The Bhutanese Leading the way.
The Royal Monetary Authority (RMA) is currently reviewing all the Medium Sector (ranging from Nu 10 million to Nu 100 million) Economic Stimulus Plan (ESP) loans coming to 37 accounts excluding the 4 already investigated by the Anti-Corruption Commission (ACC).
The RMA has done a preliminary round looking at all the 37 loan files, and it has come across some possible procedural issues which will be looked into in more detail now.
There are preliminary issues around documentation and also in terms of ESP loan eligibility for certain projects.
The RMA team will be going through the files in more detail to confirm these issues and get more details, and also check whether these were genuine cases of misinterpretation or something else.
At this stage, the RMA team has not come across what it feels could be corruption cases and, according to the RMA, if it does come across such cases then it will be flagged to the ACC.
The RMA is in the process of doing a comprehensive review, and it has completed the first preliminary round and will be going into more details in the next few rounds.
The aim of the review will be to see the extent of the problem and see if it is a wider issue or some isolated cases. The review will see if the problems are unique to ESP loans or it is a general weakness in the overall banking system to do with the appraisal process, and then accordingly calibrate the actions to be taken.
The ACC had given the RMA three months to come up with an Action Taken Report (ATR) starting from 19th December 2025 and so far, one month is already up.
The ACC had requested the RMA to conduct a comprehensive assessment of all loans approved under the medium scale ESP category to ascertain compliance with the ESP Guidelines.
Once the RMA review is done and based on its final findings, it will get in touch with the Financial Institutions (FIs) and their management and board and ask for actions to be taken based on their respective service rules.
The RMA will ensure that the boards take actions that are commensurate with any issues found on the ground.
Once this is done then the RMA will submit an ATR to the ACC within the three months.
The RMA said that it is not rushing the review and wants to take its time to do a thorough job.
The RMA said that it will also make a full public disclosure on any findings.
The RMA review on the medium sector loans will not be restricted to files and documents but it will also make field visits to the projects sites to inspect things manually.
Apart from the ACC’s request to look at all the medium sized loans the ESP Steering Committee asked the RMA to do an on-site inspection of approved loans.
Here, the RMA said that it will first do a detailed review of all the loans in the medium sector and this would given them a pointer.
If the findings are some alarming lapses, then there will a stricter review smaller loans as opposed it being some minor documentation issues.
It will be near impossible to review each and every small loan and so a sampling approach will be taken and if there are major issues found there then the review will get even bigger.
The RMA team is looking for certain things in its review. One is to check if any ineligible projects were given ESP loans, another is if the disbursement was done before it was supposed to be done and the third is if the key documentation requirements were met.
While the RMA has three months to review all the medium sector loans, the ESP Steering Committee had been given a month for its ATR on the three ESP cases where the ACC did not find corruption and hence grounds for criminal prosecution, but found serious administrative lapses in the interpretation, application, and enforcement of the ESP Guidelines by certain FIs, particularly in relation to eligibility criteria, loan conversion practices, committee governance, and post disbursement monitoring and supervision in three of the four projects.
The ESP Steering Committee wrote to the ACC on 16th January 2026 highlighting what action it has taken immediately on the ACC’s findings and recommendation on the four ESP cases.
As a follow up to the ACC letter and report the ESP Committee had directed the RMA to execute the recovery and cancellation of the three ESP loans via a letter sent on 23rd December 2025.
Accordingly, the RMA convened a meeting with the senior management of the three FIs namely Bhutan Development Bank Limited (BDBL), T-Bank Limited and Bhutan Insurance Limited (BIL) on 20th December 2025 to underscore the gravity of the matter and the need for appropriate corrective measures.
On 22nd December 2025, the RMA issued formal directives instructing these institutions to initiate the recoupment of ESP-related loans as per the ACC’s referral letter.
On 7th January 2026, the BDBL formally directed M/s Wangchuk Blocks to liquidate the outstanding ESP loan balance of Nu 35.177 million (as of 30th November 2025) by 31st January 2026.
On 23rd December 2025, T-Bank Head Office instructed its Wangdue Branch to recover the full interest differential between the ESP CCL and standard commercial loan rates, effective retroactively from the date of disbursement. They were also directed to terminate the existing ESP loan agreement and execute a new commercial loan agreement.
As T-Bank had prefunded the loan amount and has not yet received corresponding ESP funds, recoupment in this case is not applicable. Instead, the T-Bank will not be provided the refund from the ESP funds.
The BIL has disbursed a total of Nu 50.831 mn to date to T&K Concrete Products. While the BIL maintains that the project remains eligible for ESP support. The RMA concurs with the ACC’s findings and has accordingly informed the BIL. As with T-Bank, because the BIL prefunded the amount and has not yet received ESP funds, recoupment is not applicable; and instead, the BIL will not be provided the refund from the ESP funds.
There are a total of 41 ESP loans in the medium sector with a total of Nu 1.971 billion of which Nu 868 million was disbursed as of 28th October 2025.
