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The business of lending money outside the formal banking system or the so-called private money lending business and the failure of rules to curb it depicts the typical Bhutanese way of doing things.

With issues of private money lending business and its impact recognised as a social ill, the central bank and the judiciary framed the PMLRR to regulate private money lending business and bring it under the purview of the financial sector. That was five years ago in 2016. The PMLRR was intended to formalize money lending and put an end to the informal private lending market. 

However, after much hype, money lending privately, which is illegal, is still thriving. The judiciary in 2020 alone registered more than 1,674 monetary cases and 3,185 in 2019. A visit to Thimphu dzongkhag court would reveal how serious and grave the issue is.

There are only three registered private moneylenders and the PMLRR 2021 applies only to them. Those registered are also subjected to many legal requirements while illegal lenders are making the most of an ineffective rule. They are using the judiciary to reclaim their money. The rules are not encouraging more lenders to register, but suffocating them. 




Illegal private money lending not only impacts families of borrowers, but causes social menace. It affects the financial service of the country. Curbing illegal private money lending is not easy. Some moneylenders claim ignorance of rules and laws for lending. Ignorance cannot be a defense in a court of law. It is done through fraudulent cheque writings and fake sales deeds of land, buildings, and cars.

The central bank alone cannot do much. There are legalities surrounding the issue. RMA does not have the authority to frame laws. It’s the job of the legislature. 

Parliamentarians must recognise the problems of illegal private money lending and frame laws to stop it. Listening to the stories of those affected by the illegal business, there is an urgency in stopping this business.

 Judiciary has a much bigger role. Judges, who are aware of how some private moneylenders keep seeking judicial intervention for their benefit, should stop them. Judgments should deter illegal private moneylenders, not embolden them. 

The Financial Service Act clearly states that no person shall offer financial services as a business without obtaining the appropriate license and the judges cannot close their eyes. Rule of law must prevail and the judiciary must uphold the provisions of the law. 




Police, as law enforcement agencies, should bust gambling dens where people from all walks of life engage in private money lending. Arresting a few people who play dice games at the taxi parking should not be construed as bustling gambling dens. There are bigger stakes and bigger issues in the underground gambling dens where even those overseeing rules are alleged to be involved.

There should be more awareness on private money lending, not just in the rural areas through local leaders, but entire communities should be educated. There should be deterrence of private money lending in urban areas, where gambling is rampant. 

Let us not misplace our sympathies. The borrowers and lenders are equally responsible for their actions. Penalising both is the solution to it. 

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