Thukten Zangpo 

Finance Minister Namgay Tshering wrote to the Royal Monetary Authority’s (RMA) board to reassess the cooling period on loan accounts categorised as non-performing loans (NPL).

As per the RMA, loan accounts that have once been categorised under NPL, even after the repayments have to undergo a six-month cooling period with no bank guarantee and letter of credit.

With no bank guarantee and letter of credit, the contractors were not able to carry out the on-construction works.

The minister wrote on January 25, that the Board and management of the RMA could reassess the issue and possibly develop a differentiated approach to observe the cooling period depending on the severity and duration of default by the borrowers.

“Else there is a huge risk of dragging performing businesses into the watch and loss category of NPL,” the minister said.




NPL are loans with payments that are overdue by 90 days or more. Four categories of NPL are watch exposure (31 to 90 days), sub-standard exposure (91 to 180 days), doubtful exposure (181 to 365 days), and loss exposure (366 days and above).   

Acknowledging and appreciating the reform initiatives undertaken by the RMA to streamline financial services in the country, Lyonpo stated that he is also equally concerned about the applications of prudential regulations particularly the observation period for loan defaulters irrespective of severity and duration of result.

Lyonpo asked the Board to reassess the ground situation stemming out of the prudential norm and come up with solutions that are more practical since the economy is healing after the downturn from the pandemic.




He also shared his concerns on the negative impact of the regulation on business entities especially in the construction sector although there has to build better credit culture and inculcate a sense of discipline among the borrowers.

“I am hopeful that thorough assessment of the ground situation has been undertaken in close consultation with the business chamber and allied private sectors,” Lyonpo said.

The letter also asked the RMA to come up with possible solutions to balance the reform initiatives with the continuity of businesses during this time of economic uncertainties.

The President of the Bhutan Chamber of Commerce and Industry, Tandy Dorji said that the businesses would abide by the RMA’s six months’ cooling period, however, he requested if the cooling period could be enforced progressively, as and when the economy improves.

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