Impact Story : Technical Assistance - Transformation of Non Bank to Bank

Brief about UNCDF MicroLead Bhutan Project

Bhutan Development Finance Corporation Limited (BDFCL) established on 31st January 1988 with the assistance of Asian Development Bank (ADB) to function as a Development Finance Institute (DFI) to cater to the financial needs of the micro, small and medium enterprises with a special focus on agriculture development.

BDFCL is registered as a company under the Companies’ Act 2000 and functioned as a Non Banking Finance Company (NBFC) under the Financial Institution Act 1992 and primarily owned by Royal Government of Bhutan (95.67% Share). BDFCL was having a special permission from Royal Monetary Authority (RMA) in the year 2005 to accept deposits from rural areas, which is 5 kms away from district head quarters. BDFCL got a specialized banking license from RMA on 4th March 2010 to function as a domestic bank. BDFCL name changed to Bhutan Development Bank Limited (BDBL) on 30th May 2011.

United Nations Capital Development Fund (UNCDF) has a special project called Develop Savings Led Market leaders for Inclusive Finance for supporting Least Developed Countries (LDC) to promote savings culture among the poor people.

Bhartiya Samruddhi Investments and Consulting Services Ltd. (BASICS Ltd – The Holding Company of BASIX group) has done a detailed study in Bhutan on financial sector in the month of June 2009 and submitted a proposal to UNCDF in the month of December 2009 to work with BDBL as Long term Technical Assistance (TA) Provider with following objectives

  • Increase access to savings, credit and other services in rural areas by enabling BDBL to provide these services directly
  • Encourage linkages between financial and non-financial services
  • Promote strategic partnership among BDBL and NGOs to promote community based organizations and facilitate access to financial and non-financial services by the rural households
  • Facilitate multi-stakeholder consultations in Bhutan, so as to develop a strategy and action plan on microfinance that could be adopted by BDBL as well as policymakers of the country

BASICS Ltd. Overall strategy in Bhutan is offer TA support to the BDBL and strengthen their systems and procedures in microfinance and help to increase outreach in 50 months to around 57,820 credit customers and 58,554 deposit customers. 11% of credit customers will be in the form of groups.

Process of Identification of Requirements and Technical Assistance to Financial Services Provider

Long Term Consultants (LTC) studied the various Departments/Divisions of BDBL their functions, reporting structure; prepared inception report identifying gaps and organization needs. Short Term Consultants (STC) was deployed to provide domain specific technical assistance to fill the gaps and improve/modify systems and processes. LTCs assisted BDBL to implement suggestions / guidelines / tools developed by STCs. To implement the project effectively a Project Management Unit (PMU) was formed which consisted of two consultants from BASIX and two staff from BDBL.

BASIX assisted BDBL during transformation from Non Bank to full-fledged Domestic Bank by a way of capacity building and handholding of department/divisions to bring more rural people into formal financial services. Consultants travelled extensively to the field to understand ground situations and suggested best process and tools for overall development of bank while delivering timely financial and nonfinancial services to the unreached people.

Following are the key domain specific TA provided by BASIX

Intervention Area

Technical Assistance


  • Modified Group Loan Product
  • Cooperative Loan Product and Appraisal rating tool developed
  • Portfolio Quality Improvement strategy developed
  • Effective Review and Monitoring system developed

Micro Enterprises

  • Lending to Startup Micro Enterprises
  • Credit Appraisal Trainings provided


  • 11 Deposit Products Designed to bring banking focus and to meet short and long term lending requirements


  • Performance Based Incentive tool developed
  • Annual Training Calendar system introduced
  • Induction and Orientation system introduced
  • Awards Introduced – Best Branch, Best Employee, Best Field staff Retail Deposit Mobilization, Best Branch Cheque issuance and usage

Internal Audit

  • Branch Rating Tool Developed

Risk Management

  • Risk Management Manual and Branch Rating Tool Developed
  • Credit Review Unit upgraded to Risk Management Division
  • On the Job Training Provided

Information Technology

  • Hand Held Devices Introduced after doing system requirement study

Management Information System (MIS)

  • Summarized reporting formats developed to review and decision making
  • Microfinance Loan Portfolio reports developed

Treasury Management

  • Policy & Guidelines developed
  • Asset Liability Committee (ALCO) functioning regularized
  • On the Job Training Provided

Business Development Services (BDS)

  • Concept introduced and process developed to provide BDS
  • BDS provided through collaborations with stakeholders

Social Performance Management (MIS)

  • Concept introduced and reports developed
  • Toll Free No, Feedback form, Complaint form, Suggestion box introduced


  • Individual Staff wise, Month wise Business Plan Template Developed
  • Cost of Funds of Rural, Urban operations

Micro Insurance

  • Rural Life Insurance Product and Implementation Process Developed


  • Marketing Strategy Developed
  • New Marketing Division Established
  • Marketing tools developed – Brochures, Newsletters, Table and Wall calendars, advertisement in Print and Electronic media
  • Awareness Creation and Sensitization Workshops conducted till the block level on banking products and services

Year wise organizational growth in figures


Total No. of Clients

29,206 38,916 48,922 64,242

Rural Clients Percentage

87% 89% 90% 90%

Women Clients

37% 38% 39% 41%



13,848 24,830 38,609 55,610


15,878 28,918 44,529 64,181

Balance Amount in Million

266 1461 2,300 4,422


Outstanding Clients

19,359 24,476 27,874 33,322

Outstanding Accounts

19,923 25,292 28,895 34,790

Outstanding Group Clients

379 (2%) 1,643 (7%) 2,611 (9%) 3,268 (10%)

Outstanding Amount in Million

2,817 3,640 4,542 6,229

PAR > 30 Days

20.65% 20.08% 14.18% 14.90%

PAR > 90 Days

13.45% 11.77% 8.25% 7.89%

No. Branches

25 26 29 33

No. of Staff

221 276 291 320

Profit/Loss in Nu. Million

150 178 205 188

Credit to Deposit Ratio

1059% 249% 197% 141%