Credit to the poor can influence happiness
Asia-Pacific CEO Meet The presentation on gross national happiness survey yesterday indicated economic capital as an important means toward subjective wellbeing.
The happiness map showed the western region of the country as relatively happier than the east. This basically meant happiness and development are directly related, since banking and development are highly concentrated in urban areas.
The next step towards providing happiness has therefore been recognised as financial inclusion. Chief executives of Asia-Pacific financial institutions met yesterday in Thimphu to discuss and explore possibilities of providing financial services to the unbanked sections of the society.
At the meeting, the president of the Centre for Bhutan Studies, Dasho Karma Ura, presented Bhutan’s gross national happiness survey. He said happiness was concentrated in the west, because of investments, infrastructure development and access to comfort and amenities, but added that the argument could be debated and that it may no longer apply.
In Bhutan, around 70 percent of the people are financially excluded, and it is attributed to harsh geographic terrain and thin population density, which is not attractive to commercial bankers.
Deputy governor of RMA Eden Dema said financial inclusion could prevent the poor from financial shocks by providing safety nets. The poor are vulnerable to crop failure, death of the main income earner, and natural shocks, she said. “It will also help people move out of the poverty line,” she said.
She said a large section of the Bhutanese society has been passive observers of economic development. By including them in mainstream financial services, they can be active participants to development.
Today, the central bank, along with Bhutan development bank and the Asian Development bank, is carrying out a diagnosis study, which will examine the extent of financial inclusion achieved so far. The study will guide the central bank in its attempt toward including the poor in the mainstream financial services.
Despite growth in the financial sector, access to credit and micro finance has not really improved, Eden Dema said. The total asset of the banking sector reached almost Nu 70B this year from Nu 31B in 2006. There are not many incentives, either for Bhutanese banks to do business with the poor.
Central bank governor Daw Tenzin said the government has to step in and share certain amount of costs with the bank while carrying out priority lending in the agriculture sector.
As of last year’s figure, the agriculture sector, received the lowest amount of loans from the financial institutions at Nu 1.4B while housing received the highest at Nu 21.3B followed by manufacturing at Nu 12.4B, personal loans at Nu 11.9B and tourism Nu 10.6B.
The central bank last year received around four applications from the existing non-government organisations and civil society organisations to establish micro finance institutions. Today, RMA is finalising the draft regulatory frameworks for the financial inclusion policy.
Without financial inclusion, development is becoming skewed with high inequality, and that does not contribute to happiness, Eden Dema said.
Source: kuenselonline