Thimphu, Bhutan, March 15, 2013—IFC,
a member of the World Bank Group, has invested $28 million in Bhutan National
Bank to help the bank expand its capital base and increase lending to small
and medium enterprises and rural markets.
This is IFC’s first equity investment in Bhutan, and the largest foreign
direct investment in the country. IFC will also advise the bank on adopting
international best practices in areas of risk management and corporate
governance. IFC’s support will help the bank promote access to finance
in underserved market segments such as micro, small and medium enterprises
in need of specialized products and services.
“With IFC’s support, Bhutan National Bank will be able to expand its
loan portfolio, tap into new opportunities and become more competitive,”
said Kipchu Tshering, Managing Director of Bhutan National Bank. Among
the five banks operating in the country, Bhutan National Bank has the largest
share of the credit market with presence in 13 of the 20 districts.
In the last three years, the introduction of a credit information bureau
and an electronic funds transfer clearing system has helped transform the
financial sector. Yet, banks in Bhutan continue to have an urban preference
and lend primarily on the basis of fixed assets as collateral. As a result,
informal creditors dominate the market. With IFC’s support, Bhutan National
Bank will be able to enter this space and help formalize credit availability.
On a visit to Bhutan, IFC’s Vice President and newly appointed Chief Operating
Officer, Rashad Kaldany, underscored IFC’s commitment to assisting Bhutan.
“IFC’s partnership will help Bhutan National Bank to focus on financial
inclusion for low-income population and rural areas in addition to smaller
businesses to deliver large-scale impact,” said Kaldany.
Bhutan National Bank is an existing client of IFC’s Global Trade Finance
Program and received a trade facility in 2007. Bhutan has been an
IFC member country since 2003. The country’s economy is primarily driven
by public sector. IFC is supporting the government of Bhutan in improving
business conditions to promote private investments.
IFC, a member of the World Bank Group, is the largest global development
institution focused exclusively on the private sector. We help developing
countries achieve sustainable growth by financing investment, mobilizing
capital in international financial markets, and providing advisory services
to businesses and governments. In FY12, our investments reached an all-time
high of more than $20 billion, leveraging the power of the private sector
to create jobs, spark innovation, and tackle the world’s most pressing
development challenges. For more information, visit www.ifc.org.