BDBL emerges as the leading credit source, securing the trust of 59.5% of banked adults. Following closely are BOBL with a 19.2% usage and BNBL at 9%.

In a comprehensive survey on banking and credit usage conducted in 2022, Bhutan’s financial landscape has been brought to light, highlighting intriguing patterns in borrowing behavior, preferences, and satisfaction levels among banked adults.

The survey unveils that the household establishment claims the lion’s share of borrowed funds at 29.2%, closely followed by vehicle purchases at 19.0%. Other significant purposes include starting a new business with 16.3%, investing in buildings or flats with 14.4%, and agricultural activities with 11.7%.

Bhutan Development Bank (BDBL) emerges as the preeminent credit source, securing the trust of 59.5% of banked adults. Following closely are Bank of Bhutan (BOBL) with a 19.2% usage and Bhutan National Bank (BNBL) at 9%.

Moderate credit utilization is observed in Bhutan, with 45.1% of banked adults having borrowed money from formal or informal sources at least once in their lives. Notable disparities emerge when analyzing borrowing behavior based on gender and rural-urban locations. Male banked adults, with 51.7%, tend to borrow more than females with 40.1%, and rural banked adults with 50.3% surpass their urban counterparts with 37.0%.

Formal credit sources are the preferred choice, with BDB leading the way. Microfinance institutions are used by less than five percent, and informal sources, notably “friends and family,” are relied upon by 6.5% of banked adults. Borrowing preferences exhibit significant variations based on gender and rural-urban location.

Reasons cited for borrowing from informal sources include the need for a small amount of money with 53.5% and finding interest rates more affordable than formal sources with 24.4%. Urban adults are more likely to cite the small loan amount as the reason, while male and rural adults prioritize affordable interest rates and lengthy loan processing.

However, challenges persist, with a considerable loan default rate of 24.0%. Rural areas exhibit a higher default rate with 27.4% compared to urban areas with 17.0%. Approximately 73.3% of banked adults express satisfaction or high satisfaction with the overall service quality. High satisfaction levels are also observed with the friendliness of credit officers, fees charged, required documents, and the time taken to approve loans.

By Kinley Yonten