603621 - SME Access to Finance in Bhutan

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Summary of Advisory Services Project Information

Project Number

603621

Primary Business Area

Financial Institutions Group

Disclosure Date

Jul 2, 2024

Country

Bhutan

Region

South Asia

Status

Active

Estimated Total Budget

$721,600.00
(Project budget includes all project-funded activities)

Last Updated Date

Jul 25, 2024

Project Estimated Start Date

Dec 31, 2022

Project Estimated End Date

Dec 31, 2026

Client Legal Name

ROYAL MONETARY AUTHORITY

Project Description

Building on the results of the previous financial infrastructure project, this Project aims to further develop financial infrastructure services as a necessary foundation for expanding MSME access to finance in Bhutan. This four-year project will be implemented in collaboration with the Royal Monetary Authority of Bhutan (RMA) and other sector organizations. The project activities will cover various aspects under three main components: Under the “Secured Transactions Reform and Movables Finance Development” Component, the Project will support RMA and other partners to further improve the legal and regulatory framework and scale up the movables finance market by transfer movables finance knowledge to the lending community. Under the “Deepening of the Credit Reporting System” Component, the Project will work to improve the quality of data and extend the coverage of the credit reporting system, develop credit reporting products, educate lenders and strengthen financial consumer protection. Under the “Increasing the Movables Finance Volume of a Pilot Financial institution” Component, the Project will provide in-depth advisory services to a pilot financial institution to design and pilot movables finance products.

Development Results

The Project aims to further develop financial infrastructure services as a necessary foundation for expanding MSME access to finance in Bhutan. Specifically, the project will work on three areas: (i) improving the operations of Credit Information Bureau (CIB) and promote the use of CIB’s services; (ii) strengthening the secured transactions (ST) legal framework and developing a market for movable asset finance; and (iii) providing targeted support to a pilot financial institution on movable asset finance to enhance the institution’s capacity and demonstrate the business case with movables finance. To promote a more favorable regulatory environment on financial infrastructure, and effective sector level operating infrastructures and service capacities, it is expected that the project will contribute to (i) promote the improvement of legal and regulatory framework, (ii) increased financing against movables assets, with a focus on MSMEs, (iii) improvement of the credit reporting system, including development of new products and services, and (iv) increased number of individuals and businesses covered by the credit reporting system.

Indicator	Cumulative
Number of entities that implemented recommended changes	1
Number of new registrations of security interests in the registry	18676
Number of recommended laws/regulations/amendments/codes enacted or government policies adopted	0
Number of recommended procedures/firm-level policies/practices/standards that were improved or eliminated	3
Number of inquiries received by credit reporting service provider (CRSP) (i.e. Credit Bureau, Public Registry)	84672
Number of entities receiving in-depth advisory services	2
Number of participants in workshops, training events, seminars, conferences, etc.	562
Number of procedures/firm-level policies/practices/standards recommended for improvement or elimination	16
Number of women participants in workshops, training events, seminars, conferences, etc.	254
Number of workshops, training events, seminars, conferences, etc.	15
Number of new financial products designed	null
Number of new laws/regulations/amendments/codes/government policies drafted, or contributed to the drafting	null
Number of new financial products launched	null

E&S Risks / Impacts and Mitigation

Performance Standard	Description and Potential Impact	Mitigation
PS 1. Assessment and Management of Environmental and Social Risks and Impacts	As part of its Due Diligence, and as mandated by IFC Sustainability Policy, IFC team has screened this project to assess consistency with IFC's Performance standards. Environmental and social risks will be further reviewed throughout the life-cycle of the project.	IFC advice will be provided in a manner consistent with the principles of the relevant Performance Standards. The IFC team will assist the client, as final decision maker, in gaining a good understanding of IFC's Performance Standards, and provide recommendations for appropriate mitigation measures whenever warranted.

This Summary of Advisory Services Project Information (ASPI) is prepared by IFC to disclose a factual summary of the main elements of this advisory services project. It may also include findings and recommendations related to environmental and social considerations regarding this project. The purpose of the ASPI is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the client. IFC considers that this ASPI is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed within sixty days of project's approval and may be updated periodically afterwards. Total budget and start dates are estimates only. The following ASPI is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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