Debt in Bhutan

The Royal Monetary Authority (RMA) licenses and supervises banks, non-bank financial institutions and microfinance institutions. These providers offer home, vehicle, personal, education, business and microloans. Interest rates, fees, collateral and repayment periods depend on the provider and contract; Bhutan has no single reviewed consumer interest rate or general debt cap. Before approving or renewing a loan, a regulated provider checks the Credit Information Bureau of Bhutan, commonly called the CIB. Borrowers should provide accurate and current information about their address, occupation, financial condition, loan purpose, repayment source and other loans. Private money lending is also regulated. Under the 2023 rules, a private lender must be registered with the RMA, be a Bhutanese citizen, obtain a certificate and apply for renewal 30 days before expiry. The renewal fee is 1,000 ngultrum, intermediaries are not allowed, and lending after certificate expiry is illegal. The RMA publishes a register of current private lenders. An applicant with non-performing loans may be refused registration. The extent and terms of unregistered informal lending are not reliably established in the reviewed sources. For defaulted loans, the Regulations on Non-Performing Loan Management 2025 apply to all financial service providers from 1 July 2025. A viable defaulted loan, and in some cases a performing loan affected by a genuine unforeseen financial constraint, can qualify for restructuring after an affordability assessment and an agreement between borrower and provider. Willful defaulters are excluded. Restructuring should be completed within a maximum of 365 days after the loan becomes past due; failed restructuring can lead to foreclosure. The rules distinguish viable and non-viable loans as well as willful and non-willful default. The payment moratorium under the 2025 regime was revoked on 7 April 2026, with six facilities remaining under the applicable arrangement. A borrower can complain about a licensed provider through its consumer protection cell or the RMA Consumer Protection Cell. The CIB keeps creditworthiness information confidential and provides loan-status certificates and credit scoring. A complaint does not remove the contractual duty to repay. Banking and private-money-lending disputes can proceed through the Judiciary, and a court may order judicial sale or levy real and personal property, including property in another jurisdiction. After realization costs, proceeds are distributed among multiple creditors on a pro-rata basis; a court can postpone a sale if the offered price is inadequate. Bhutan’s Bankruptcy Act of 1999 formally provides for petitions, secured creditors, reorganization and discharge applications, but the National Assembly has stated that the Act remained unimplemented for more than 20 years. An Insolvency and Rehabilitation Bill introduced in 2025 proposes procedures for individuals, small and medium-sized businesses and companies, including rescue and cross-border cooperation, but it was not verified as enacted or operational. No nationwide household-debt total, standardized debt-counselling service or functioning general consumer-insolvency pathway was verified. Public debt is a separate macroeconomic subject. At 31 December 2025, total public debt was 302,770.746 million ngultrum, comprising external debt of 285,672.694 million and domestic debt of 17,098.052 million. Central government debt was 108,229.352 million ngultrum, equal to 31.1% of GDP, against a policy threshold of 55%. Debt service compared with domestic revenue was 32.7% in fiscal year 2025–26 against a 35% threshold, while external debt service represented 19.5% of exports. Hydropower accounted for 60.1% of external debt, the Government of India was the creditor for 62.3%, and 64.4% was denominated in Indian rupees. Repayment pressure is elevated from fiscal year 2026–27 through 2037–38.