Private sectors in the country are struggling to revive their businesses post-pandemic. They said they cannot restart businesses as expected with limited access to loans. Three financial institutions suspended loans in May due to excessive non-performing loans, well beyond the level set by the Central Bank. The Bhutan Chamber of Commerce and Industry has appealed to the government and Royal Monetary Authority several times to intervene. Unable to yield the desired outcome, the BCCI plans to re-submit their recommendations to the RMA soon.
The representatives from the private sectors across the country met in Thimphu yesterday to discuss the way forward. They said around 50 business owners who couldn’t repay loans were taken to court since June.
“Since July, we had to repay loans as usual. As they couldn’t pay back the loans on time, some of them even landed up in court. Moreover, with the new guidelines from the RMA, those who defaulted on loan repayment cannot apply for a loan for six months. So, it is a major concern for all of us as it is affecting our business,” said Phuntsho Wangdi, the President of Wood Based Association.
In their submission, the members of BCCI are requesting the government to lift the suspension on loans from the Bhutan Development Bank Limited, Royal Insurance Corporation of Bhutan, and National Cottage and Small Industry Bank.
The President of BCCI said they already had three rounds of meeting with the government on the issues.
“After seven to eight years, the prudential guidelines were there since 2017 but it was never applied, never followed but immediately after the pandemic, this is affecting the general economy. Banks are suspended, and NPL has been enforced. Immediately trying to restructure and align it to their guidelines would be impossible. Gradually they should develop and we would follow and corporate but not all at a time, as it affects the private sector so that would be our submission,” said Tandy Wangchuk, the President of BCCI.
Meanwhile, in the recent notification, the RMA said the loan suspension from the three financial institutions is to secure financial stability.
The Central Bank stated that it has uncovered several lapses in non-compliances by the three-financial institution after a thorough examination. RMA has also uncovered several weaknesses in the governance process of these financial institutions.
RMA’s in-depth review has found that these breaches have resulted in an excessive and risky increase in non-performing loans.
In addition, the BCCI also recommended the RMA provide blanket loan deferment and loan restructuring options across all sectors.
Announcing monetary measures IV in July, the Central Bank offered loan deferment from one to two years and eight different forms of loan restructuring options depending on the risk category.
Kelzang Choden
Edited by Phub Gyem
