CSI bank comes up with friendly loan scheme for farmers

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The National Cottage and Small Industry Development (NCSID) bank as an investor has developed a client friendly investment scheme, which targets end to end support to plug the gap of inadequacies in farming business.

As a pilot this year the bank aims to focus on selected winter vegetables mainly chili, onion, tomato and garlic to substitute import and counter winter food shortages in the country.

The investment model will facilitate complete business eco-system; right from identity the potential product input source clients to marketing the products.

Chief Executive Officer of the bank, Kinzang, said that the maximum ceiling for the loan is Nu 500,000 and farmers can pay only after their products are harvested.

He said that the scheme will be implemented in some of the southern and eastern dzongkhags where the weather is warmer.

“By mid October the loans will be disbursed because it is time to grow winter vegetables,” said the CEO, adding that currently they are reviewing the applications. 

He also said that banks will facilitate to buy seeds and distribute to the farmers; costs will be deducted from the loan amount.

He also said that community centers, local government leaders and representative Member of Parliament will monitor the farmers after the loans were taken on how they are working.

After the products are harvested, the group of aggregators will sell them in the market. 

Under the fiscal and monetary measures the NCSID bank has provided high priority to non-formal agriculture and CSI sectors through concessional interest rates and favorable lending terms.

This has resulted into substantial lending to non-formal agriculture sector. This is expected to enhance rural and informal business in the agriculture sector value chain.

“However, rural agriculture sector lacks marketing capability and business know-how. Therefore, without good post-harvest support, approach and apparatus in place even after successful production the scheme may not be successful to address these issues.”

Since the bank was established in February this year, it has disbursed a total loan of Nu 894mn in non-formal agriculture sector constituting more than 56% of the total loan portfolio of the bank.

“This model will be rolled out in the long run if the current pilot project is successful.”

Dechen Dolker from Thimphu

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