Bhutan to receive India's credit facility (Economy)
New Delhi, July 27: India has decided to grand a sum of Rs 400 crore to Bhutan to help meet the shortage of Indian currency in the country.
The commitment was made during Prime Minister Jigme Y Thinley's recent four-day visit to India.
As of now, the Royal Monetary Authority (RMA), the country's central bank, has managed the shortage by borrowing from the State Bank of India (SBI) at an interest rate of 10 per cent.
RMA pledged hard currency as collateral to borrow. From March until now, the central bank had borrowed about Rs 200 crore from SBI.
With more than 80 per cent of Bhutan's trade with India alone, the demand for Indian rupee has been steadily rising within the country in tandem with growing disposable incomes and increasing imports.
Central bank officials explained that rupee flows in the Bhutanese economy have demonstrated a cynical pattern that revolves around mega projects.
At the commissioning of mega projects, the economy experiences a rupee surplus and when such projects, like Chukha and Tala, wind up, the economy had faced a shortage. Bhutan News Service