The Royal Monetary Authority of Bhutan (RMA) imposes Monetary Penalty on the T Bank Ltd for Regulatory Non-Compliance and places it under Rehabilitation Program which includes a Loan Moratorium

Name of the Bank

T Bank Ltd

Penalty Amount (Nu.)

4,375,581.76

Penalty Imposition Date

17 May 2024

Other Remedial Actions

Placed under Rehabilitation Program

Background

The RMA found breach of regulatory requirements during the review of audited annual returns for the FY 2023 that the T Bank Ltd submitted. The breaches were deemed significant warranting corrective actions, and the T Bank Ltd was provided 14 days to respond. The T Bank Ltd acknowledged their lapses on breach of CAR and misrepresentation of subordinated debt.

Prescribed Contravention

The T Bank Ltd has failed to comply with the following requirements:

1.      Breach of capital adequacy ratio (CAR): Section 1.6.4 of the Prudential Regulations (PR) 2017 mandates that the regulated institutions shall maintain CAR of 12.50%. in December 2023, the T Bank Ltd’s CAR was 12.21%.

2.      Misinformation: Section 138 of the Financial Service Act of Bhutan (FSA) 2011 mandates that the regulated institutions shall not provide false, misleading, or incomplete information. Subordinated debts were misrepresented.

Remediation

The T Bank Ltd is placed under rehabilitation program, and following conditions are attached:

1.      Credit moratorium.

2.      Weekly reporting of capital position from 6 May 2024.

3.      Improve capital position.

Penalty Decision Factors

In deciding the appropriate penalty to impose, the RMA considered that the contravention constitutes a significant departure from the standard required under the applicable laws in vogue.

Other Considerations

The statutory auditor of T Bank Ltd was referred to the Royal Audit Authority on 3 May 2024 for their review on misrepresentation of subordinated debt.

T Bank Ltd Board’s Commitment

The Board of the T Bank Ltd has held seven employees responsible and are taking administrative actions on them, and is working on strengthening its internal controls and governance process.

RMA’s Informed Opinion

The RMA reiterates its stance on non-compliance and the importance of adhering to regulatory standards. Regulated institutions that fail to comply with these standards will face appropriate sanctions to maintain the integrity and stability of the financial sector.