Banking Infrastructure in Bhutan: An Assessment of Commercial Bank Branches

Abstract

This paper in trying to examine and understand the banking system in Bhutan, particularly its infrastructure and banking penetration, undertakes a cross-sectional review of dzongkhag-wise statistics of Bhutan. It presents four broad findings. First, in terms of its financial infrastructure vis-à-vis its population, Bhutan has sufficient infrastructure in place. The spread of its financial institution is comparatively much better than India, with at least 3 bank offices in place for each dzongkhag. Second, Bhutan Development Bank Ltd and Bank of Bhutan are two banks which have its bank offices in all of the dzongkhags and hence have the highest reach. These two banks also have the highest number of deposits and credit accounts. This could perhaps be attributed to their precedence in arrival, in
the sector. Thirdly, it is observed that there is a huge disparity between deposit accounts and credit accounts. While some dzongkhags have a relatively good amount of deposit accounts, the figure for credit is largely still low. Fourth, and finally, it is observed that Thimphu has a very disproportionate share of financial banking services, especially in credit dissemination. This article concludes by highlighting the need to decentralize finance, primarily in terms of its accessibility.