Paper

Review for Improving Microfinance Services in Bhutan

Presenting strategies to improve the microfinance sector in Bhutan
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This paper suggests ways to improve existing microfinance services in Bhutan.

Microfinance in Bhutan is still at a nascent stage. Less than 20% of rural households have access to agricultural credit, despite the efforts of Bhutan Development Finance Corporation (BDFC). To improve the microfinance sector in Bhutan, the paper suggests that:

  • BDFC should develop separate departments for microfinance, commercial agriculture and other commercial sectors;
  • BDFC should review procedure, change staff’s mindset, expand networking, initiate interest rebate system, increase staff productivity and develop client friendly savings products;
  • Government should encourage other financial intermediaries to provide microfinance in rural areas;
  • Existing self-help groups should develop into savings and credit organizations;
  • Ministry of Agriculture and Forests (MOAF) should develop policy that is beneficial to farmers and lending organizations;
  • Government should provide interest subsidies to disadvantaged districts;
  • MOAF should work with the monetary authority to issue refinance and to manage soft loans to financial institutions for agriculture lending;
  • Monetary authority should formulate a national microfinance policy in consultation with BDFC and other stakeholders;
  • MOAF and the monetary authority should initiate the establishment of a separate bank for agricultural development.

About this Publication

By Pathak, B.
Published