Priority Sector Lending(PSL)

Priority Sector Lending (PSL) is a scheme to promote and identify the cottage and small industries (CSI) as a priority sector for targeted lending and increased coordination and efficiency in the delivery of government support schemes and incentives. PSL is a lending based on insurance on the proposed project assets.

Eligibility

  • Farmers

  • Unemployed youths,

  • Farmers or unemployed youths can apply for PSL loans individually, group/cooperatives and also form a company.

  • Applicant(s) should be Bhutanese citizen holding valid Citizen Identity Card;

  • Group / cooperative borrowing should have minimum of 3 members and only one person will be eligible from one household.

  • Individuals, Groups and/or cooperatives wishing to avail Agricultural CSI related financing must register with the MoAF.

  • Applicant(s) should be of sound mind;

  • Applicant(s) should have good credibility with clean CIB track record;

  • The business activities should be within the frame work as per PSL guidelines (Table 2: Activities and Products, pg 4-5).

  • PSL financing will be available for both new CSI businesses/startups as well as for CSI business expansion.

Loan Limits

  • Individuals – Loan limit of Nu. 0.5 million (max. investment size) for primary production under Agricultural CSI

  • Integrated Activity – Nu.10 million

  • Groups / Cooperatives – Nu. 10 million (max. investment size)

    • Registered with DAMC/Forestry (Agri)

    • Partnership businesses (Non-Agri)

  • Incorporated Companies – Nu. 10 million (max. investment size)

The loan limits for agriculture CSI as well as for non-agriculture CSI will be based on the PSL guidelines and will be subject to change as and when PSL guidelines are revised.

Tenure

  • Agriculture CSI – 5 years inclusive of gestation period

  • Non-Agriculture CSI – 15 years inclusive of gestation period

Preferential Interest Rates for 2018

  • Preferential interest rate ceiling for lending to Primary Production under Agricultural CSI: 8%

  • Preferential interest rate ceiling for lending to Non-agricultural CSI & value addition in Agricultural CSI: 8.5%

Debt Equity ratio

  • Agriculture CSI (primary production)– 100% debt finance

  • Non-agriculture CSI and valued added agriculture CSI – debt equity finance of 70:30.
    CSI: 8.5%

Required Documents

  • PSL Application form duly filled in and signed on all the pages (Full signature).

  • For loan limit between 0.5 million to 1.0 million – A brief business proposal template duly filled in where applicable.

  • For loan limit between 1.0 million to 10.0 million – A detailed business proposal with the financial projections.

  • A Copy of valid Citizenship Identity (CID) of the applicant(s) and the Chairman, office bearer and treasurer if applicable.

  • One recent Pass Port size photograph of the applicant(s) or the Chairman, office bearer and treasurer as applicable.

  • A copy of security clearance of the applicant(s) or the Chairman, office bearer and treasurer as applicable.

  • Ownership certificate(s) of the plot where PSL activity is taking place if applicable.

  • For land under joint or co-ownership, a consent letter from the joint owner or co-owner witnessed by Gup of the village (if applicable).

  • For family owned land, family (household) register issued by Department of Civil Registration and Census, MoHCA and NOC from family members (18 years and above) (if applicable).

  • For private land under lease, a Sale Deed agreement and a copy of CID of the owner of the land (if applicable).

  • Approved drawing plan of the building or construction and a copy of approval letter for construction from concerned authority (if applicable).

  • Off-take agreements if applicable.

  • A copy of group resolution or Articles of Association – in-case of partnership/cooperative/groups/company.

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