T-Bank & Druk PNB

An update on the T-Bank and Druk PNB education loans

There has been a lot of anxiety after the Tashi Bank followed by Druk PNB bank stopped their special education loan products for students wanting to study in Australia.

There are many students who have either got offer letters from Australian Universities, have done IELTS or have plans to go there who are now all stuck due to these two loans products being halted for exceeding their limit.

It has been learnt that the banks had to stop the loans after they exceeded the five percent exposure limit for the loan product.

This was a limit that was set by the RMA when T-Bank and Druk PNB had sought and got permission to introduce these two new education loan products.

It has been learnt that both the private banks have applied with the RMA and are trying to get the limit increased so that they can start lending again.

The request will be put up to the RMA Board which is expected to meet soon. The RMA Board has the Finance Secretary, Governor, the two Deputy Governors, DG of Trade and two members from the Transformation Office.

A reliable source in the RMA told The Bhutanese that as the loan products are benefitting people the RMA is likely to continue the loans in the two banks. This is, however, pending a final board decision.

One thing going for the loans is that the RMA itself had approved these products.

The main consideration for the RMA is also that the loans have little to no chance of going for NPL with very limited exposure.

Meanwhile, it has been learnt that a third bank has also applied with the RMA to give a similar loan product and is awaiting clearance from RMA.

The closure of the loans by T-Bank had led to speculation that the government had somehow stopped the loan to discourage people from going to Australia, but this was strongly denied by the government.

In fact, the Prime Minister Dasho (Dr) Lotay Tshering recently on record said that as per the RMA’s own regulations there is a threshold on various loans and once that is exceeded then the banks have to stop or the RMA can penalize them.

Lyonchhen had said that T-bank is in discussion with RMA and he opined that breaching the threshold is fine because the loan is low risk in nature. The PM said if the RMA allows then T-bank will start to give the education loan again as the bank is ready to give the loan.

Lyonchhen had also said that its okay for an individual to go to abroad since there are less opportunities in the country right now, and by going abroad they can support their families back home.

The Druk PNB was giving the loan at 10.5 percent and the loans had become a cash cow for both the private banks.

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