The Royal Monetary Authority (RMA) is seeing an increase in the number of enquires wanting to register as authorized private moneylenders, following the implementation of the Private Money Lending Rules and Regulations 2016 last year.
The regulation ensures that the private money lending business is brought under the reach of the financial sector. It includes the duties, responsibilities and the obligations of both the lenders and borrowers.
At present, only one private moneylender has registered with the authority so far.
“We are informed by the Thimphu Dzongkhag Court that there are about 17 applicants. The applicants require an affidavit from the court,” Damche Tenzin, the Chief General Counsel of Legal Services Division in RMA, said.
“Currently, there are another four applicants who have approached the RMA with all the documents. We are reviewing the documents.They will soon be given the registration certificate.”
Registering private money lenders is a step towards doing clean business and bringing legal money into the financial sector. RMA’s Chief General Counsel said that being a registered private moneylender not only safeguards the lender’s interest but also the borrowers.
For instance, the borrower would be aware if the lender is credible or not and the lender would also know whether the borrower’s mortgage is genuine or not.
“Now we are obligating the lenders to all these verifications before he lends money. At the same time, there are certain things that the borrowers need to keep in mind like signing a proper agreement, the interest should not be more than 15 per cent per annum. Earlier the interest was exorbitant.”
As per the regulation, a private moneylender has to be registered with RMA if the amount they lend exceeds Nu 90,000. A registered private moneylender can lend up to Nu 500,000.
