The Economic Wizard

Bhutan’s journey toward financial modernization has been marked by strategic partnerships, visionary reforms, and the establishment of institutions that continue to shape the nation’s economic landscape. From the late 1960s onward, successive initiatives laid the foundation for a robust financial system, fostering both economic growth and societal welfare.
Established in 1968, the Bank of Bhutan (BoB) took a decisive step toward institutional maturity on October 7, 1971, when it entered a strategic partnership with the State Bank of India (SBI). Under the agreement, Bhutan gained the prerogative to acquire shares upon its conclusion, while SBI, India’s premier commercial bank, provided technical expertise in capital management and fiscal stewardship.
A royal decree issued on February 18, 1972, reconstituted BoB under a fresh royal charter, and by March 1, 1972, the partnership was operational. The venture began with a paid-up capital of Nu. 2.5 million, apportioned between the Royal Government of Bhutan (Nu. 1.5 million) and SBI (Nu. 1 million). This collaboration laid the groundwork for a mutually beneficial partnership designed to propel Bhutan’s economic empowerment.
In 1974, the Food Corporation of Bhutan (FCB) was established. Beyond ensuring food security, FCB played a critical role in micro-credit provision, empowering individuals and communities and enhancing resilience in rural economies.
The Royal Insurance Corporation of Bhutan (RICB) emerged in 1975, a year after the coronation of His Majesty, providing comprehensive insurance services while expanding into real estate, housing construction, and affordable accommodations for civil servants. This institution became a cornerstone of equitable economic development.
Similarly, the Bhutan National Bank (BNB) was founded on July 25, 1980, as the Unit Trust of Bhutan (UTB). Seeded with Nu. 2.5 million from RICB, UTB aimed to cultivate a culture of thrift among citizens while channeling resources into socially beneficial ventures, representing an early stride toward financial inclusivity.
Meahwhile, the establishment of the Royal Monetary Authority (RMA) in 1982 marked a critical milestone in Bhutan’s financial evolution. Enshrined in the RMA Act of 1982 and ratified by the 56th National Assembly, the RMA assumed responsibility for monetary policy, currency issuance, foreign exchange management, and external reserves, officially commencing operations on April 1, 1983.
The Bhutan Development Bank Limited (BDBL), founded in January 1988 under a royal charter and supported by the Asian Development Bank (ADB), was tasked as a development finance institution to catalyze economic growth, support transformative projects, and enhance societal advancement across the nation.
Bhutan’s focus on retirement security began in 1962 with a gratuity scheme, later expanded in 1976 through the Government Employees Provident Fund (GEPF), covering civil servants, corporate employees, and the armed forces. In 1998, His Majesty the Fourth Druk Gyalpo issued a Royal Kasho directing a review of existing schemes.
The Government Working Committee, with technical support from UNDP, ADB, and the World Bank, conducted a comprehensive study, resulting in the separation of GEPF operations from RICB and the creation of the National Pension and Provident Fund (NPPF) as an autonomous agency on March 30, 2000.
In August 1993, the Royal Securities Exchange of Bhutan (RSEB) was established, officially opening for trading on October 11, 1993. A quasi-public, non-profit organization under RMA, RSEB was designed to promote wider share ownership, mobilize savings, provide a platform to raise equity for new ventures, and enhance liquidity for existing shareholders.
Through these successive institutions, Bhutan crafted a resilient and inclusive financial system, blending fiscal prudence, development finance, and social welfare. While these milestones reflect a deliberate strategy to balance economic growth with societal well-being, at its heart lies the wisdom of His Majesty the Fourth Druk Gyalpo, who emerged here, manifesting an Economic Wizard.