The Money the Banks Don't Want

If you walked into a Bhutanese bank in 2026 with a profitable, growing business and asked for a loan to expand, what would happen?

In most countries, the answer is straightforward. The bank looks at your cash flows, your collateral, your industry, your track record. If the numbers work, the bank lends. That is what banks are for.

In Bhutan, the answer is more complicated. The bank may decline you even if your numbers work. Not because of you. Because of the bank.

And here is the part that is strange. While you are being declined, the bank is sitting on more than two billion ngultrum of excess deposits that it cannot find anyone to lend to. The bank’s largest single counterparty, by deposit volume, is the Royal Monetary Authority — the central bank — where the commercial banks park their excess liquidity at modest interest because the alternative is to leave it as idle cash.

Across the entire commercial banking system, the same pattern. The total parked at the central bank, above the regulatory floor, runs to roughly Nu 60 billion.

Nu 60 billion is approximately five percent of Bhutan’s annual GDP. It is more than the country’s annual education budget. It is more than the country’s annual health budget. It is enough money to fund every priority in the Economic Stimulus Programme four times over.

And it is sitting at the central bank because Bhutanese banks cannot find Bhutanese businesses to lend it to.

The country has, in 2026, the strangest version of an economic problem it could have. It does not lack capital. It lacks the infrastructure that turns deposits into productive credit.

Pema Choden has run a boutique tour operator in Paro for sixteen years. Twelve permanent staff. About five hundred premium clients a year — mostly American and European travellers paying USD 300 to USD 600 a night for guided cultural and wellness itineraries. Annual revenue around Nu 80 million. Profit margins consistently in the eighteen to twenty-two percent range. She has never missed a loan repayment.

In late 2025, Pema Choden decided to expand. The Gelephu Mindfulness City was attracting attention. International wellness tourism was growing globally. She had identified four sites — two in Paro, one in Punakha, one in Bumthang — where she wanted to build small branded luxury lodges, eight rooms each, premium positioning.

She needed Nu 200 million in growth capital.

She walked into her bank — the bank she had banked with for sixteen years, the bank that knew her business, the bank that held her transaction history — and made her case. She brought three years of audited financials. She brought architectural drawings. She brought a market study commissioned from a Singapore consultancy. She brought letters of intent from three luxury brands considering co-branding partnerships.

The bank’s loan officer, who was new in the role and had joined the bank from the civil service two years earlier, listened politely. He took the file. He said he would discuss it with the credit committee.

Two weeks later, he called Pema Choden and told her the loan had been declined.

Why? Because the credit committee’s template did not have a category for what she was asking. The bank’s lending playbook had hotels — but only standard hotels collateralised against the hotel building itself. The bank had infrastructure loans — but only government infrastructure with sovereign guarantees. The bank had small-business working-capital loans — but only up to Nu 30 million, against existing inventory. The bank did not have a product for ‘expanding established profitable mid-sized boutique tourism operator into four-property chain.’ The credit committee, faced with something outside the template, defaulted to no.

Pema Choden took her file to a second bank. Same outcome. She took it to a third. Same outcome.

She raised the capital, eventually, through a Singapore family office that took a thirty-five percent equity stake. The lodges are being built. The growth happened. The ownership rent flows, partially, to Singapore.

Multiply this story across hundreds of Bhutanese mid-sized businesses, and you have the explanation for two parallel facts about the Bhutanese economy. Bhutanese banks have more capital than they know what to do with. Bhutanese businesses have more demand for capital than they can find domestic supply for.