Bhutan’s financial sector has reached a landmark moment as the International Finance Corporation (IFC), a member of the World Bank Group, announced a USD 20 million investment in the Bank of Bhutan (BoB), the country’s oldest and largest commercial bank. This marks the first foreign debt inflow into Bhutan’s banking sector under the revised External Commercial Borrowing (ECB) guidelines, a key reform aimed at broadening access to international finance and stimulating private sector growth.
The five-year fixed-rate financing, supported by the International Development Association’s (IDA) Private Sector Window, will primarily target micro and small enterprises (MSEs), which account for 95 percent of registered businesses and employ roughly 12 percent of the population. At least 80 percent of the investment will directly support MSEs, while the remainder will benefit individuals engaged in income-generation and asset creation.
“This historic partnership with IFC sets a new benchmark for international investment in Bhutan’s financial sector,” said Tshering Tenzin, Chief Executive Officer (CEO) of BoB. “It will enhance financial inclusion, stimulate economic activity, and accelerate private sector growth.”
BoB will leverage its extensive branch network to prioritize financing for women-led businesses and cottage industries, which form the backbone of Bhutan’s local economies. Beyond capital support, IFC will assist BoB in strengthening governance, risk management, compliance, and environmental and social standards—aligning the bank with international best practices and positioning it to attract additional development finance in the future.
Allen Forlemu, Interim Regional Vice President for Asia Pacific at IFC, emphasized the significance of the deal. “By channeling long-term local currency financing to micro and small enterprises, we aim to empower the businesses that drive Bhutan’s economy and create jobs. This transaction demonstrates the viability of foreign investment in Bhutan’s financial sector and sets a benchmark for future deals.”
The investment is the result of close collaboration between the World Bank Group, the Royal Government of Bhutan (RGoB), and the Royal Monetary Authority (RMA), which revised the ECB guidelines to enable Bhutanese banks to access foreign capital more efficiently. The initiative aligns with the World Bank Group’s Country Partnership Framework (CPF) FY2025–29, which prioritizes expanding private investment in job-rich sectors and promoting inclusive economic growth.
Established in 1968, BoB is jointly owned by Druk Holding & Investments Limited (80%) and the State Bank of India (20%). With branches across all Dzongkhags and digital platforms such as mBoB, goBoB, and BoBConnect, the bank remains a central pillar of Bhutan’s financial modernization and inclusion agenda.
The IFC, the largest global development institution focused on the private sector in emerging markets, committed a record USD 71.7 billion in FY2025 to private companies and financial institutions worldwide. Its IDA Private Sector Window, launched in 2017, catalyzes private investment in the world’s most fragile and poorest countries by providing co-investment and guarantees to de-risk investments.
This landmark deal marks a new chapter for Bhutan’s financial sector, signaling growing confidence among international investors and reinforcing the government’s commitment to private sector-led economic growth.
Tashi Namgyal
From Thimphu
