In late March the Royal Monetary Authority (RMA, the central bank) said that it will soon allow the establishment of Bhutan's first credit-rating agency. The agency, to be called the Credit Rating Agency (CRA), will rate organisations, institutions and individuals, categorising borrowers on the basis of the strength of their cash flows, reputations and other parameters. Banks will use the CRA's ratings to sanction loans.

A good rating from the CRA might even permit borrowers to receive loans without collateral. Although the Bhutanese debt and capital markets are small, the RMA is keen to establish the CRA to help ensure that small borrowers get access to funds on the basis of a proper credit rating rather than only on the basis of collateral. Both the government and the central bank are keen to develop the industrial sector, given the Bhutanese economy's heavy dependence on hydroelectric projects and foreign aid. As part of this endeavour, they would like to develop the small and medium-sized enterprise sector, which is currently poorly served by financial institutions, precisely because of its general lack of collateral. The government and the central bank would also like to develop Bhutan's capital market in order to provide alternative funding to businesses apart from bank borrowing.

The Credit Information Bureau (CIB), a part of the RMA, already provides detailed information on borrowers, loan repayments and defaults. The CIB started in 1997, and the bureau has been collecting and sorting data from banks and financial institutions ever since. As the CIB now has a large data bank, it has, since January, been acting as a centre for businesses to obtain clearance when applying for a loan. Before sanctioning a loan, financial institutions had been required to obtain clearance certificates from other financial institutions that had dealt with the same clients, certifying from their experience and data that they were creditworthy. Since January the RMA has directed financial institutions to stop issuing physical loan clearance certificates and to use instead the CIB's central information-sharing platform to access its detailed client information. Individual clients or companies can also get a self-inquiry report through the CIB to find out their creditworthiness. The RMA charges a fee for the use of the CIB. The RMA says it will soon establish the CIB as a separate, autonomous entity.

The CIB is an information-sharing mechanism, which does not issue a rating or opinion, but rather puts all the information in one place and facilitates information-sharing. Its self-enquiry report will allow borrowers to see their own information. The CRA, in contrast, will be a proper credit-rating agency that will issue a rating informed by its opinion and assessment of the borrower.