First foreign debt investment in Bhutan’s banking sector under the revised External Commercial Borrowing (ECB) guidelines to spur private sector growth, job creation, and broaden access to finance.
Washington, D.C., October 16, 2025 — In a major step forward for Bhutan’s financial sector, IFC, a member of the World Bank Group, today announced a US$20 million (equivalent in Bhutanese Ngultrum) investment in Bank of Bhutan (BoB), the country’s oldest and largest bank.
The five-year fixed-rate financing, supported by the International Development Association’s (IDA) Private Sector Window, will enable BoB to significantly expand its lending to micro and small enterprises (MSEs)—a key engine of Bhutan’s economic growth. MSEs account for 95 percent of the country’s registered businesses and employ approximately 12 percent of the population. At least 80 percent of the financing will be dedicated to MSEs, with the remainder supporting individuals seeking to generate income and assets.
“This historic partnership with the World Bank Group’s IFC marks the Bank of Bhutan’s first major step in setting a precedent for future international investments in Bhutan’s financial sector under the External Commercial Borrowing guidelines. It is a timely step in opening the Bhutanese economy to international investors and supporting financial inclusion and sustainability through private sector engagement” said Tshering Tenzin, Chief Executive Officer, Bank of Bhutan Limited.
Leveraging its extensive branch network, BoB aims to ensure that critical financing reaches entrepreneurs across Bhutan, with a focus on women-led businesses and cottage industries. IFC will also support BoB’s efforts to strengthen governance, risk management, compliance, and environmental and social standards in line with IFC Performance Standards, enabling the bank to attract additional financing from other development finance institutions, further diversifying its funding base.
“This milestone partnership with the Bank of Bhutan is a key step toward unlocking the potential of Bhutan’s private sector,” said Allen Forlemu, Interim Regional Vice President, Asia Pacific, IFC. “By channeling long-term local currency financing to micro and small enterprises, we aim to empower the businesses that drive Bhutan’s economy and help create thousands of jobs. This transaction demonstrates the viability of foreign investment in Bhutan’s financial sector and sets a benchmark for future deals that can enhance access to finance, strengthen resilience, and accelerate private sector growth.”
This investment builds on World Bank’s and IFC’s collaboration with the Royal Government of Bhutan and the Royal Monetary Authority to revise the ECB guidelines, strengthening the regulatory framework and enabling Bhutanese financial institutions to access foreign capital.
By providing an alternative source of finance for Bank of Bhutan, the loan supports the World Bank Group’s Country Partnership Framework (CPF) FY2025–29, which prioritizes expanding private investment in job-rich sectors. It will help deliver last-mile financing to micro and small enterprises, strengthening Bhutan’s entrepreneurial base and promoting inclusive, sustainable growth.
About IFC
IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2025, IFC committed a record $71.7 billion to private companies and financial institutions in developing countries, leveraging private sector solutions and mobilizing private capital to create a world free of poverty on a livable planet. For more information, visit www.ifc.org.
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About the IDA Private Sector Window
The International Development Association’s Private Sector Window (IDA PSW) was launched in 2017 to catalyze private sector investment in the poorest and most fragile countries. Recognizing the key role of the private sector in creating jobs and promoting economic transformation, the window provides a source of co-investment funding and guarantees to de-risk private investments supported by the World Bank Group’s International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). The IDA PSW is an option when there is no commercial solution and the Bank Group’s other tools are insufficient. For more information, visit: http://ida.worldbank.org/psw
About The Bank of Bhutan
The Bank of Bhutan (BoB), established in 1968, is the country’s oldest and largest commercial bank. Functioning as the country’s central bank until 1982 when the Royal Monetary Authority of Bhutan (RMA) was established, BoB now operates as a public sector commercial bank. It is jointly owned by Druk Holding & Investments Limited (DHI) and the State Bank of India (SBI) with a ratio of 80:20 respectively. It offers a full range of financial services including deposits, loans, trade finance, and digital banking through its extensive branch and ATM network across all Dzongkhags. The Bank has been leading the digital innovation within the country by introducing modern banking technologies such as internet and mobile banking through its “mBoB”, “goBoB” and “BoBConnect” platform, supporting financial inclusion across the nation. The Bank of Bhutan continues to play a vital role in driving Bhutan’s financial growth and digital transformation.
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