Since April 2020, there was a swift increase in loan applicants
Amid the COVID-19 pandemic, the financial institutions in the country sanctioned new loans amounting to Nu 10.29bn with a loan outstanding of Nu 3.89bn from April to October last year.
A total of 10,486 loan accounts were sanctioned during this period.
Of the financial institutions, the Bhutan Development Bank Limited (BDBL) sanctioned the highest number of loan accounts (3,863), whereas the Bank of Bhutan Limited (BoBL) sanctioned the highest loan amount of Nu 3.58bn.
According to the Annual Report of the Royal Monetary Authority (RMA) 2020, the five commercial banks collectively sanctioned 77.2% of the loan accounts and financed 89.3% of the total new loans.
According to the report, non-banks on the other hand collectively sanctioned 10.7% of the loan amount and 22.8% of the loan accounts. Amongst the micro financial institutions, the RENEW sanctioned the highest loan account as well as loan amount during the period.
The sector wise analysis on new loans reveals that the highest amount sanctioned consists of service and tourism sector with Nu 3.12bn, followed by housing with Nu 2.45bn, and personal loan with Nu 1.73bn.
The continued expansion of the credit flows reflects the effort of the RMA to provide uninterrupted supply of credit in the economy and to support the economic activities even during the time of pandemic, according to the report. Since April 2020, there was a swift increase in loan applicants amidst the COVID-19 pandemic.
The highest loan sanctioned was in the month of July last year with Nu 2.91bn to 2,223 loan accounts.
The growth, however, dipped to a low level in August 2020, due to the national lockdown which was extended from 11th August until 31st August 2020.
As the lockdown measure was lifted, the credit growth witnessed a gradual increase. As of 31st October 2020, 2,085 loan accounts were sanctioned amounting to Nu 1.67bn.
The report states that of the total new loans, the retail borrowers had the highest share both in terms of loan account as well as the amount. The share of retail borrowers was witnessed at 63% of the total loan sanctioned against a 27% for the corporate. Within the retail borrowers, the male borrowers are comparatively larger than the female both in terms of loan accounts and amounts.
Through monetary measures, the financial institutions provided new loans to 2,324 borrowers amounting to Nu 2.55bn.
Credit portfolio for hotels and restaurants
As of June 2020, 516 hotels have availed a total loan of Nu 17.44bn consisting of 711 loan accounts related to different categories of hotel.
The total loan outstanding to 293 3-Star hotels stood at Nu 10.46bn of which 60% with 431 loan accounts. Following the 3-Star hotels, the second highest loan accounts are witnessed in budget hotels, however, their share to total loan outstanding stood at 6.01%. From the total loan outstanding of Nu 17.44bn, Nu 16.79bn of which 581 loan accounts constituted the term loans while Nu 641.8mn of which 130 loan accounts were sanctioned as working capital.
The report states that of the total 15 financial institutions, eight of them financed the hotels and restaurants in the country. Out of the eight, BNBL has the highest number of loan accounts with 34.3%, while the loan outstanding is highest with the BoBL with 40.9%. Furthermore, these two largest commercial banks’ share of loan accounts as well as volume of loans are comparatively larger than that of other financial institutions.
Among the non-banks, the RICBL has the highest number of loan accounts as well as the volume of loans provided to hotels and restaurants.
It was observed that there is a considerable heterogeneity in the hotel loans within the dzongkhags in the country. The financing of hotels is predominantly concentrated in four Western dzongkhags followed by central dzongkhags
The extent of Thimphu and Paro’s domination in the nation’s tourism business is reflected in the amount of loans serviced by the financial institutions to these dzongkhags. The loan outstanding in these two dzongkhags accounts to more than 76% of the total hotel loan portfolio.
As of June 2020, the financial institutions exposure to hotel loans stood at Nu 17.44bn, with NPL ratio at 10.5%. NPL loan amounted to Nu 1.83bn originating from 94 loan accounts under default.
Dechen Dolker from Thimphu