…this will materialise from November 4

Banking: The banks may not reach every nook and corner of the country but their services will be available in the most remote parts of the country, should the newly approved agent-banking work out.

The Royal Monetary Authority (RMA) board approved its agent-banking rules and regulations two days ago and this new banking channel is expected to enhance the convenience and outreach of quality and affordable financial services.

From November 4, all banks are permitted to sign agreements with their agents. For instance, the Food Corporation of Bhutan (FCB) outlet in Laya can be an agent for the Bank of Bhutan.

Agent-banking is providing banking and financial services through engagement of agents under a valid agency agreement, rather than having the bank maintain a physical presence or branch. This means that an agent conducts banking transactions on behalf of a bank.

During a conference on issues on macroeconomic policy-making held at the Royal Thimphu College yesterday, the Central Bank’s governor Dasho Penjore said that the fundamentals of bringing about economic growth lies in investment.

While the country has invested in hydropower development, another panellist, Sonam Tashi, from the economic affairs ministry asked whether hydropower led GDP growth leads to the economy becoming more resilient to external shocks or even able to withstand such shocks. “It has of course boosted the government revenue,” he said.

The governor said hydropower and construction-led economic growth is not generating employment and that the answer lies in diversification.

In order to diversify the economy, in effect bring about more investment, the governor said that both monetary and fiscal policies are instrumental. While he said that he couldn’t speak for fiscal policy, the authority for which rests with the government, he claimed that the Central Bank is already executing the important monetary policies.

Dasho Penjore said the reduction in interest rates itself is an approach. Having reduced the lending rates, he said “financial inclusion” is the key to reaping the benefits. For instance, agent-banking, with its reach would facilitate entrepreneurial development, which in turn would create jobs in the most remote parts of the country. “Then, we are hitting the target,” he said.



There are 84 bank branches and 174 automatic teller machines (ATM) in the country and inter-mobile payment systems are being developed. Likewise there are more than 829,000 depositors and more than 100,000 lenders. The governor was asked if it will give the economic growth the country aspires for.

While inter-mobile banking and a lot of initiatives of electronic transactions are underway, the governor informed that agent-banking is one such edge to promote financial inclusion.

As per the draft rules and regulations of agent-banking, banks are granted permission to conduct its business through an agent. But banks wishing to seek to conduct its business through an agent shall apply and obtain a prior written approval of the RMA before commencing agent business.

However, it is the responsibility of the bank to seek the RMA’s approval for an entity to be contracted as an agent. The entity seeking the approval must have an existing well-established commercial activity and has not been classified as a non-performing borrower by a bank in the last 12 months preceding the date of signing the contract.

It is prescribed that either a government postal services and private courier services or any agents of telecom operators, registered retail merchants, insurance companies or insurance agents, pharmacies and medical stores and any other entity, which the RMA may prescribe shall be eligible to become an agent.

Accepting cash deposits to the users’ bank accounts, cash withdrawals, loan application process, document collection and submission, loan disbursement services, accepting cash towards payments to various government services and utility payments including the delivering of bank statements, among others, are a few services that an agent is allowed to deliver.

Tshering Dorji