𝐒𝐭𝐫𝐞𝐚𝐦𝐥𝐢𝐧𝐢𝐧𝐠 𝐄𝐒𝐏 𝐋𝐨𝐚𝐧 𝐀𝐩𝐩𝐥𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬 𝐟𝐨𝐫 𝐑𝐮𝐫𝐚𝐥 𝐄𝐧𝐭𝐫𝐞𝐩𝐫𝐞𝐧𝐞𝐮𝐫𝐬

…𝑻𝒓𝒂𝒊𝒏𝒊𝒏𝒈 𝑷𝒂𝒗𝒆𝒔 𝒕𝒉𝒆 𝑾𝒂𝒚 𝒇𝒐𝒓 𝑰𝒎𝒑𝒓𝒐𝒗𝒆𝒅 𝑳𝒐𝒂𝒏 𝑨𝒄𝒄𝒆𝒔𝒔 𝒊𝒏 𝑩𝒉𝒖𝒕𝒂𝒏’𝒔 𝑹𝒖𝒓𝒂𝒍 𝑪𝒐𝒎𝒎𝒖𝒏𝒊𝒕𝒊𝒆𝒔

By Lhendup Wangmo

In a significant effort to enhance rural financial accessibility, the Economic Stimulus Plan (ESP) Secretariat, in collaboration with Participating Financial Institutions (PFIs) and the Royal Monetary Authority (RMA), recently conducted a three-day training program to empower Community Centre (CC) Operators. The program aimed to address ongoing challenges faced by rural communities in accessing ESP loans by equipping CC operators with essential skills to guide local applicants through the complex loan application process.

This initiative aligns with the government’s broader Economic Stimulus Plan, which seeks to revitalize Bhutan’s economy post-pandemic with a substantial budget of Nu 5.3 billion. Given that the first point of contact for many aspiring applicants is often CC operators, the training focused on preparing them to provide hands-on assistance in completing loan forms, understanding application requirements, and navigating financial processes, ensuring that Bhutan’s rural communities are not left behind in the country’s economic revival efforts.

The need for this training arose from the reported struggles rural residents face when filling out loan applications, where many encounter difficulties understanding eligibility criteria, application forms, and documentation requirements. In rural Bhutan, access to information and guidance is often limited, resulting in a high frequency of application errors and misunderstandings. “Before the training, there was a lot of confusion among the villagers about what criteria they needed to meet,” shared Choidrup Namgay, a participant from Chhukha Dzongkhag. “Many were unsure of how to properly fill out the forms, which led to a high chance of mistakes.”

This confusion also extends to sector-specific requirements. While ESP loan applications for agriculture and livestock sectors are relatively straightforward, other industries often face hurdles due to sectoral clearance needs and additional documentation requirements, such as detailed project proposals and financial audits. “The training has helped clarify these requirements for us, making it easier to guide applicants in industries outside of agriculture,” explained Sangay Penjor, a participant from Wangdue Dzongkhag.

One of the standout features of the ESP loan program is its dual-window structure: Window I, which offers Nu 3.3 billion in concessional credit lines, and Window II, providing Nu 2 billion for revitalization efforts. Loans under Window I are set at an appealing 4 percent interest rate with no collateral for select sectors. However, the application process has posed challenges for many potential applicants, particularly in rural areas where awareness and financial literacy levels are comparatively lower.

For rural entrepreneurs and startups, the loan process has been described as daunting, requiring extensive documentation that often goes beyond what many applicants are familiar with. “The forms are lengthy and require more documentation than expected,” shared an entrepreneur who attempted to apply for a loan to expand a sculpture business. “I was unaware of all the approvals needed, which led to delays.”

To address these barriers, the training equipped CC operators with a clear understanding of ESP loan requirements and the common pitfalls applicants encounter. Trainers provided step-by-step guidance on form submission, loan documentation, and payment timelines. Sangay Penjor emphasized, “The trainers offered detailed instructions on everything from completing forms to understanding interest rates and repayment schedules. This will allow us to help villagers submit their applications without repeated errors and delays.”

The training also highlighted the importance of effective communication during virtual meetings, where misunderstandings regarding the ESP loan process had previously been common. The sessions focused on helping CC operators communicate essential information more clearly to loan applicants, a critical skill given the frequent reliance on virtual consultations in remote areas.

By providing CC operators with virtual communication techniques and standardized guidance on the loan process, the program aims to streamline the loan application process. “Moving forward, applicants will now prioritize reviewing their proposals before filling out the forms. It’s crucial to understand the proposal first; without that, filling out the form is more likely to result in errors,” Choidrup Namgay emphasized.

ESP loans have presented some limitations for rural communities, especially for cottage and small industries (CSIs) that often need additional documents like proposals and audit clearances. The stringent application requirements have spurred a cottage industry of consultancy services, with some firms charging up to Nu 60,000 per application. While helpful to some, these costs can be prohibitive for many rural applicants. Recognizing this, the ESP training program focused on enabling CC operators to provide these support services at no additional cost, thereby reducing the financial burden on applicants.

Participants from the training are now motivated to organize community meetings to share their new skills and educate rural residents about the ESP loan application process, a crucial step toward ensuring that rural communities have equal access to financial resources. “Learning about the benefits of the ESP loan and how it can act as a lifeline in rural areas is crucial,” Sangay Penjor said. He added that he and his fellow participants would collaborate with Gewog officials to hold informational sessions for villagers on effectively leveraging the ESP loans.

The ESP program also faces challenges with non-performing loans (NPLs) in the application pool, particularly from businesses that require financial support to scale but may not meet all eligibility requirements. Entrepreneurs with previous NPL status encounter a mandatory cooling-off period before becoming eligible for new loans, a situation that can hinder their ability to capitalize on available funds. For many, Window II, which offers interest subsidies but still requires collateral, has become the only viable option, albeit with some challenges of its own. Critics argue that the loan structure, as it currently stands, does not fully address the financial barriers these entrepreneurs face.

Looking ahead, the success of Bhutan’s ESP loan initiative in rural areas will largely depend on the program’s ability to evolve and address the unique financial needs of rural applicants. The recent training is a promising step toward addressing these needs. For CC operators, the training has not only demystified the loan application process but has also instilled a sense of confidence that they can effectively assist their communities. “I feel more confident in my understanding of the process,” Choidrup Namgay shared. “I will teach the villagers what I’ve learned so they can successfully navigate the application process and access the support they need.”

The ESP Secretariat, PFIs, and RMA remain committed to working alongside these CC operators to promote financial inclusivity across Bhutan. By empowering local representatives and streamlining loan accessibility for rural entrepreneurs, the government is fostering a foundation for economic resilience that aligns with Bhutan’s goals for sustainable development and community empowerment.

Through initiatives like this training, Bhutan continues to strengthen its support for rural communities, enabling them to pursue growth and recovery in the wake of the pandemic. As Sangay Penjor reflected, “Programs like these are essential for rural regions, where awareness of government financial aid options is often limited. By equipping locals with knowledge about the ESP loan, we can help them utilize these funds for personal and community development, ultimately contributing to economic stability in their areas.”
The three day training was held at the Royal Institute for Tourism and Hospitality from October 21 to 23.