Financial Crime World

Financial Sector Development Program (FSDP) Report: Progress and Achievements

Overview

The Financial Sector Development Program (FSDP) has made significant progress in strengthening Bhutan’s financial sector. This report highlights key achievements and developments in banking, insurance, and anti-money laundering (AML) and combating financing of terrorism (CFT).

Banking Developments

Bank of Bhutan Limited (BOBL) has experienced notable growth, with its total assets more than doubling from 2005 to 2012. The bank’s total income and profit have almost quadrupled during the same period. Additionally, BOBL’s net non-performing assets were reduced from 2.5% in 2005 to 1.4% in 2012.

  • Key Statistics:
    • Total Assets (2005-2012): More than doubled
    • Total Income and Profit (2005-2012): Almost quadrupled
    • Net Non-Performing Assets (2005-2012): Reduced from 2.5% to 1.4%

Insurance Developments

Royal Insurance Corporation of Bhutan Limited (RICB) has taken steps to strengthen its operations, including separating life insurance and general insurance products. The company’s balance sheet expanded significantly between 2005 and 2012.

  • Key Statistics:
    • Balance Sheet Expansion (2005-2012): From Nu 2 billion to Nu 8 billion
    • Separation of Life Insurance and General Insurance Products
    • Strengthening of Human Resources, Information System, and Organizational Structure

AML/CFT Developments

Bhutan has established an effective AML/CFT regime as per the Financial Action Task Force (FATF) recommendations. Additionally, a regulatory framework with prudential norms is being established for non-banking financial institutions, including those in the insurance sector.

  • Key Statistics:
    • Establishment of Effective AML/CFT Regime
    • Regulatory Framework with Prudential Norms for Non-Banking Financial Institutions

Conclusion

The report highlights significant progress made in strengthening Bhutan’s financial sector. However, there are still areas that require improvement, such as RICB’s commercial banking operation, which is expected to be spun off in the future.