FIs contribute Nu 70B to credit

Economy: Nine months after the loan restrictions were lifted in September last year, financial institutions’(FIs) credit to different sectors grew by about Nu 9.2B.
As of May this year, financial institutions’ contribution to credit has reached Nu 70.66B from Nu 61.46B in August last year.
Before the restrictions were lifted, credit grew by Nu 3B between January and August last year.
Figures from the Royal Monetary Authority reveal that service and tourism sector recorded the highest credit growth followed by trade and commerce and construction.
Since September last year, credit towards service and tourism sector grew by about Nu 3B reaching Nu 11B in May this year. In eight months, before the restrictions were lifted, credit towards this sector grew by Nu 700M.
Like wise, for trade and commerce credit grew by around Nu 2B after restrictions were lifted.
Credit for building and construction sector has been gradually increasing since January last year from Nu 15.5B to 17.2B in May this year.
A banker said this trend of credit growth shows that economic activities are picking up leading to more investments.
The money lent to different sectors is about 67 percent of the GDP and this would translate into some form of investment leading to production of more goods and services.
However, it could also lead to more consumption and worsen the balance of payment.
The country experienced one of the lowest GDP growths at 2.1 percent last year and this year, on the back of gaining momentum of hydropower project constructions, the GDP is expected to grow by 6.8 percent.
While growth in Bhutan has been propelled by hydropower and construction sectors, the ADB in its report on development outlook, 2015, has stated that Bhutan should prioritise agriculture development equally.
Agriculture, which employs 56 percent of the workforce in Bhutan, is the main source of income for farmers.  The share of agriculture to GDP was 24 percent in 2004, but dropped to 16 percent in 2013.
However, figures from the central bank reveal that loans toward agriculture sector have increased by Nu 1B from September last year until May this year.
Meanwhile, the Bank of Bhutan has contributed 30 percent of the total credit, followed by Bhutan National Bank at 28 percent.
Bhutan Development Bank’s share of total credit is about 19 percent.
Royal Insurance corporation has contributed about 13 percent and Bhutan Insurance Limited’s share is 0.7 percent.
Druk PNB and T-bank has contributed 5.6 percent and 3.6 percent respectively.
By Tshering Dorji

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