Thukten Zangpo 

The revised loans under the education loan category that includes visa fees, tuition fees and living expenses for overseas studies will be issued by commercial banks beginning today.

The loan service will be available from five commercial banks: Bhutan National Bank Limited, Bank of Bhutan Limited, Druk Punjab Bank (Druk PNB) Limited, T-Bank Limited, and Bhutan Development Bank Limited.

The Royal Monetary Authority (RMA) notified on November 12 that the existing education loan products as they existed did not fully address the long-term living, visa and educational needs as required by the various host countries.

The decision was made, after the authority’s management and board convened an extraordinary board of directors meeting on November 8. The meeting reviewed the updated proposals on education loans to enhance the exposure limit, expand the number of lenders and enhance the revised product, which was duly endorsed and approved.

The authority also notified that there has been an upsurge in education loans and the authority’s board and management have been mindful of the heightened concerns through various ongoing discussions.

“The RMA has been canvassing the industry to expand and enhance the product to meet current and future demand for future applicants,” the notification stated.

There has been much misconception across various social and public media regarding loan ceiling limit rules being required of T-Bank Limited and Druk PNB Bank Limited’s education loan, the authority stated.

“The loan limit ceilings equally apply to other loan product types with alternative risk characteristics,” it added.

The notification stated that the authority is mindful of the need and use of providing good credit, balanced against underlying and inherent risks with all lending which is the fiduciary duty to ensure prudent lending practices.

“The financial institutions’ decision to temporarily suspend such loans is one such measure where they are upholding necessary prudent lending practices,” it stated.

The banks stopped the loans after they crossed the limit of 5 percent of the total loan portfolio.

The authority stated that the Central Bank continues to safeguard Bhutan as an institution. However, the authority is also aware of the ambitions and desires of the youth in Bhutan and endeavours to ensure requisite and viable financial support where possible.

A private sector employee, Tshering said that the release of the loans from the banks is timely. “I have paid my college tuition fee and was waiting for the education loan for admission in January next year.”

Another aspiring candidate, a civil servant, said that without an education loan, it is impossible to process a visa, the Central Bank’s directive to release education loans was good news for many Bhutanese who wish to go for studies abroad.

Clarification from Royal Monetary Authority issue of November 15

This is in line with the Press Release on Education Loan: Visa Fee, Tuition Fee and Living Expenses for Overseas Studies issued on 12th November 2022, the RMA would like to clarify that out of five Commercial Banks, only BoBL, BNBL and Druk PNB Bank Ltd are allowed to give loans under the new education loan scheme.

T-Bank Ltd is not allowed to give loan under the new education loan scheme since on further review, the Bank has well exceeded the prescribed lending cap. The RMA is further investigating this breach. Likewise, BDBL is also not allowed to give loan under the new education loan scheme as the Bank is currently under the credit moratorium where the granting of new loan is not allowed.