Thukten Zangpo 

Despite several submissions to consider the businesses’ recommendation on the monetary measures IV and non-performing loans (NPLs) to the government and the Royal Monetary Authority, the outcome was pale, Bhutan Chamber of Commerce and Industry’s president Tandy Wangchuk said.

The chamber plans to re-submit their submissions to the central bank soon.

“An economic consultant will be hired to develop a concrete paper to reflect the impact of the central banks’ new measures including MMIV,” Tandy Wangchuk said.

He added that after three rounds of meetings with the government, chief executive officers of financial institutions (FIs), and central bank, there has not been any outcome.




“The central bank started tightening the norms right after the pandemic. If the rules were gradually enforced, we would have supported it,” Tandy Wangchuk said.

Members also said that they would also approach His Majesty The King for Kidu.

The central bank announced MMIV offering loan deferments from one to two years and eight different forms of loan restructuring options depending on the risk category.

The chamber submitted its recommendations to provide blanket loan deferment and loan restructuring options across all the sectors rather than categorising based on high, moderate, and low risks a few months ago.

Businesses also asked to place a standard asset valuation among the FIs for collateral used to avail loans to ensure uniform rate for collateral across FIs.




Tandy Wangchuk said that private businesses could avail loan up to 70 percent of the total collateral. “Additional loan amounts can be pumped into the economy.”

The businesses also asked to continue providing bridging or soft loans.

“If the submissions are not considered, many borrowers would land up in court,” Tandy Wangchuk said, adding that about 50 entities are in court currently.

Members also expressed to lift the suspension of loans by three FIs-Bhutan Development Bank Limited, Royal Insurance Corporation of Bhutan, and National Cottage and Small Industry Bank.

Upon the central bank’s directive, three FIs have stopped sanctioning new loans including bank guarantee because of high NPLs from May 13.




The NPLs are loan repayment obligations overdue by more than 91 days.

A member said that they are not able to work without access to finance. “Financing is a weapon for the businesses.”

Tandy Wangchuk said that the central bank did not enforce prudential norms in 2018. The FIs’ NPL ratio was 15 to 20 percent then, he said, adding that the central bank has asked to maintain NPL at 5 percent and 7.5 percent now.

“We would request the central bank to relax the prudential norms until the economy recovers,” Tandy Wangchuk said.

On October 10, the central bank issued a directive to all the FIs that NPLs that have become performing through repayments made by the borrower shall be placed under the “observation period” for a period of six months with no bank guarantee, letter of credit, and other OBS items.

Construction Association of Bhutan’s president, Trashi Wangyel, said that if the existing bank guarantees are not renewed, it is likely that the bank guarantees would be encashed by the procuring agencies which will create further rift or trust issues with FIs and further dangers or inabilities of repayment issues will arise, thereby creating more NPLs.

A member also said that with the six-month observation period, a person who has multiple businesses is also deprived from availing new loans if one of his businesses becomes performing after NPLs.




Members also expressed their desire to include the private sector in the government’s 13th five-year plan and the chamber to submit its private sector participation to the government.

“The government needs to introduce a private sector friendly budget rather than a government spending budget only,” a member said.

Members also said that the private sector needs to chart a way to earn convertible currencies to help the country’s dwindling foreign reserves.

The chamber’s 34th annual general meeting, represented by 20 representatives from dzongkhags and 60 business entities, concluded yesterday.