The National CSI Development Bank in Paro is temporarily withholding new loan sanctions. The bank recorded over 11 per cent of non-performing loans (NPL) in March this year. Since the bank’s NPL exceeds the NPL tolerance limit of 5 per cent, the Royal Monetary Authority asked the bank to stop lending money until further notice. Non-performing loans are loans with payments that are overdue by 91 days or more.
National CSI Development Bank’s NPL has been increasing which raises concern about the bank’s financial stability. As of December last year, the bank had an NPL of 5.23 %. And by March this year, it reached 11.04 %.
The bank loaned over Nu 637 M to the Agriculture sector, some Nu 780 M to the livestock sector and almost Nu 400 M to the Manufacturing and Production sector. Of these, the Manufacturing and Production sector recorded the highest NPL.
“The Manufacturing and Production sector has the almost 15 per cent NPL. We loan up to Nu 10 M for clients in the Manufacturing and Production sector, whereas in agriculture and livestock the ceiling is only about Nu 500,000. This is why we think the NPL is higher in the Manufacturing and Production sector,” said Kinzang, the Chief Executive Officer of the National CSI Development Bank.
He said the pandemic affected the performance of the Manufacturing and Production sector, delaying loan repayment. However, as businesses pick up due to the gradual easing of COVID restrictions, the bank hopes people to repay their loans.
“The economy is opening up. Labourers are coming in. We are getting materials and we are getting equipment. I am sure the freeze of lending will not be there for long. I am very optimistic the freeze will be lifted soon and carry on the business as usual,” added the CEO.
The bank has opened additional branch offices across the country to improve loan repayment. The bank also accepts repayment through other financial institutions.
Since its inception in 2020, the CSI development bank has provided over Nu 2bn worth of loans to more than 6,200 clients.
Namgay Wangchuk, Paro
Edited by Sangay Chezom
