Construction sector still the largest borrower

Borrowings by private sector form 90 percent of the total lending by financial institutions

Loan: The construction sector continued to take the largest share of total loans from financial institutions last year followed by personal loans.

Loans taken by the construction sector constituted 25 percent of the total credit disbursed by financial institutions, according to the Royal Monetary Authority’s monthly bulletin of March. As of December last year, total loans to the sector stood at Nu 16.4 billion (B).

Loans continue to remain concentrated in the private sector, constituting 90 percent of total credit as of December last year. The rest constitute government borrowing.

The total amount of loans to various sectors stood at Nu 64B as of December last year. Last year, the amount of construction loans increased by Nu 900 million (M).

Over the last four years from 2011 to 2014, the share of loans to the construction sector has remained constant at 25 percent even though some restrictions on housing loans were imposed by the Royal Monetary Authority in 2012.

Personal loans amounted to Nu 11.5B last year. This is 18 percent of the total credit, which is the second largest. Personal loans increased from Nu 10.4B to Nu 11.5B.

The manufacturing sector took the third largest chunk of the total credit amounting to Nu 10B. Loans to this sector increased by Nu 2.6B over the year.

Loans to the agriculture sector, which employs the largest number of people, constituted just 4 percent of the total credit. The sector saw an increase of Nu 908M.

Meanwhile, the overall lending by financial institutions started to slow down after the Royal Monetary Authority launched fiscal measures to address the twin challenges of Rupee reserve constraints and tight financial sector liquidity in 2012.

While credit grew by Nu 10B from 2011 to 2012, it grew by Nu 5.4B only between 2012 and 2013.

The contributions of the Bank of Bhutan and Bhutan National Bank amounted to 19B each as of December 2014. Bhutan Development Bank Ltd contributed Nu 10.9B followed by Royal Insurance Corporation Ltd with Nu 8B. Druk Punjab National Bank contributed Nu 3.8B and Tashi Bank Ltd Nu 2.3B.

By MB Subba

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