The Royal Monetary Authority of Bhutan completed a compliance review of the Economic Stimulus Programme concessional credit line for medium scale projects, undertaken at the request of the Anti-Corruption Commission. The assessment, which also tested adherence to the central bank’s credit appraisal norms, found multiple deficiencies in Bhutan Development Bank Limited’s handling of the facility and set out remediation measures alongside enforcement action. Medium scale eligibility under the ESP Guidelines covers production and manufacturing investments above BTN 10 million and up to BTN 100 million, excluding services, construction, mining in raw form and agro-based sub-sectors. The bank received 149 applications totalling BTN 7,531.66 million, declined 112 and approved 37 for BTN 1,913.19 million, while four ACC-investigated cases were not reviewed. In three approved loans, treating interest during gestation as part of project cost would have pushed totals above the BTN 100 million ceiling by BTN 2.82 million, BTN 2.28 million and BTN 1.61 million, leading to an instruction to adjust IDG and deduct a portion from future disbursements. Two loans were flagged for land-lease periods of three and seven years that expire before 10-year loan tenors, with the bank reminded that it bears the full default risk and must refund ESP funds to the government in the event of default. Further directions covered correcting clerical errors and closing documentation gaps including missing MOICE clearances by 30 April 2026, setting up a standardised monitoring framework and an independent inspection team with relevant expertise by 31 May 2026, and returning to the ESP pool funds tied to two cancelled, undisbursed approvals of BTN 42.90 million and BTN 53.00 million. One case involving a material deviation from the original proposal was ordered to be cancelled with immediate recoupment of the BTN 5.82 million already disbursed from a BTN 46.58 million approval. In determining sanctions, the RMA noted operational pressures linked to centralising the ESP concessional credit line window under BDBL in December 2024, onboarding 18 inexperienced recruits and processing 3,969 applications totalling BTN 11,569.91 million in around nine months. The BDBL Board of Directors must take administrative or disciplinary action against individuals responsible and report back by 18 May 2026, and a monetary penalty of BTN 1,702,699.64 was imposed for the non-compliances.
Royal Monetary Authority of Bhutan 2026-04-20
Royal Monetary Authority of Bhutan imposes BTN 1,702,699.64 penalty on Bhutan Development Bank Limited and orders fixes after review of medium scale ESP loans
The Royal Monetary Authority of Bhutan has completed a compliance review of the Economic Stimulus Programme concessional credit line for medium scale projects, identifying multiple deficiencies in Bhutan Development Bank Limited’s credit appraisal and administration. The central bank ordered adjustments to loans breaching the BTN 100 million ceiling, flagged tenor and land-lease mismatches, mandated enhanced monitoring and documentation controls, and required the return of undisbursed and improperly disbursed funds to the ESP pool. It also directed the bank’s Board to take disciplinary action against responsible staff and imposed a BTN 1,702,699.64 monetary penalty.