportunity to get trained in digital marketing and learning skills to support myself,” said Karma Norzin. “I am also very relieved that BoB has come up with this loan scheme and I can now buy a good laptop and start earning some income,” she added.

According to a BoB release, it states, “Access to finance, because of collateral requirements, has been one of the biggest impediments to setting up a business, and this DSP Start-Up Loan which does not require collateral will enable any eligible and interested De-Suup to start a business. This should go a long way in helping skilled De-Suups to turn their dreams of becoming an entrepreneur into reality.”

Additionally, the release states, “As supporting young budding entrepreneurs to pursue business opportunities, and also create employment opportunities has become important to address problems of youth unemployment and strengthening the economy, the DSP Start Up Loan has been approved and classified under the Priority Sector Lending portfolio. Therefore, the interest rate for the loan is at the lowest rate of 8%, which should be very beneficial for Desuups who are taking these loans.”

DSP has trained 2,316 Desuups in 96 different training programmes, and currently 1,007 Desuups are being trained in 47 training programmes.

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