No provision for deferring NPLs

Finance Minister Namgay Tshering says there will be flexibility if the country’s economy improves

Financial Institutions (FIs) will not provide further deferment of Non-Performing Loans (NPLs) as it would be a great risk to the economy of the country with high NPLs in the future.

This was informed by the chairman of the Financial Institutions Association of Bhutan (FIAB), Karma, during the discussion between the FIs and the private sector on the phase IV monetary measures held on July 18.

“There is no provision for deferment as we are going through a reform where things have to be recognized as they are rather than treating it as something else,” he said, adding that they need to go with the evolving situation.

He shared that FIs are working on the NPLs reforms with the Royal Monetary Authority (RMA) and FIs will also discuss the reforms and options to be made with the private sectors.

However, Karma shared that deferment will not be looked into.

Meanwhile, most of those in the private sector and present in the meeting requested the deferment of repayment loans including the NPLs.

Finance Minister Namgay Tshering shared that at this juncture FIs are not able to provide deferment for NPLs

However, the minister said there will be flexibility if the country’s economy improves.

Meanwhile, those in the private sector also highlighted that there is no concession for NPLs under the phase IV monetary measures, which RMA and FIs released recently.

The president of the Bhutan Exporters Association (BEA), Karma Tenzin questioned why there is no concession for NPLs under the phase IV monetary measures.

“It is important to look into the matters of NPLs by having a conversation with the banks and to look into them immediately,” he said, adding that the deferment of NPLs will help them immensely.

The chairperson of the FIAB, Karma shared that under viable and non-viable NPs, the FIs were instructed by the RMA to discuss and look into the option for restructuring measures, financial measures, and administrative measures, among others.

He said that non-viable NPLs will also be looked at further to foresee any repayments in the future.

In addition, the chairman of the Horticulture Association of Bhutan (HAB), Tshering Wangchuk said that if the government could look into the CSI bank to provide loan schemes like before and recommended that the agriculture sector can be categorized under high risk instead of low risk.

Tshering Wangchuk said that for two years, the people in the agriculture sector could not do much as the pandemic hit them and if the government could categorize it under high risk, it could be of benefit to the people.

“People are also eagerly waiting for the CSI bank to provide loans as before,” he said.

Lyonpo Namgay Tshering responded that the government will look through the sector categorization with the RMA.

Regarding the CSI bank loans, Lyonpo said that the government is not able to do anything as of now due to the issue of NPLs and other internal issues with the CSI bank, which are currently being looked into by the Anti-Corruption Corporation (ACC).

Sherab Dorji from Thimphu