Subscribe

RSS Feed (xml)

Powered By

Skin Design:
Free Blogger Skins

Powered by Blogger

Showing posts with label currency. Show all posts
Showing posts with label currency. Show all posts

Mar 26, 2010

Profits dip by Nu 44 million: Bhutan National Bank

Foreign exchange movement, not performance, led to a slump in Bhutan National bank’s profits, the first time in eight years, say bank officials.

“If you exclude the foreign exchange (forex) component for 2008 and 2009, we’ve actually grown by more than 23 percent,” said BNB’s chief executive officer, Kipchu Tshering.

In 2008, the bank had a windfall of Nu 84 mn through forex and last year it suffered a loss of Nu 19 mn. BNB, like most banks, is required to maintain at least USD 10 mn in foreign exchange to facilitate third country transactions.

According to the bank’s profit and loss account, which was not obtained from bank officials, BNB’s profits fell by about Nu 44 mn in 2009, with profit after tax slipping to Nu 266.2 mn from Nu 310.3 mn in 2008.

While income from interest on loans grew to Nu 1.14 bn from Nu 917 mn, interest paid on fixed deposits shot up to Nu 588.9 mn from Nu 329 mn in 2008.

The bank’s management said that the raise in corporate fixed deposit rates last year to attract more funds had increased the cost of funds. “Our lending was growing but not our deposits, so we raised the fixed deposit rates to avoid a cash crunch,” said Kipchu Tshering.

While this increased deposits to Nu 21.65 bn from Nu 14.60 bn and loans also grew to Nu 11 bn, shareholders pointed out, during the bank’s annual general meeting in Thimphu on March 23, that the huge interest payments on fixed deposits had significantly eaten into the profits.

“The bank has made money, but it could have made much more had it not taken so much deposits,” said a shareholder. “It’s a lapse on the management for not being able to track investment as well as fund flow.”

The bank did the same in 2002 and its profits fell for the first time after it was formed in 1997, said another shareholder. “It’s a repeat of 2002, they took in just too much money.” He also said that the bank could be stuck with paying high interest rates for some time, particularly for long term fixed deposits.

For the Bank of Bhutan, the cost of funds were much cheaper, because most government agencies, for whatever reasons, had their current accounts with them, on which the bank incurred no cost but charged for services rendered.

BNB today has an excess liquidity of about Nu 4 bn, but its officials expect large borrowers only after some hydropower projects are completed. “Domestic power consumption has reached its peak and no new industries can come up without power,” said Kipchu Tshering. There was no land either to set up new industries, although the government has made announcements to develop several industrial estates.

Kipchu Tshering said that there were no investment avenues within the country to utilise the surplus money. “Elsewhere, you have mutual funds, the stock market and government bonds. Here even the issue of government bonds isn’t consistent.”

The bank is waiting to invest several hundred million ngultrums as consortium financing to the Dungsam cement project, which announced earlier this year that it would borrow about Nu 2 bn domestically.

Despite the drip in profits, the bank declared a dividend of Nu 28.50 a share, the same as the previous year. It will paying Nu 101 mn as dividend, Nu 79 mn will go into reserves. As in 2008, Nu 50 mn has been set aside as reserve to build an office complex.

Source: Kuenselonline

Sep 1, 2009

Bhutan Currency

Design: Obverse

The Government crest in the center with two mythical bird ( Bja Tshering), the bird of long life at both right and left sides.
The Royal Monetary Authority of Bhutan in
Dzongkha at the top face.

Design: Reverse

Paro Rinpung Dzong.
The Royal Monetary Authority of Bhutan in
English at the top face

Design: Obverse

The Governmen crest on the left.
Dungkar (conch) one of the eight lucky signs in the center.
Portrait of His Majesty Jigme Singye Wangchuck on the right.
Royal Monetary Authority of Bhutan in Dzongkha at the top face.

Design: Reverse

Paro Rinpung Dzong.
The Royal Monetary Authority of Bhutan in
English at the top face


Design: Obverse

The Governmen crest on the left.
Khorlo ( Wheel of Dharma , one of the eight auspicious signs) in the center.
Portrait of third King His Majesty Majesty
Jigme Dorji Wangchuck on the right.
Royal Monetary Authority of Bhutan in
Dzongkha at the top face.

Design: Reverse

Punakha Dzong.
The Royal Monetary Authority of Bhutan in
English at the top face

Design: Obverse

The Governmen crest on the left.
Khorlo ( Wheel of Dharma , one of the eight auspicious signs) in the center.
Portrait of third King His Majesty Majesty
Jigme Dorji Wangchuck on the right.
Royal Monetary Authority of Bhutan in
Dzongkha at the top face.

Design: Reverse

Trongsa Dzong with two mythical bird Bja
Tshering ( bird of long life ) at both ends.
The Royal Monetary Authority of Bhutan in
English at the top face


Design: Obverse

Crossed Dorji (Dorji jardrum) watermark on the left.
Norbu Rimpochhe, one of the seven auspicious gems in the center.
Portrait of His Majesty Jigme Singye Wangchuck on the right.
Royal Monetary Authority of Bhutan in Dzongkha at the top face.



Design: Reverse

Tashichho Dzong with two dragons at top ends.
The Royal Monetary Authority of Bhutan in
English at the top face

Design: Obverse

Crossed Dorji (Dorji jardrum) watermark on the left.
Norbu Rimpochhe incircled by two Dragons, one of the seven auspicious gems in the center.
Portrait of His Majesty Ugyen Wangchuck
on the right.
Royal Monetary Authority of Bhutan in
Dzongkha at the top face.

Design: Reverse

Punakha Dzong.
The Royal Monetary Authority of Bhutan in
English at the top face


The Ngultrum (BTN) (Nu.) is the currency of Bhutan, subdivided into 100 Chetrums (Ch.).

