Provided as a supporting document to the Report and Recommendation of the President for the Rural Finance Development Project in in Bhutan.

Govt had heated discussions with RMA to lift BDBL Bank moratorium but RMA did not agree: PM

After the Opposition Party called on the government to lift the moratorium on the Bhutan Development Bank Limited (BDBL) loans, the Prime Minister Dasho (Dr) Lotay Tshering responded saying the government tried twice, but the Royal Monetary Authority (RMA) did not agree.

In accordance with the directives from the Royal Monetary Authority of Bhutan, dated 10 May 2022, all kinds of loans including Bank Guarantee (BG) were suspended until further notice for BDBL, Royal Insurance Corporation of Bhutan Limited and National Cottage and Small Industry Development Bank (NCSIDB) in view of high non-performing loans. As of 13 May 2022 sanctioning of new loans was stopped for them.

“Lyonpo Namgay and I were disappointed when loans were stopped for BDBL and NCSIDB for crossing the 5% Non Performing Loan threshold, and while the RMA has the authority to monitor and control the banks we wrote to RMA saying it is not professional as some loans are in the phases of distribution like phase 1,2 and 3 and not all loans are going into NPL as some sectors are profitable and these should not be stopped, but the RMA did not agree,” said the Prime Minister.

Not satisfied with RMA’s refusal on the matter the PM said the government wrote to the RMA again asking if RMA would take the risk for phase wise funded projects going into NPL.

He said the RMA only agreed to release the phase wise loans fund, but did not agree to not freezing the loans in sectors where the NPL was low and there was higher productivity.

“We also argued saying if this is even the right time to put restrictions when we are in a revival mode and these are two developmental banks,” said the PM.

The PM said that this loan portfolio is also very small of around half a billion but the RMA still did not agree.

He said under the RMA Act and the Financial Services Act the authority over banks is totally with the RMA only.

“Six months ago wo had written two rounds of very strong letters and I really wish the government had the authority to lift the moratorium,” said the PM. 

The PM said the Opposition should know that the RMA is autonomous as the RMA and FS Act had been passed in Parliament.

The PM said the government had asked the RMA to give loans to those who need it for jersey cows or poultry if they are doing well and to stop it for sectors like construction loans or boleros if they are not doing well, but this was not agreed to.

He said if it is up to the government then they would lift the restriction today itself and not even tomorrow.

“I know many families’ lives will be different as many graduates will need this money to make their dreams come true. These loans are taken mainly by those from poor families as they do not have capital and also cannot get loans from commercial banks like BoB and BNBL,” said the PM.

He said they had tough and heated arguments and discussions but RMA did not listen. 

The PM said his hands are tied as while he has political authority in the government the RMA has authority over the banks and similarly there is the ACC, ECB, RAA and RCSC and these are all the checks and balances in a democracy.


In a press release issued on Thursday the Opposition said it has been several months since the moratorium on the credit facilities of Bhutan Development Bank Limited (BDBL) came into force, and this has greatly affected the rural communities and small businesses across the country.

The Opposition Party said it placed the issue for debate during a Question Hour in the National Assembly’s last Parliamentary Session and in response, the government reported to the House that the suspension was temporary and access to loans would be resumed in two to three months.

“However, they still remain frozen,” said the party.

The Opposition Party said if the moratorium continues, they foresee farming and small-time rural enterprises collapsing which will result in other graver associated problems – such as giving up agriculture and agribusiness and increasing poverty, among others.

“The need to immediately lift the moratorium on BDBL loans was one of the many critical issues people raised at public meetings with the Leader of the Opposition during his recent tour of Eastern and Southern Dzongkhags,” said the party.

It urged the Government to immediately lift the moratorium to protect and promote the rural livelihood and small-time rural enterprises.

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