Hotel’s opting not to pay loan may not be eligible for 4% subsidy

2026-03-16 - 11:15

Last week, the government announced that the Economic Stimulus Plan (ESP) has kept aside Nu 844 mn as a one-year interest subsidy of 4% for the hotel sector. It has been learnt that Financial Institutions are willing to given an additional 1% interest debate provided the ESP is approved. Around 537 four-star hotels and below are eligible with the final number to depend on bank verification. However, a likely condition for hotels to be eligible for the ESP subsidy is that they will have to agree to keep paying their loans. Earlier, it was assumed that even hotels who do not pay loans or opt for a two-year moratorium will be eligible, but they are now unlikely to get the interest subsidy and discount. A government source said that hotels getting the ESP subsidy should also pay their loans. For hotels that cannot pay at all and cannot revive their business, certain other options are being looked at like repurposing their hotel to some other structure like apartments, offices etc. A government official said there is no point giving the 4% ESP subsidy of the hotel itself is not viable and instead giving the subsidy may cause further harm. “We have to really assess the hotels and very soon it will be rolled out,” said the official. Meanwhile, the loan deferment period for hotels which had got repeated extensions from the Royal Monetary Authority (RMA) ended on 31st January 2026 and RMA declined to give any further deferrals. As a result, banks have contacted hotels and there are various options being looked at by the banks and hotels. HRAB Chairman Ugyen Tenzin said the Financial Institutions (FIs) are following up with the hotels and applying one of the seven measures or options given by the RMA to deal with deferred loans after the deferment is over. He said that many of the hotels signed to take deferment up to two years. He said within this time hotels will have to work hard and it is hoped that the easing of some restrictions like duration and group discount will improve numbers too. The Chairman said earlier they hired a consultant and found the two-year moratorium to be the best option. A Bhutan National Bank (BNB) official said that the majority of the hotel clients of BNB have started repaying their loans. The bank advised and encouraged their clients to pay if they have any source of income, otherwise they were told the loan will only keep ballooning. Another option being taken under the RMA scheme is to split the loans into two and start paying for one part of the loan. A Druk PNB official said that there are seven options and around 50% have agreed to pay while the others are getting various other options. The official said even for those given deferments it is only for a limited time like 6 months for them to pay. The official said people are reasonable and they pay if they can to reduce their liabilities. The official said hotels are encouraged to pay based on their occupancy status and footfall. A BoB bank official said they are also encouraging their clients to start paying as if they don’t, then they may fall into a debt trap. He said the hotels are being encouraged to pay within their capacity. The bank is studying the cash flow of banks and while it may give some extension in some cases it is not for two years and is subject to review every few months. There is the option of splitting loans and also merging together the loans and interest for a new longer loan tenure which means an easier EMI. A T Bank official also said various options are being given like splitting loan and while deferment is given in some cases it is just for a year.