CHALLENGES & OPPORTUNITIES IN SME FINANCING 2... · OPPORTUNITIES To contribute greater share to...
Transcript of CHALLENGES & OPPORTUNITIES IN SME FINANCING 2... · OPPORTUNITIES To contribute greater share to...
CHALLENGES & OPPORTUNITIES IN SME
FINANCING
BACKGROUND ON REDCL
The Royal Government of Bhutan established Rural Enterprise Development Corporation Limited (REDCL) as a State Owned Enterprise (SOE).
The office is entrusted with the mandates to carry out the services of the access to Revolving Fund (RF II).
Rural Enterprise Development Corporation Limited was inaugurated by His Excellency Prime Minister Tshering Tobgay on 21st May 2016.
MANDATES OF REDCLRevolving Fund (RF) II – Non-Formal Rural ActivitiesFund access to non-formal rural activities involved in
production & Manufacturing.
Base-line financing for individuals & cooperatives engaged in agriculture, livestock, forestry, fishery and manufacturing.
Purpose is to boost overall production of rural communities and support the rural entrepreneurs.
To improve the living standards of the rural communities.
FUND TERMS & CONDITIONSFund size : Maximum of Nu. 5, 00,000.Interest : 4%.Tenure : Maximum of 10 years (depending on the nature of
project).Gestation period : Maximum of 12 months (depending on the nature
of project).Mode of Repayment : Monthly/Quarterly/Half‐yearly.Repayment Source : Cash flow from activities/Identified repayment
source.CIB Report : Applicable.Guarantor : who has good credit history with other Financial
Institutions.Sector : Production/ Manufacturing and Non‐formal Rural
Activities.Licenses and Clearances : Depend upon the nature of the business.
SOURCES OF FUND Economic Stimulus Plan – Total Nu. 5.00 billion (Grant from GoI)
Fund Allotment to REDCL (Former BOiC) – Nu. 400.00 million
Additional Allotment in 2018 – Nu. 100.00 million
Further Commitment from the Government – 200.00 million
FUND STATUS
Fund Approved = Nu. 595.163 million
Fund Disbursed = Nu. 466.452 million
Ratio of Operational cost to Interest Income = 1: 3
CHALLENGES Limited or no other sources of fund.
Institutional sustainability (With Interest rate of 4% p. a )
Diversion of fund by the clients
Force Majeure (Insurance Companies do not cover all the risks associated with the borrowers & and the projects)
Recovery of fund (NPL as of Nov. 2018‐13.8%)‐ Allowable rate is 30% as per ESP.
Geographical difficulties
Risky Target Group
OPPORTUNITIES To contribute greater share to GDP (currently 17.37 % by pry sectors)
Generation of employment
Reduce Import ( For 3 Q alone in 2018, imports = Nu.8 billion)
Enhance Export ( For 3 Q alone in 2018 exports – Nu. 3 billion)
Curb rural‐urban migration
Enhance livelihood of the rural population
And…SomeoftheSuccessfulProjects
ofREDCL…
Yathra Production in Bumthang
Sherkar’s Yoghurt Production
YONTEN JAMTSHO PARZO KHANG
Tengma Production
Mrs. Pema WangmoGreen Tea plantation
Mushroom projects
Sowing seed
Billet storage shed Mushroom available in the local markets
Nazhoen Gonor Yarpel Tshogpa,TashiYangtse
Poultry farming in various Dzongkhag
REDCLApprovedProjectsMapasofNovember30th,2018• https://www.google.com/maps/d/viewer?mid=1hVjcomVwkeeO11jodXEbL0kywP49ww7M&ll=27.359472005512742%2C90.99005074570312&z=8