Lyonchhen Dr Lotay Tshering, during the meet the press yesterday, said that the government doesn’t have the authority to lift the loan moratorium by the two development banks—Bhutan Development Bank Limited, and Cottage and Small Industry Bank.
Lyonchhen said that Royal Monetary Authority (RMA) imposed a loan moratorium because the banks have crossed the Non-Performing Loan (NPL) threshold of five percent. “With this, many people have been impacted.”
He said that the government exchanged two rounds of letters with the RMA. “We made several suggestions and almost all of them were turned down. We can only suggest and we are compelled to be happy with whatever RMA decides. Government doesn’t have the authority.”
Lyonchhen said that the two banks are development banks that cater to rural people who do not take huge loans.
“We also wrote to RMA saying that imposing loan moratorium was unprofessional since some loans were already in the process of disbursement; some had started projects with the first phase of the loans released during the time when the moratorium was imposed,” Lyonchhen said.
Government asked RMA to continue giving loans to the profitable sectors and those who have not gone into NPL yet. The moratorium could result in NPL for these sectors as well if the loans are stopped.
Lyonchhen said RMA at least released subsequent loan phases to those who had already taken the first phase.
But he also said that it was not the right time to impose a moratorium when the country is in revival mode. “I really wish I had the authority to do so but our hands are tied,” Lyonchhen said.