Favouring foreigners over locals

July 13, 2010Posted inGovernment, Legislature
The National Assembly passed the Financial Services Bill last week. I voted against it. I did so because the Bill seems to favour foreign investors over our own people and companies. Section 50, on restrictions on ownership of financial institution and investments by financial institutions, reads: No person shall hold more than the following percentage of interest in shares of a financial institution: (a) in case of an individual, 10 percent, (b) in the case of a company not being a financial institution, 20 percent (c) in the case of a company being a financial institution, as per the…

Lazy banks

April 1, 2009Posted inEconomy
My last entry provoked Zekom to exclaim: “…calling Bhutanese Banks conservative is a praise they don’t deserve. I’d call them lazy!”She is correct.Because our banks our lazy, money lenders are doing a thriving business throughout rural Bhutan, where our farmers are compelled to take loans at exorbitant rates. It’s common for money lenders to charge farmers interest rates of 5% per month, which works out to 60% per year!This, of course, is illegal. The Moveable and Immoveable Property Act (1999) stipulates that “… no lender other than a registered financial institution which has been duly licensed to engage in…

Banking on our banks

March 31, 2009Posted inEconomy
Our banks continue to make generous profits. Last year, BNB made Nu 310 million, a whopping 124% over the previous year, and BOB made Nu 168 (see Kuensel article). Not bad, considering the size of our economy. And, considering that they’ve been consistently declaring very attractive dividends.How do banks make money? Primarily by paying depositors a certain interest rate, and charging borrowers a higher interest rate. And obviously, the larger the spread between the two rates, the bigger the profit that banks earn. But what about bad loans, loans that banks cannot recover? That’s the risk that banks take,…

Mobile banking

March 28, 2009Posted inEconomy
Wouldn’t you be happy if you could get your bank balance on your cell phone instead of having to go all the way to the bank?Wouldn’t it be good if you could instruct your bank not to honour a cheque that you’d issued mistakenly?Wouldn’t you like it if your bank informed you every time money was withdrawn from or deposited to your account?And wouldn’t it be convenient if your bank reminded you when loan repayments were due?All this, and more, are available with the BNB’s mobile banking service which was launched yesterday. I’m excited about this new service, so…

Question bank

December 26, 2008Posted inEconomy
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…