The Covid-19 pandemic continues to pose serious risks to the health and livelihood
of our people. The containment measures and lockdowns have adversely affected
everyday life and business creating economic hardship. While ‘Service and Tourism’
is the hardest hit Sector, the impact of the pandemic is felt across all Sectors. In
response to the pandemic, a series of monetary measures were introduced to help
the businesses remain resilient during such hardship times.

The RMA is cognizant of the fact that due to the prolonged impact of the pandemic on businesses, there is looming threat to the Housing Sector as well. The Housing Sector accounted for 26% of the total loan portfolio of Nu. 174.92 billion as of June 2021.

In view of the above, and as a measure to promote home ownership, housing affordability and availability, and further reduce rental burden, the Royal Monetary Authority during its 181st Board meeting held on 27th August 2021 approved the revised ‘Directives on Housing (commercial and home) Loans, Vehicle Loans and Personal Loans 2021'. The revised directive incorporates following changes:

1) The maximum loan term for Commercial Housing Loan and Home Loan is
enhanced from 20 years to 30 years excluding gestation period. The existing
housing loans (both commercial and home) will also be eligible for the
extension of loan term by the remaining period.

2) The maximum Loan to Value ratio for Commercial Housing Loan is enhanced
from 70% to 80% for loan amount up to Nu. 50 million and from 60% to 70% for
loan amount more than Nu. 50 million.

3) The maximum Loan to Value ratio for Home Loan is enhanced from 80% to
90%.

4) Further, to encourage Financial Institutions to finance Home Loans, the risk
weight for Home Loans, which are overdue by 90 days and less is relaxed from
100% to 50%. The relaxation in the risk weight will help in freeing up capital
charge on Home Loans which are required to be maintained as part of the
regulatory capital.

The revised directive shall come into force with immediate effect. For further information, please refer ‘Directive on Housing (commercial and housing) Loans, Vehicle Loans and Personal Loans 2021' available at www.rma.org.bt.

RMA Board approves Directives on Housing (commercial and home) Loans, Vehicle Loans and Personal Loans 2021 in view of the pandemic

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