RMA to submit Australia education loan, BDBL moratorium and 6 months cooling period to Board

Staff Reporter/ Thimphu

Recently a meeting was held between the Finance Minister Namgay Tshering, Royal Monetary Authority and Financial Institutions.

The three main points of discussion in the meeting was on the education loans for Australia, the issue of the moratorium on Bhutan Development Bank Limited (BDBL) and National Cottage and Small Industries Development Bank Limited (NCSIDBL) and the six months cooling period for those whose loans become Non Performing Loans.

The Finance Minister said, “We had our own internal meetings between the RMA, myself and the Financial Institutions to discuss some issues related to education loan, lifting of the moratorium on BDBL and the six months cooling period.”

Lyonpo said that as per the discussion the RMA has to put up these matters back to the Board in the coming week and sort it out as a matter of urgency.

“Whatever support is required from the government we will provide all the support necessary unconditionally,” said Lyonpo.

The government is also requesting the RMA to allow the education loans used mainly for Australia after the two private banks Tashi Bank and Druk PNB exceeded their limit.

The Bhutan National Bank (BNB) has also applied to give a similar loan product.

“For the education visa loan we need to ensure that it does no breach the lending norms and it has to be legitimate,” said Lyonpo.

“I said that the RMA and the FIs should work on it and submit it to the board on priority basis and whatever support they need from the government we will provide unconditional support. I think it is very timely,” said Lyonpo.

Earlier the government also stated its readiness to stand as financial guarantors for students going to Australia provided the students come back and work in Bhutan for some years.

Last week a RMA official had said that the matter of the education loans would be put to the board on the request of T-Bank and Druk PNB and the Board is likely to allow it since it is helping the students.

On the lifting of the moratorium on CSI and BDBL Lyonpo said he thinks they have made a lot of progress over the last 8 months of the moratorium period and recovery was quite impressive.

 “I think now we cannot be adamant and stand on the requirement saying that if you can’t bring the NPL below this and that, the moratorium will not be lifted. I think it should be lifted in a phased and incremental manner,” said Lyonpo.

He said this is because while a few portfolios are not doing well, but all the portfolios are not that bad and so they cannot afford to punish all the other portfolios due to the fact that some portfolios are not doing well.

The eight month NPL cooling period was also discussed as it was particularly hampering contractors in completing ongoing works and also applying for new ones.

The government has come under tremendous pressure on all three financial issues, but since the RMA is an autonomous institution the final decision will be up to the RMA and its Board.

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