The Bhutanese Leading the way.
A meeting was held on 10th September between the Hotel and Restaurant Association of Bhutan (HRAB), the Financial Institutions Association of Bhutan (FIAB), and the CEOs of the country’s banks to address the pressing issue of loans for the hotel sector. The discussions focused on finding a sustainable way forward for both the financial institutions and the hoteliers.
A key outcome of the meeting was the FIAB’s commitment to request an extension for the loan restructuring period from the Royal Monetary Authority (RMA).
The FIAB has already submitted a request for the extension until 31st January 2026. This move comes as hoteliers expressed the need for more time to stabilize their finances and finalize restructuring measures.
During the meeting, hoteliers said that their most preferred measure among the seven restructuring options provided by the RMA was a payment moratorium. They also requested that banks park the FIEF 1 and 2 accounts, with the promise to begin full repayment of these accounts after the repayment of the principal loan, after a 30-year tenure.
The HRAB also shared a positive development, stating that after meetings with the government, the 4 percent ESP subsidiary is likely to be approved. The HRAB believes that if this is approved and banks reduce the interest rate by 1 percent, hoteliers would be able to repay their loans and make installments more manageable.
In response, the CEOs and the FIAB indicated their willingness to explore the possibility of a 1 percent reduction in the interest rate.
However, they said that hotels must be willing to take the risk in case their accounts default after the initial three-year period. The FIAB further stated that they would aim to get back to the HRAB by October with a decision on the 1 percent interest reduction for the main loan. They also plan to restructure the loans for a three-year period to align with the ESP interest support and will review the proposed measures after this period to assess whether to return to normal lending terms.
The HRAB committed to securing confirmation of the 4 percent per annum ESP interest support from the government by mid-October. The association also provided a crucial assurance to the banks, stating that the interest subsidy would be recovered from the borrower if a loan becomes a Non-Performing Loan (NPL), a concern initially raised by the banks.
The HRAB also promised to inform its members to initiate discussions with their respective lending institutions this month, providing accurate financial data. This was in response to the CEOs’ observation that many clients were not coming forward to discuss restructuring or other measures.
The HRAB also plans to seek government support on policy and structural issues and will submit accurate financial data to the financial institutions to facilitate these discussions. Additionally, the HRAB said it would request the RMA to create a FIEF 3 account for interest accrued over the next three years.
