The Bhutan National Bank (BNB) has not been able to declare any dividends for the year 2011 as per the annual report of Druk Holding and Investments (DHI).
Earlier with the encouragement of the Royal Monetary Authority (RMA), BNB had encouraged all the shareholders to buy the rights issue where each shareholder had the right to buy equivalent amount of shares at the book value which was valued Nu 450 per share at that time.
At that time many of the shareholders could not come up with money so they took huge loans. “Even from the institution’s side, DHI paid a substantial amount,” said the DHI Chairman Om Pradhan.
Further he said that the expectation of the shareholders was that they would get some dividends but RMA had certain guidelines instituted with regard to Cash Reserve Ratio and Statutory Liquidity Ratio.
“When they give these loans, they are required to have 300 percent back-up. The conditions that RMA put forth made the BNB ineligible to declare dividends,” he added.
The Chairman said “BNB has been discussing with RMA if some provision could be made but RMA has stood by the conditions that it has put up”.
Despite the profit, BNB would not be able to declare dividends for 2011. DHI has only 14% ownership in BNBL and the majority is owned by other institutions as well as private sector.
The Chairman of DHI, Lyonpo Om Pradhan said that in the year 2011, BNB made almost 100%. The performance according to DHI’s assessment was ‘very good’ and it was thought that BNBL should declare at least 50 percent dividend.
This was one bank where government wanted to encourage private sector in the past so it allows private sector investments and this is one of the trends which the government has been encouraging for many years and which, DHI will continue.