Rinzin Wangchuk

The Royal Monetary Authority (RMA) dismissed a complaint one of the borrowers lodged against an unregistered private money-lender stating that the case at hand has long been resolved through the Thimphu dzongkhag’s court-annexed mediation.

The borrower, a woman detainee through her husband on April 13, sought the central bank’s intervention to look into the exorbitant interest rates charged by the illegal money lender.

The complaint was lodged after the victim was detained for failing to comply with the court’s order. She has to pay Nu 30.9M to the illegal money-lender.

The victim alleged that the money-lender had charged her unreasonably interest rates for the Nu 13M she borrowed for two months at a monthly interest rate of 10 percent in 2019.

She filed a complaint as per the Private Money Lending Rules and Regulations 2023 which allows the authority to receive any related complaint against any individual carrying out private money-lending business with or without a registration certificate from the central bank. Once the case is sufficiently reviewed by the authority, it has to be forwarded to the Office of the Attorney General in accordance with Financial Services Act 2011 for prosecution.

However, RMA’s consumer protection unit on April 28 wrote to the complainant informing her that the unit cannot entertain her complaint as the case was already adjudicated through the court-annexed mediation. “This process is not applicable to cases that have been already filed before a competent court or have received any arbitral award or have been subjected to court-annexed mediation,” the letter stated. “Therefore, we cannot take your complaint as a separate case since the case at hand had long been resolved on November 2, 2021.”

The letter also stated that the case had already been the subject of court proceedings with both the parties mutually agreeing to the terms of the negotiated settlement with full consent.

An official from RMA also said that the victim had never submitted before the court that the money was actually borrowed illegally on the pretext that she transacted her building at Babena and a plot at Motithang. “If the party argued on this, RMA could have taken up the complaint,” he told Kuensel.

In her earlier interview with Kuensel, the victim alleged that the lender forced her to agree to the court’s mediation by assuring her to reduce the interest rate from 10 percent to five and lend her an additional amount of Nu 7.5M if she accepted the judgment. “That is why I didn’t admit anything about the illegal lending issue before the court,” she had said.

After agreeing to the suggestion, the lender calculated the five percent interest for 24 months on the Nu 13M and three percent for six months on the time given in the court’s order which came to Nu 30.9M.

Borrower’s claim

The victim claimed that she borrowed Nu 13M from the woman to clear her outstanding dues, but the loan shark issued two cheques amounting to Nu 15.6M to be withdrawn from Bhutan Development Bank Limited. The money-lender had clubbed the 10 percent interest to the principal amount making it Nu 15.6M.

The loan amount was reflected in two sales deed agreements signed on October 3, 2019 on the pretext that the victim’s four-storied building in Babena was sold to the loan shark for Nu 23.2M for which a cheque of Nu 7.2M was given. The balance amount of Nu 16.2M was to be deposited in the RICBL account for the building as per the agreement. The building was already mortgaged with RICBL when the two parties signed the agreement.

The other sales deed was for a plot in Motithang executed for Nu 9M of which a cheque of Nu 8.4M was issued and the balance amount of Nu 0.6M was not received by the victim.

From Nu 13M, the loan shark deducted Nu 250,000 as commission and took back Nu 2.6M after withdrawing Nu 15.6M. The victim paid the interest portion of Nu 1M. However, due to the Covid-19 pandemic and family problems, she could not repay the loan. The principal amount along with interest has reached Nu 30.9M in three years.

The lender then filed a case against the victim at the Thimphu court in October 2021.

While lodging her complaint to the central bank, the borrower also submitted a voice recording of the lender saying details related to interest payment and loan term. 

Meanwhile, the victim’s family said that they appealed to the RMA again to re-consider the victim’s complaint since the court had reopened a similar case.

This is the first case lodged at the RMA regarding the Private Money Lending Rules and Regulations 2023.