Bhutan : Financial Market Development Program (Subprogram 2)

Sovereign Project | 51252-004

The Financial Market Development Program (FMDP) is a series of interventions designed to develop the financial markets of Bhutan using the modality of a Policy Based Loan (PBL) with programmatic approach. The program identified three selected areas as outputs to address identified causes to solve the core problem of efficient financial intermediation, viz improved non-banking financial sector, strengthened stability and integrity of the financial system and improved financial inclusion. The project has three subprograms (SP) with linked policy actions. Following on what has been achieved in the previous program and discussions with the government , new areas were added under a SP3 within the same FMDP. SP1 has already been delivered. We ae seeking board approval for SP2 which was outlined at the time of SP1, and the additional SP3. A revised post program engagement framework too has been included to ensure the sustainability and continued success of the policy actions.

Project Details

Project Name Financial Market Development Program (Subprogram 2)
Project Number 51252-004
Country / Economy Bhutan
Project Status Active
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 3992-BHU: Financial Market Development Program (Subprogram 2)
Concessional ordinary capital resources lending US$ 30.00 million
TA 6581-BHU: Strengthening the Financial Market Development Program
Financial Sector Development Partnership Special Fund US$ 250,000.00
Technical Assistance Special Fund US$ 250,000.00
TA 6581-BHU: Strengthening the Financial Market Development Program (Supplementary)
High Level Technology Fund US$ 500,000.00
TA 6581-BHU: Strengthening the Financial Market Development Program (Supplementary)
Technical Assistance Special Fund US$ 450,000.00
TA 6581-BHU: Strengthening the Financial Market Development Program (Supplementary)
Technical Assistance Special Fund US$ 180,000.00
Operational Priorities OP1: Addressing remaining poverty and reducing inequalities
OP2: Accelerating progress in gender equality
OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
OP6: Strengthening governance and institutional capacity
Sector / Subsector

Finance / Central banking systems - Finance sector development - Housing finance - Money and capital markets

Gender Some gender elements
Description The Financial Market Development Program (FMDP) is a series of interventions designed to develop the financial markets of Bhutan using the modality of a Policy Based Loan (PBL) with programmatic approach. The program identified three selected areas as outputs to address identified causes to solve the core problem of efficient financial intermediation, viz improved non-banking financial sector, strengthened stability and integrity of the financial system and improved financial inclusion. The project has three subprograms (SP) with linked policy actions. Following on what has been achieved in the previous program and discussions with the government , new areas were added under a SP3 within the same FMDP. SP1 has already been delivered. We ae seeking board approval for SP2 which was outlined at the time of SP1, and the additional SP3. A revised post program engagement framework too has been included to ensure the sustainability and continued success of the policy actions.
Project Rationale and Linkage to Country/Regional Strategy The program supports key policy reforms designed to address identified deficiencies, vulnerabilities, and inadequate inclusiveness in the finance sector, while drawing lessons from previous programs of the Asian Development Bank (ADB). The program will help address the three key binding constraints on the finance sector: (i) underdeveloped nonbank financial institutions, (ii) deficient financial infrastructure, and (iii) the combined effects of low financial literacy and inadequate financial inclusion. The program aims to strengthen the finance sector's resource mobilization to improve its allocative efficiency and to enhance stability and inclusiveness at the request of the Government of Bhutan.
Impact

Macroeconomic stability achieved, economic diversity and productive capacity enhanced, and poverty eradicated, and inequality reduced

Project Outcome
Description of Outcome

Stability, depth, and inclusiveness of the finance sector enhanced

Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Nonbank financial system developed

Stability and integrity of the financial system strengthened

Financial inclusion promoted

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects It is not expected to have any environmental or social safeguard impacts.
Involuntary Resettlement The program requires no construction or rehabilitation and will not require land acquisition. Therefore, none of the program activities (including the support for the affordable housing strategy) can be demonstrated to have any direct or indirect involuntary settlement impacts, including the potential to cause loss of assets, resources, or income.
Indigenous Peoples Based on the program's policy actions, none of the actions would impact any indigenous peoples communities.
Stakeholder Communication, Participation, and Consultation
During Project Design Relevant stakeholders have been engaged during the preparation and design of the project and attached TA.
During Project Implementation Consultation and meetings are regularly held with relevant stakeholders and consultants to ensure views of all stakeholders are considered during project implementation activities.
Business Opportunities
Consulting Services N/A
Procurement N/A
Responsible ADB Officer Gunawardhena, Manohari
Responsible ADB Department Sectors Group
Responsible ADB Division Finance Sector Office (SG-FIN)
Executing Agencies
Ministry of Finance
Timetable
Concept Clearance 11 Jul 2019
Fact Finding 18 May 2020 to 06 Jun 2020
MRM 07 Aug 2020
Approval 27 Oct 2020
Last Review Mission -
Last PDS Update 14 Dec 2022

