… except for new housing, hotel construction, and transport loans 

Thukten Zangpo 

The Bhutan Development Bank Ltd (BDBL) will lift the loan moratorium today after the bank reduced the non-performing loan (NPL) within the regulatory requirement.  

An official from the Bank said that the loan moratorium will be fully lifted because the bank could implement all the corrective measures to mitigate risk associated with loan origination, management, and recovery for loan lifting. She said that the NPL was within the regulatory requirement. 

Following the Royal Monetary Authority (RMA) directive, the BDB suspended the sanction of the new on May 13 last year because of high non-performing loans. The Authority mandated a stringent NPL ceiling of 5 percent to be adhered to by the end of December 2023 while new loans are mandated to adhere to an even lower NPL ratio of 3 percent.

However, the moratorium imposed on new housing and hotel construction loans and transport loans shall continue to be in force until such time the directive is superseded by the RMA.

From today, the bank will provide agriculture loans for the agricultural activities for the maximum period of five years at the interest rate of 10.5 percent.

The customers would also be available for the seasonal loan to individuals for season based agricultural activities for the maximum term of one year at an interest rate of 11.55 percent.

The borrowers can also avail general trade loans to business entrepreneurs for period up to five years at 12.25 percent and the start-up of manufacturing to expand with proper source of income for maximum up to ten years at 11.3 percent, among others. 

When the property tax was revised, the people were expecting that they would get higher loans upon the revised Property Assessment and Valuation Agency (PAVA) rate. However, the bank official said that the bank follows their own internal collateral valuation. 

The BDB launched a Nu 1 billion collateral-free community development loan under the micro-lending programme for next five years on November 25. 

Twenty-five percent will be allocated for whole-sale lending and 75 percent for retail lending with a maximum loan ceiling of Nu 500,000 at an interest rate of 15 percent per annum. 

However, the loan scheme saw criticism from the people of its high lending rate of 15 percent. 

An official from the bank said that the high interest rate is because of the high credit risk premium of the loan being collateral free.  

She said that the loan will be monitored following the stringent monitoring and recovery process put in place at various levels of pre-sanction, sanction, and post-sanction.