The PM said he had told RMA that the government would bear one third of the NPL and that the RMA and the defaulter could bear the rest equally
During the 4th Monthly Last Friday Meet (MLFM) that the Prime Minister, Dr. Lotay Tshering held with representatives of the business community on May 26, 2023, the PM said that the government had proposed to the Royal Monetary Authority (RMA) that one third of the NPL could be borne by the government; one third by the RMA and the other one third by the business entities responsible. The PM also said that the RMA is studying this proposal made by the government.
Regarding the cooling period, the PM said that there are two issues; one is with the working force cooling period and the other NPL cooling period. He said that currently the government is talking on both the issues. The PM said that regarding the cooling period of work force, it is already in the government’s system. On the 6 month cooling period of NPL, the PM said that the RMA has agreed to re-look into the matter and that they are currently working on this.
However, the PM said that while extending the NPL for one more year, he had categorically asked the people to show evidence that they would be able to clear their NPLs within a year. The PM said that people are not able to do this.
PM shared that with such a situation, many people will be in NPL. Nonetheless, the PM said that he had even asked RMA that if 50% or 60% of the people are in NPL, then the people will be in the court. The PM added that he suggested the RMA to re-look into the NPL issues and that he had told the RMA that the government will bear one third of the burden and the remaining burden could be shared by the RMA and financial institutions and the people under NPL.
Meanwhile, the private sector proposed the initiation of Monetary Measures V (MMV) and proposed its extension beyond 2024. The private sector also asked for few consideration such as Fixed Equated Installment Facility (FEIF) account to be extended to 10 years, extension of soft loan, categorization of business risks, accumulated interest rate, Non-performing loan (NPL), Equated Monthly Installment (EMI), amongst others.
Another issue concerned categorization of the businesses. The PM said this was already done and businesses categorized into high, medium and low risk by the financial institutions. He said that the RMA also gave a presentation on reasons behind the categorization, and as per business risks. However, the PM said that he will ask the RMA to revisit the categorization of high, medium and low risk as per the current situation.
Meanwhile, the PM said; “I agree with the loan incubation but we have to know that the financial institutions will have to take some loss.” Nonetheless, the PM also said that he will put this up to the RMA.
Speaking about remittance, the PM said that he had asked the RMA that the black market should be offset. He said that by giving the current remittance of 2% to 10% or more, private sector can transact in third markets and thus improve the situation of Equated EMI.
Sherab Dorji from Thimphu