To improve the private sector which has been severely affected by the COVID pandemic, the bank loan interest rates need to be reduced. This was recommended by members of the National Assembly while deliberating on the National Budget Review Report today. The Economic and Finance Committee of the house further recommended that the government take up the issue of high-interest rates of bank loans with the Royal Monetary Authority.
The House today continued the deliberation on the Economic and Finance Committee’s Review Report on the National Budget for the Financial Year 2022-2023.
The Committee presented four observations and five recommendations on the National budget report yesterday. They were on the Digital Drukyul, Industry and Service Sector, Balance of Trade and Granular Sub-base.
While all recommendations were approved, the committee was asked to include a new recommendation under the Industry and Service Sector.
The committee had recommended easing more restrictions to increase the influx of tourists and foreign workers to develop the private and tourism sector.
Most members recommended that instead, the government reduce the loan interest rates on private sector lending to strengthen the private sector.
The Finance and Economic Committee’s Chairperson Kinga Penjor presented the new recommendation today.
“Following the discussion, we discovered that the interest rates on loans are quite high and that the money in banks is not useful to the people due to excess liquidity.”
“We proceeded through the International Monetary Fund and then contacted the RMA based on these two discussions. We discovered that there is no RMA interest rate fixing culture. The RMA can set a minimum lending rate, but it is up to the individual banks to set their rates. Due to lack of time, we were unable to determine how much interest rates the individual banks have added to the RMA’s minimal interest rate,” he added.
Furthermore, the Committee recommended that all financial institutions update and standardise the valuation of collaterals.
Meanwhile, the Finance Minister said rather than reducing the interest rates, it is important to improve market access. He said it is the responsibility of the government to make sure that people taking loans don’t run into a loss.
However, after extensive deliberation, the motion was endorsed by a show of hands.
Pema Seldon Tshering
Edited by Yeshi Gyaltshen
