Banks and private sector yet to come to consensus over monetary measures

Additionally, soft loans for hotels in the east were also requested

The second round of discussion about the fourth phase of monetary measures between the Financial Institutions (FIs) and the private sector concluded on July 18, with the government mediating between the two.

The focus of the second round of discussion was on the private sector’s request for clarity on the issue they raised during the first round of meeting on the fourth phase of monetary measures.

Following the Royal Monetary Authority (RMA) announcing the fourth phase of monetary measures, the Bhutan Chamber of Commerce and Industry (BCCI) presented suggestions that instead of sector-based, possibilities for blanket loan deferment and loan restructure across all the sectors should be explored.

Additionally, soft loans for hotels in the east were also requested.

Finance Minister Namgay Tshering, during the meeting, said the government’s role is merely to facilitate and that monetary measures are the authority of the RMA.

The minister also requested information from the BCCI president regarding areas that were confusing.

The BCCI president, Tandy Wangchuk said, “There is no uniformity; the loan deferment for some has been accommodating but we would like other sectors to be taken into consideration as well.”

Subsequently, the president of the Bhutan Exporters Association asked for additional information on no concession of Non-Performing Loans (NPLs) and asset valuation.

“There is no concession for NPLs under the monetary measures which is important,” he said.

The Chairman of the Financial Institutes Association of Bhutan (FIAB), Karma said of the two types of NPLs, if a loan is live and viable, restructuring is not an option.

“We will talk about doing financial and administrative reorganizations, and banks can look into it, but if business is bad, there isn’t much to look at,” he said.

The private sector also requested clarification about bridge loans that were made during the times of the Covid-19 pandemic.

“The bridge loans were offered to some retailers and some to the industries, who were striving to sustain their level of employment, even though the economic activity did not warrant,” said an advisor of the Tashi Group of Companies.

“It would be extremely challenging and hard for those businesses to have to recreate the entire amount at one go,” he added.

The Finance Minister said the government is continuously following up with those businesses.

He added that loan deferment, private business problems, and issues with loan deferment up to two years are insufficient and limiting because some workshops and industries continue to be closed for longer durations.

“Therefore, we are here to discuss such issues and come up with solutions, which are in favor of both the FIs and the private sectors,” the minister said.

According to the FIAB’s Chairman, the classification of sectors into high, medium, and low risks needs further review and will be reassessed depending on the evolving scenario.

He said that loan deferment will be implemented considering the situation.

The Finance Minister said, “If there is an issue between the Financial Institutions and the private sector and needs intervention from the government, then the government will step up.”

Tshering Pelden from Thimphu