Bhutan Development Bank Limited (BDBL) has revised its lending interest rates, introducing a mixed but significant shift in its loan pricing structure, raising interest rates on several fixed-rate products while reducing most floating-rate loans, effectively reshaping borrowing costs for households, farmers and businesses. In a parallel move, Bhutan Insurance Limited (BIL) has also revised its lending interest rates following a review by its Board and Management, based on the company’s Minimum Lending Rate (MLR).
According to BDBL officials, the revision follows a directive from the Royal Monetary Authority (RMA) and is linked to changes in the bank’s internal pricing methodology.
An official said the adjustment reflects a recalibration of risk and cost structures under the new framework. “Some fixed rates have increased due to the revised pricing methodology, while floating rates have either decreased or remained at par with existing levels,” the official said.
Under the revised fixed-rate structure, borrowers will face higher interest rates across several key loan categories.
Home loans have increased to 11 percent across all repayment periods, up from a tiered structure of 9 percent for loans up to five years, 9.25 percent for five to 10 years, and 9.75 percent for loans above 10 years.
Commercial housing loans have seen a sharper rise, increasing from 10.75 percent to 13 percent across all tenures.
Agriculture and livestock loans now carry a fixed rate of 10.75 percent, up from 10 percent, while employee loans have risen from 9.5 percent to 10.5 percent. Personal loans have increased from 13.5 percent to 14 percent.
Service sector loans have also become more expensive, rising to 12.75 percent from a previous range of 11 to 11.75 percent.
Despite the overall upward trend, several fixed-rate loans have been reduced.
Manufacturing and industrial loans have been lowered from 12.75 percent to 12.5 percent, while seasonal loans saw a significant drop from 11.5 percent to 10.25 percent. Transport loans have also declined from 12 percent to 10.5 percent.
Unsecured special education loans have been reduced from 10 percent to 9 percent, offering some relief to students. However, education loans, overdraft facilities, working capital loans and community development loans remain unchanged.
In contrast to fixed rates, most floating-rate loans have become more affordable, easing pressure on borrowers exposed to variable interest rates.
Home loan floating rates have declined from 8.75 percent to 8.25 percent, while agriculture and livestock loans have fallen from 9.25 percent to 8.25 percent.
Education loans have been reduced from 9 percent to 8.25 percent, and service loans from 10.5 percent to 9.25 percent.
One of the most notable reductions is in seasonal loans, which dropped from 11.25 percent to 8 percent.
Manufacturing and industrial floating rates have also declined from 11.5 percent to 10.5 percent, while hotel and tourism loans have been reduced from 10.5 percent to 9 percent. Personal loans have eased from 10 percent to 9.25 percent.
However, several floating-rate categories remain unchanged, including co-operative loans, employee loans, commercial housing loans, transport loans, small-scale industrial loans, and loans for purchase of shares.
BDBL has also introduced a new floating-rate product for electric and hybrid vehicle transport financing at 8.25 percent, signalling a push toward greener mobility.
The revised rates will take effect from 1 July 2026.
In a parallel move, Bhutan Insurance Limited (BIL) has also revised its lending interest rates following a review by its Board and Management, based on the company’s Minimum Lending Rate (MLR). The changes, effective from 1 July 2026, will reduce borrowing costs across several loan categories.
The revised structure applies to overdraft loans, personal mortgaged loans, forestry and logging, mining and quarrying, hotel and tourism services, service sector loans, contractor loans, non-commercial transport loans, home loans, and loans against shares and securities.
Among the key revisions, overdraft loan rates have been reduced from 13.50 percent to 12.30 percent, while hotel and tourism service loans have declined from 11.90 percent to 10.80 percent. Home loan rates have also been lowered from 11.90 percent to 11.67 percent.
According to BIL, the revision is aimed at improving access to finance and supporting both individuals and businesses through more affordable borrowing conditions.
The simultaneous revisions by two major financial institutions highlight a shifting lending environment in Bhutan—where borrowing costs are being recalibrated rather than uniformly tightened or relaxed.
While fixed-rate borrowers face higher costs in several segments, the easing of floating rates suggests improved short-term liquidity conditions and a push toward more flexible credit structures.
For borrowers, the message is clear: loan type and structure will now play a more decisive role than ever in determining long-term financial burden.
Sherab Dorji, Thimphu
