After the commercial banks started processing applications for Special Education Loans, hundreds of students wishing to upgrade their qualifications have been flocking to the banks for inquiries and applications. However, they are confused over new terms and conditions set by the Central Bank to be eligible to apply for the loan. The banks are directed to provide education loans under two schemes, secured and unsecured. Secured loan mandates collaterals which is not a requirement while applying for the unsecured scheme.
The banks are receiving more than a hundred applications every day. Currently, the Bank of Bhutan, Bhutan National Bank and Druk Punjab National Bank are providing the loan products.
Bhakta Bdr. Gurung, one of the applicants, said the banks ask applicants to get documents from various institutes without specifying many details.
“There was a lot of confusion yesterday when we approached DRC for the form. They were confused about what kind of documents we were looking for. They called BOB and asked for the purpose. In the form, they asked us to get the signs of the family members. But not specified. We have to work twice for the same purpose. But I am happy for the government to restart this loan for those who want to study outside. But I am worried about how fast I am going to get the loan.”
“We have to come to the head office. If the banks could open these services in the branch offices, it would help people like us. They have mentioned coming to the head office, but updating the checklist on their websites would ease us to compile documents before proceeding. Since our family members are separated getting their signatures is inconvenient,” added Chhimi Dem, another applicant.
The banks will provide up to Nu 3.5 M under the unsecured scheme and Nu 5 M under the secured scheme.
Individuals aged 18 to 35 are eligible for unsecured loans. The applicants have to submit documents including a certificate from the National Land Commission proving that the applicants and their families do not own land or properties worth more than Nu 3.5 M.
Also, the applicants have to submit a Tax Clearance Certificate proving that the family’s annual earnings are less than Nu 1 M. The applicant should also submit a report from the Credit Information Bureau to confirm that they did not take loans from other financial institutes.
Those who are ineligible for the unsecured scheme will be provided with a secured loan for which they will have to submit a Lagthram or the land ownership certificate and the No Objection Certificate from the property owner. It will be kept as collateral until the loan is liquidated. According to the banks, the loans are meant for applicants who are not financially stable.
“If they are classified under unsecured they don’t have to produce collaterals. There are certain conditions made to confirm that the applicant falls under an unsecured loan and provided with Nu 3.5 M without having to produce collateral,” said Tashi Tenzin, Chief of the Credit Department of the BoB.
“For both loans, the checklist is provided by RMA. We do not have separate requirements designed. For an unsecured loan, you have to prove that you don’t have collateral to place in the banks. If not, you can apply for secured loans. There are no additional documents required by BNB apart from a press release from RMA. This education loan surely supports the people who are looking up to upgrade their qualifications who cannot produce Nu 3.5 M in cash,” said Hem Kumar Acharya, Director of Banking Operations with the BNBL.
Druk PNB is accepting applications for secured loans only.
The commercial banks started receiving applications after the RMA allowed them to provide special education loans earlier this month.
The banks have, however, set varying interest rates for the same loan products.
The BOB charges 8.5 per cent interest for secured loans and 9.5 per cent for unsecured loans. BNBL provides unsecured loans at a 10 per cent interest rate and secured loans for nine per cent. Druk PNB provides unsecured loans at 10.5 per cent interest, and 9.5 per cent for secured.
Krishna Ghalley
Edited by Phub Gyem