Moderate Utilization with Gender and Regional Variances Revealed in Survey

โ€ฆ๐’“๐’–๐’“๐’‚๐’ ๐’ƒ๐’‚๐’๐’Œ๐’†๐’… ๐’‚๐’…๐’–๐’๐’•๐’” ๐’†๐’™๐’‰๐’Š๐’ƒ๐’Š๐’•๐’†๐’… ๐’‚ ๐’‰๐’Š๐’ˆ๐’‰๐’†๐’“ ๐’‘๐’“๐’๐’‘๐’†๐’๐’”๐’Š๐’•๐’š ๐’‡๐’๐’“ ๐’ƒ๐’๐’“๐’“๐’๐’˜๐’Š๐’๐’ˆ ๐’‚๐’• 50.3 ๐’‘๐’†๐’“๐’„๐’†๐’๐’•, ๐’˜๐’‰๐’Š๐’๐’† ๐’•๐’‰๐’†๐’Š๐’“ ๐’–๐’“๐’ƒ๐’‚๐’ ๐’„๐’๐’–๐’๐’•๐’†๐’“๐’‘๐’‚๐’“๐’•๐’” ๐’”๐’•๐’๐’๐’… ๐’‚๐’• 37.0 ๐’‘๐’†๐’“๐’„๐’†๐’๐’•

Tshering Dorji

A recent comprehensive survey on credit utilization in Bhutan has unveiled intriguing patterns, showcasing a moderate credit usage rate of 45.1 percent among banked adults in 2022. The study, which delved into the borrowing behavior concerning formal and informal sources, gender, and rural-urban locations, provides valuable insights into the financial dynamics of the Himalayan kingdom.


The survey indicates significant disparities when it comes to borrowing behavior between male and female banked adults, with 51.7 percent of males having borrowed compared to 40.1 percent of females. Additionally, rural banked adults exhibited a higher propensity for borrowing at 50.3 percent, while their urban counterparts stood at 37.0 percent.


Formal credit sources emerged as the preferred choice for most Bhutanese, with Bhutan Development Bank (BDB) leading the way, utilized by a substantial 59.5 percent of banked adults. Following closely were Bank of Bhutan (BOB) and Bhutan National Bank (BNB) with 19.2 percent and 9 percent usage, respectively. Microfinance institutions saw less than five percent utilization. Among informal sources, “friends and family” were the most common, relied upon by 6.5 percent of banked adults.


The survey highlighted nuanced variations in the usage of formal and informal credit sources based on gender and rural-urban locations. Rural banked adults displayed a higher inclination towards Bhutan Development Bank (BDB), while urban counterparts and males favored Bank of Bhutan and Bhutan National Bank (BNB). Microfinance institutions found greater demand in rural areas and among female banked adults, while T-Bank showed an orientation towards the urban population.


Household establishment (29.2%) and purchasing vehicles (19.0%) emerged as the most common purposes for availing loans among banked adults. Other significant purposes included starting a new business (16.3%), investing in building or flats (14.4%), and agricultural activities (11.7%). Loans for education, paying off other loans, and miscellaneous purposes were less prevalent.


Among banked adults who borrowed from informal sources, the primary reasons included needing a small amount of money (53.5%) and finding interest rates more affordable than formal sources (24.4%). Other considerations were the lengthy loan processing duration (10.8%), requiring fewer documents (9.3%), and being refused by financial institutions (5%).


The survey uncovered that insufficient net income for loan repayment (63.8%) was the primary reason cited by potential borrowers for being denied credit. In rural areas, barriers were related to a lack of required documents and insufficient collateral, with a higher proportion of rural banked adults (42.6%) facing loan refusal due to document inadequacy. The survey also highlighted a considerable loan default rate, with 24.0 percent of those who availed loans being unable to repay the installment. Rural areas showed a significantly higher default rate (27.4%) compared to urban areas (17.0%).


Despite challenges, a significant 73.3 percent of banked adults who availed loans expressed satisfaction or high satisfaction with the overall service quality. Additionally, high satisfaction levels were observed with the friendliness of credit officers, fees charged, required documents, and time taken to approve loans.

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