MB Subba

With the Royal Monetary Authority (RMA) rolling out monetary and fiscal interventions, one of which is deferment of housing loans and waiver of interests for three months, all eyes are on landlords for possible concessions or full waiver of house rents.

Although the measures are effective only from April to June some house owners have already shown their generous side by waiving either 50 or 100 percent of rents.

The government and financial institutions (FIs) are of the view that waiver of rents should be left to house owners. This means that there is no legal obligation for house owners to waive rents.

President of the Financial Institutions Association of Bhutan and CEO of Royal Insurance Corporation Limited (RICBL), Karma, said the decision would depend on house owners.

However, officials said that it was a moral responsibility of landlords to see if the loan deferment could benefit their tenants. The three-month interest waiver has been granted as Kidu.

Landlords are expected to come forward voluntarily as the relief measure is expected to generate confidence and positive vibes during the pandemic for a “better and more prepared tomorrow”.

The loan deferment and interest waiver means that during the three-month period there would be no accumulation of interest and fines on all loans including housing loans, except loans to financial institutions, to government and on staff incentive loans.

The president at the launch of the relief measure said the deferment of loans and the waiver of interests would affect their cash flow. But he said that the measure was a sacrifice on part of the financial institutions.

He said Bhutan was going through a difficult time and that it depended on the kind of measures that were taken for the country to see through the pandemic. He cautioned the pandemic could take Bhutan into recession if measures are not taken now.

“The kind of measures we take are extremely important in order for Bhutan’s economy to stabilize and see through this vulnerable period with the least damage to the economy and lives of our people,” he said.

He said that proper implementation of the measures would be important. “The broader shoulders should carry the biggest load. In this case, the government and shareholders of financial institutions are carrying the biggest load,” he said.

Financial institutions and the government are bearing the cost of interest waiver on a 50-50 basis.

He said that the biggest losers would be the government and shareholders as three months’ interest has been waived off.

“But it’s worth it. After all, what is a financial institution like RICB, BOB or BDBL without a vibrant financial sector in the country? We are what we are because of the economy and borrowers,” he said.

He said that it was in the interest of the financial sector’s own survival that the rest of the economy was supported. The financial sector, he said, was prepared to “preserve” businesses and borrowers.

“Financial institutions will have time to rebuild their balance sheet, but that will depend on the soundness of the economy,” he said, adding that financial institutions were happy to be playing the role.