The Bhutanese Leading the way.
According to the Ministry of Finance (MoF), an agreement was concluded on 27 August 2024 to establish a unified Internal Standard Operating Procedure (SoP) and accompanying guidelines. These documents, developed in collaboration with the Financial Institutions Association of Bhutan (FIAB), have now been distributed to the Financial Institutions (FIs).
Finance Minister Lekey Dorji shared, “However, the rollout has faced delays due to the time needed to create a robust assessment framework and finalize the SoP, which required approval from both the PFIs’ boards and the FIAB. In parallel, the Royal Monetary Authority is working on a real-time reporting framework to monitor fund distribution and investment concentrations.”
Despite such delays, the applicants will be able to approach their banks with proposals starting on 2 September 2024.
A total of eight Participating Financial Institutions (PFIs) will take part in this initiative: Bank of Bhutan, Bhutan National Bank, T Bank, Druk PNB Bank Limited, Bhutan Development Bank Ltd., Royal Insurance Company Ltd., Bhutan Insurance Ltd., and the National Pension and Provident Fund.
The implementation guidelines for these credit lines, which were officially launched on 7 August 2024, have been issued to PFIs.
The Phase I of Economic Stimulus Programme (ESP) has a substantial allocation of Nu 5.3 billion. The Phase I rollout includes Nu 3.3 billion designated for concessional credit loans in various sectors and Nu 2 billion for a Reinvigoration Fund (RGF) which will subsidize existing interest rates by 4% for up to three years.
The distribution of funds among FIs will be determined based on the demand and assessment of proposals received.
The concessional loans will be offered at a 4% interest rate with no collateral required, and non-performing loans (NPLs) will be managed by the FIs.
