Question bank

I was shocked to read that RMA has given the Punjab National Bank approval to start preliminary work to set up a branch in Bhutan. I have many questions…

Do we know that Punjab National Bank is India’s second largest public sector lending bank? That it has more than 3850 branches? That its total business in 2007 was US$ 60 billion? That this is 56 times our GDP? Or almost 20 times the total planned outlay for our 10th Five Year Plan? That its market value of US$ 2.79 billion which almost trebles our total GDP?

Do we know why they are interested in Bhutan? Is there enough business here? Isn’t our economy too small? Or are they specifically targeting banking for the hydropower projects? If so, what will happen after these projects are over? Will we be able to regulate a giant? Will they operate in the dzongkhags where they will incur losses? Will Bhutan’s national interests be more important than corporate profits for PNB?

Will our existing banks be able to compete with PNB? Will competition be fair since PNB is more experienced, has more money, and better technologies? If not, can our banks survive after PNB enters? If not, where will competition come from?

Was our banking sector overregulated? Did that stunt the growth of our banks? Why suddenly liberalize? Why the sudden urgency? What support for national banks has the government announced? Why not give our banks five years to prepare for international-level competition?

Will the existing banks be allowed to close their loss-making dzongkhag branches so that they can become more competitive? Will they be allowed to relieve excess staff? Will these be good for Bhutan?

What’s happening with the proposals of Bhutanese investors? Why haven’t they been approved? Why shouldn’t Bhutanese be given preference to start banks? Will other Bhutanese be able to start banks once PNB enters? Will they even want to?

And what’s next? Airlines? What will happen to Druk Air? Hydropower? What will happen to DGPC? Cement? Will PCA stand a chance? Ferrosilicon? Steel? Agriculture?

Where’s GNH in all of this?


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  1. I am also shocked after reading this…doesn’t sound positive for the local banks, but isn’t RMA suppose to do a thorough analysis before giving a go ahead signal…

  2. Sir,
    I would also like to join you in paying our homage and respects to our Beloved kings on this very special moment.
    My heartfelt congratulations to you on becoming the first democratically elected opposition leader. Though it is a little too late to convey my message.
    My full appreciation to you for doing a commendable job in being the best critique that you can be.
    I as a democratic citizen of this country pledge my support to such process of change where our voices are heard and respected.

    Tashi Delek.
    An ardent observer.

  3. Bhutanese Blogger says

    Are BNBL and BoBL prepared for the competition in the banking sector?

    The answer is irrelevant now that RMA has already accorded the approval.

    BNBL and BoBL should look into the future and brace themselves for the competition. We do not yet have any corporate governance code (a reason why we have the Bhutan Post CEO fiasco) or competition laws that will ensure transparent and fair competition.

    I hope we are not headed the Mexico way. Mexico had many large domestic banks (around 5) in early 1990s when they opened their financial markets. They deemed themselves prepared for any competition. By 2005 all their banks were bought by the new entrants and now Mexico doesn’t have a dominant bank owned by the Mexicans.

    Bhutan is not disconnected from the global markets and other sectors will also open up soon. For them it is still relevant to prepare and develop resources and capabilities that will give them the competitive edge.

    But I doubt. We have many sectors (steel and tourism) already asking for money from the Government.

    I did a similar but a brief post on my blog and you can read it at:

  4. How did RMA came about making such an important decision (which is basically disastrous) that affects the whole economy of our country!!? Were the MoEA involved? Its sad that with democracy in place and with a population of only 650,000 we are starting to make a big mess of our country. Even the pay hike proposal is such a disappointment. I would like to know what you think about the pay hike proposal.

  5. Enough of the shock and horror at the risk to another cultural icon
    Do we want Bhutan to practice it’s own form or protectionism for the banks whilst in the same breath stating that the government should not bail out failing private sector?
    Who can honestly say they are totally satisfied with the banks’ performance? There are two banks and neither yet had scrapped account fees or card fees. They hold our money and use it to invest yet charge us for the pleasure. Cashing a cheque in an out of town branch costs time and money. How can such systems still persist when even the most rural farmer can use a mobile phone? Does the bank still not use server based systems which can verify my balance from any location?
    Bring some competition I say and let us learn from PNBs experience. No one is compelled to open an account with them – it is a personal choice, but if they have good service, then BNB and BOB should open their eyes to new ways of doing things

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