Moratorium on bank licenses to remain: RMA

Business Daily News Headline Latest News National News News

For the population of around 700,000 in the country, the existing financial institutions are more than enough, according to the RMA.

The central bank, Royal Monetary Authority (RMA), has no immediate plans to lift the moratorium on licensing of commercial banks.

Since 2010, the central bank has received expression of interest from five individuals to establish commercial banks including one merchant bank. However, the assessment of commercial bank license applications has been kept on hold since 2010.

An RMA official stated that as of now the central bank does not see immediate need for additional commercial banks.

Currently, RMA is focusing on financial inclusion of unbanked and rural population, which can be reached or provided through microfinance, Cottage and Small Industries (CSI) banks. Since 2014, RMA has issued registration certificate to five microfinance institutions and it is in the process of assessing license application for CSI bank to cater to the need of productive sectors like agriculture and CSI sectors.

“The RMA is also creating an enabling environment for the existing banks to grow and strengthen their financial services outreach through technology based delivery channel such as agent banking,” said the RMA official.

He said new banks as of now would not add much value as the existing banks are already into significant lending and are competing within the existing market.

For the population of around 700,000 in the country, the existing financial institutions are more than enough, according to the RMA.

However, the central bank official said that accepting, assessing and granting approval for the license to microfinance institutions and CSI banks will be more effective to reach out to the unbanked, rural population and promote financial inclusion in the country.

Currently there are five financial institutions in the country: Bank of Bhutan, Bhutan National Bank, Bhutan Development Bank, Druk Punjab National Bank (PNB) and T bank. However, there are only two private banks in the country: the latest two new banks were Druk PNB and T bank. Druk PNB started operations on January 27, 2010 and T bank on March 12, 2010.

Dechen Dolkar from Thimphu