Bhutan first began to produce coins in silver towards the end of the 18th century, mainly for use in trade with the plains. These were followed by coins struck in alloyed silver, copper or brass, which were used for minor local purchases. These pieces, known as “Ma-trum” or “Chhe-trum” were struck by several local chieftains, rather than by the central government. Coin production continued into the 20th century under the reign of the first King, Druk Gyalpo Ugyen Wangchuck (1907-26), who gradually improved the quality of striking. In 1928/29, during the reign of the second King, Druk Gyalpo Jigme Wangchuck (1926-52), fine machine struck silver and copper coins were introduced into circulation, marking the beginning of modern coinage in Bhutan. However, throughout this period the use of coins remained limited, and barter remained the predominant means of carrying out transactions, and even government officials were paid in kind, rather than in cash. In the mid 1950’s, during the reign of the third King, Druk Gyalpo Jigme Dorji Wangchuck (1952-72), the economy gradually started to become more widely monetised, with further issues of “silver” coins, using the dies of his father, but of a nickel alloy. In 1968, the Bank of Bhutan was established as a further step towards full monetisation. By this time most salaries were paid in cash, rather than in kind.

India was key in assisting the Bhutanese government as it developed its economy in the early sixties. When the Ngultrum was introduced in 1974 the Bhutanese pegged it to the Indian Rupee. It does not exchange independently with other nations but is exchanged interchangeably with the Indian Rupee.

Commerce in Bhutan was traditionally carried out through a system of barter in rice, butter, cheese, meat, wool, hand-woven cloth and other local produce. Bhutan first began to produce coins in silver towards the end of the 18th century, mainly for use in trade with the plains. These were followed by coins struck in alloyed silver, copper or brass, which were used for minor local purchases. These pieces, known as “Ma-trum” or “Chhe-trum” were struck by several local chieftains, rather than by the central government. Coin production continued into the 20th century under the reign of the first King, Druk Gyalpo Ugyen Wangchuck (1907-26), who gradually improved the quality of striking. In 1928/29, during the reign of the second King, Druk Gyalpo Jigme Wangchuck (1926-52), fine machine struck silver and copper coins were introduced into circulation, marking the beginning of modern coinage in Bhutan. However, throughout this period the use of coins remained limited, and barter remained the predominant means of carrying out transactions, and even government officials were paid in kind, rather than in cash. In the mid 1950’s, during the reign of the third King, Druk Gyalpo Jigme Dorji Wangchuck (1952-72), the economy gradually started to become more widely monetised, with further issues of “silver” coins, using the dies of his father, but of a nickel alloy. In 1968, the Bank of Bhutan was established as a further step towards full monetisation. By this time most salaries were paid in cash, rather than in kind.

Monetary reform commenced in 1974, during the reign of the present King, Druk Gyalpo Jigme Singye Wangchuck, with the issue by the Ministry of Finance of the first bank notes in 1974 coinciding with His Majesty’s Coronation. The unit of currency was accordingly standardised with 100 Chhetrum being equal to 1 Ngultrum. In 1982 the Royal Monetary Authority of Bhutan (RMA) was established to act as the central bank of Bhutan. The RMA commenced its operations in 1983, when it assumed liability for all notes and coins previously issued by the Ministry of Finance.

Denomination of Banknotes and Coins in Bhutan
At present, notes in Bhutan are issued in the denominations of Nu.5, Nu.10, Nu.20, Nu.50, Nu.100 and Nu.500. The printing of notes in the denominations of Nu.1 and Nu.2 have been discontinued, and the Nu.1 denomination has been coinised. However, such notes issued earlier which are still in circulation and are still legal tender.

Coins are available in denominations of Ch.5, Ch10, Ch.25, Ch.50 and Nu.1.

Currency Management

The various denominations of banknotes and coins are decided by the RMA’s Board of Directors on the advice of the RMA. The designs and security features of the banknotes and coins are also proposed by the RMA and subject to approval by the Board of Directors. The RMA estimates the quantities of notes and coins of different denominations that are likely to be needed, and after obtaining the approval of the Board, invites tenders from renowned international security printing companies and mints. The notes and coins received from the printers are stored in the vaults and issued to the banks and the public on request. Notes and coins returned from circulation by the banks and the public are examined and only notes and coins which are fit for circulation are reissued. “Soiled and mutilated” notes are destroyed by shredding so as to maintain the quality of the notes in circulation.

Refund of soiled and mutilated notes

Soiled notes are those which have become dirty and limp due to use, and mutilated notes are those which are torn, disfigured, burnt etc. Such notes can be exchanged at the RMA. Full value is payable against soiled notes. Payment of value against mutilated notes is made in accordance with the Note Refund Rules which have been framed by the Board of Directors under Section 21 (9) of the RMA Act.General features of bank notes
The first series of banknotes issued by the Ministry of Finance and the Bank of Bhutan were all of the same size, irrespective of the denomination. However, this sometimes made it difficult for the largely rural population to differentiate between the denominations.

Coins in circulation

5 Chertrum (discontinued)
10 Chertrum (discontinued)
20 Chertrum
25 Chertrum
50 Chertrum
1 Ngultrum

Banknotes in circulation

1 Ngultrum
5 Ngultrum
10 Ngultrum
20 Ngultrum
50 Ngultrum
100 Ngultrum
500 Ngultrum

Banknotes in Bhutan are issued in the denominations of Nu.1, Nu.5, Nu.10, Nu.20, Nu.50, Nu.100 and Nu.500. The printing of notes in the denominations of Nu.1 and Nu.2 have been discontinued, and the Nu.1 denomination has been coined. However, such notes issued earlier which are still in circulation and are still legal tender.

[Source: RMA, Bhutan]