Phase IV monetary measures begin

The RMA also announced the extension and enhancement of the Incentive Scheme on Inward Remittance

Upon the completion of Phase III monetary measures on June 30, the implementation of Phase IV monetary measures as directed by the Royal Monetary Authority (RMA) to the banks started on Friday July 1, 2022.

The Phase IV monetary measures include loan restructuring measures for clients as per the overall risk classifications as high, moderate, and low-risk levels for different sectors.

At the high-risk level, the sectors include hotels and restaurants, which are of tourist standards, and tourism, which includes airlines, tour operators, ticketing, and travel agents.

Similarly, the monetary measures for the high-risk level sector are deferment of loan repayment for up to two years, partial repayment for up to two years which is 50% of the installment, and the extension of maturity period up to three years for term loans which are in addition to the deferment period.

Further, the change in repayment frequency, conversion of overdraft facility to term-loan, splitting of loans, and transfer of loans to third parties, and the extension of the gestation period for up to two years are also some of the monetary measures in Phase IV.

The sectors included in the moderate-risk level are construction, mining and quarrying, hospitality, entertainment, recreational services, manufacturing enterprises, handicrafts and textile production, trade and retail, and home loans amongst others.

At the moderate-risk level, Phase IV monetary measures include deferment of loan repayment for up to one year and partial repayment for up to one year, which is a 50% installment.

Sectors such as livestock farming, agro-processing, forestry, and crop cultivation amongst others are categorized in the low-risk level.

The sector can now have the extension of the gestation period for up to two years depending on the progress of the project.

Further, hydropower, renewable energy, ICT, and wood-based products are also some of the sectors which can have the gestation period extended for up to two years.

The monetary measures such as accumulated interest rate till June 30, 2022, will be converted into a Fixed Equated Instalment Facility (FEIF) account where the clients will have to pay the amount in the FEIF account in equal installment for a period of up to five years, according to the monetary measures issued by the RMA.

Meanwhile, all the performing loans as of June 30, 2022, will be eligible for Phase IV monetary measures.

Further, the RMA also issued a press release yesterday announcing the extension and enhancement of the Incentive Scheme on Inward Remittance.

In continuation of the Incentive on Remittance Scheme, launched in May 2021, the RMA announced the extension of the scheme for Bhutanese who live, work, or study overseas for another six months, starting July 1, 2022.

“The incentive eligible under this scheme is enhanced to 2 percent from 1 percent in recognition of the significant contributions made towards boosting the remittance inflow since May 2021 and the foreign currency reserves, and promoting savings and investments,” states the RMA’s press release.

According to the press release, the 2 percent incentive will continue to be made available exclusively to Bhutanese remitters, who live, study, or work overseas to offset the transaction costs while sending money to their personal accounts or to their family members in Bhutan.

“The beneficiaries will receive an enhanced cash incentive of 2 percent upon converting the remitted amount into Bhutanese Ngultrum using the prevailing exchange rates through the banking channels and the international money transfer operators. However, the incentive shall not be applicable for the remittances received for the purpose of foreign direct investments, donations, and trade, including remittances received in favor of non-governmental organizations, civil society organizations, and companies,” states the press release.

This scheme will be extended for an additional period of six months from July 1, 2022, to December 31, 2022.

Sherab Dorji from Thimphu