Loan 3992-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Oct 2020 29 Oct 2020 06 Nov 2020 31 Dec 2020 - 31 Dec 2020
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 30.00 Cumulative Contract Awards
ADB 30.00 12 Feb 2024 30.00 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 12 Feb 2024 30.00 0.00 100%

TA 6581-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Oct 2020 03 Nov 2020 03 Nov 2020 31 Mar 2022 30 Jun 2024 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,130,000.00 500,000.00 0.00 0.00 0.00 0.00 1,630,000.00 12 Feb 2024 763,836.87

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

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In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Title Document Type Document Date
Financial Market Development Program (Subprograms 1, 2, and 3) Project/Program Completion Reports Nov 2022
Financial Market Development Program (Subprogram 2): Data Warehousing and Analytics Policy - Technical Assistance Consultant’s Report (Final Report) Consultants' Reports Dec 2021
Financial Market Development Program (Subprogram 2): Report on Warehouse Receipt Financing - Technical Assistance Consultant’s Report Consultants' Reports Dec 2021
Financial Market Development Program (Subprogram 2): Corporate Governance and Corporate Social Responsibility Code of Bhutan, 2021 - Technical Assistance Consultant’s Report Consultants' Reports Dec 2021
Financial Market Development Program (Subprogram 2): Report on Housing Market Demand Survey - Technical Assistance Consultant’s Report (Final Report) Consultants' Reports Dec 2021
Financial Market Development Program (Subprogram 2): Credit Risk and NPL Management for Bhutan – NPL Management Strategy Report - Technical Assistance Consultant’s Report Consultants' Reports Dec 2021
Financial Market Development Program (Subprogram 2): Report on Bhutan’s Capital Markets and Alternative Investment Markets Regulations - Technical Assistance Consultant’s Report Consultants' Reports Dec 2021
Financial Market Development Program (Subprogram 2): Exploring the Development of a Green Exchange within the Royal Securities Exchange of Bhutan - Technical Assistance Consultant’s Report Consultants' Reports Sep 2021
Strengthening the Financial Market Development Program: Technical Assistance Report Technical Assistance Reports Nov 2020
Financial Market Development Program - Subprogram 2: Report and Recommendation of the President Reports and Recommendations of the President Oct 2020
Loan Agreement (Ordinary Operations [Concessional]) for Loan 3992-BHU: Financial Market Development Program - Subprogram 2 Loan Agreement (Ordinary Resources) Oct 2020

Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.


Evaluation Documents See also: Independent Evaluation

Title Document Type Document Date
Bhutan: Financial Market Development Program (Subprograms 1, 2, and 3) Validations of Project Completion Reports Jan 2024

Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Data Warehousing and Analytics Expert Individual - Consulting Closed
National Insurance Expert Individual - Consulting Closed
Data Warehouse Technical Advisor Individual - Consulting Closed
Data Warehousing and Implementation - F3 Firm - Consulting Closed
Data warehousing and Analytics Policy Expert (International) Individual - Consulting Closed
Credit Risk and NPL Management - F1 Firm - Consulting Closed
International - CBDC Feasibility Study Expert Individual - Consulting Closed
International - IFRS Expert Individual - Consulting Closed
International - Senior IFRS Expert Individual - Consulting Closed
International -Green Finance Expert Individual - Consulting Closed
International - Legal Specialist Individual - Consulting Closed
Legal Expert (National) Individual - Consulting Closed
Warehouse Financing Expert (International) Individual - Consulting Closed
National - Housing Specialist Individual - Consulting Closed

Contracts Awarded

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
Capacity Development Technical Assistance Technical Assistance 6581 01 Aug 2023 IRIS BUSINESS SERVICES LIMITED (INDIA) | T-231, TOWER 2, 3RD FLOOR, INTERNATIONAL INFOTECH PARK VAHI, NAVI MUMBAI, MAHARASHTRA 400703, India Ministry of Finance 848,000.00
Capacity Development Technical Assistance 6581 17 Jun 2021 Pricewaterhousecoopers Pvt. Ltd. | 8-2-624/A/1, 4th Floor, Road No.10, Banj Hyderabad, Andhra Pradesh 500 034 India Ministry of Finance 140,787.00
Capacity Development Technical Assistance 6581 06 May 2021 KPMG (SRI LANKA) | No. 32A, Sir Mohamed Macan Markar Mawath Colombo 3, Sri Lanka Ministry of Finance 118,600.00

Procurement Plan

None currently available.