Almost a year since the implementation of the Private Money Lending Rule and Regulation of Bhutan 2016, the first private moneylender has registered with the Royal Monetary Authority (RMA).
Tshering Penjor, 38, registered with the authority on March 20 this year. He also runs a handicraft business.
He said although many clients have approached him, he has not started lending money as he is yet to obtain his trade license from the economic affairs ministry.
Tshering Penjor said that as a registered private moneylender, he could provide short duration loans to people during emergencies, which the financial institutions cannot.
According to the private money lending rules, a private moneylender requires an affidavit from a court of law indicating that the applicant does not have any monetary cases for the past two years on money lending.
Tshering Penjor said that the most difficult part of registering process is to obtain the court affidavit.
It took him almost two months to obtain the affidavit from all the 20 dzongkhag and 15 dungkhag courts. “I followed up with the dzongkhags personally.”
He said if he did not pursue it diligently, it could have taken a year to get the affidavit because of poor network connectivity of some of the courts.
RMA’s chief general counsel, Damche Tenzin, said although only one private moneylender has registered so far, the authority has received many enquiries.
He said most of the lending cases are observed in commercial hubs such as Thimphu, Paro and Phuentsholing where there are more activities.
Damche Tenzin said that being a registered private moneylender not only safeguards the lender’s interest but also the borrowers. “The borrower would be aware if the lender is credible or not and the lender would also know whether the mortgage put forth by the borrower is genuine or not.”
He said that registering private moneylenders with the authority is a step towards doing clean business and bringing legal money into the financial sector.
According to the private money lending rule and regulation, private moneylender has to be registered with RMA if the amount they lend exceeds Nu 90,000.
“They do not need to be registered if it is below Nu 90,000. This is to keep some flexibility for the society to borrow in terms of crisis and emergency,” Damche Tenzin said.
A registered private moneylender can lend up to Nu 500,000.