This year has seen a decrease in the base rate for most of the financial institutions of Bhutan with the exception of Bank of Bhutan. This is good news for the people of Bhutan as they might gain access to cheaper loans. Base rate is calculated every year by banks and submitted to the Royal Monetary Authority for approval. This rate is the minimum interest rate below which banks are not permitted to lend.
Finding out the base rate for a bank involves calculating the cost that the bank incurs on its deposits. The cost involves the money that the bank has to pay to its depositors as interest. The decrease in base rate enables the banks to lower the interest rate on loans. This is good for both the consumers and the banks as the consumers are able to get less expensive loans while the banks are able to attract more customers and expand their business.
Even Bank of Bhutan, which has seen a marginal increase in its base rate, has lowered its interest rates on various kinds of loans. New customers applying for loans will surely benefit from this development but whether the interest rates will be lowered for those who have already taken loans at previous rates is yet to be seen.