Thimphu, Bhutan, (BBN) – International Finance Corporation (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, an annulment said.  
The 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.
 
BBN/SSR/AD-16Mar13-9:11 pm (BST)