Bhutan's Ambitious Plan to Accelerate Financial Inclusion Nationwide

Bhutan's policymakers have revisited and refined their national strategy to advance financial inclusion, with the ultimate goal of ensuring that all citizens have equal access to quality financial services. Dubbed as a national priority, the freshly updated plan aims to boost financial empowerment, stimulate domestic economic activity, and promote inclusive growth aligned with the country's development philosophy of Gross National Happiness. The revised strategy places emphasis on expanding digital financial services, strengthening financial literacy, and developing inclusive alternative financing schemes. Bhutan's pursuit of financial inclusion has been complicated by low financial account ownership, particularly among women, who hold only 28% of formal bank accounts.

Key Takeaways:

• Financial account ownership in Bhutan remains relatively low, with only 34% of adults holding a formal bank account, and a stark disparity among women, where ownership drops to 28%.
• Despite a majority (76%) of the population holding savings accounts, a significant portion of these accounts are underutilized or hold minimal balances, reflecting a cautious approach to formal finance.
• Limited access to credit restricts opportunities for entrepreneurship, investment in education, home ownership, and other wealth-building activities, particularly among underserved groups.
• Targeted interventions, such as digital banking initiatives, women-focused lending programs, and community-based financial literacy campaigns, are seen as essential to bridging the gaps and ensuring all segments of society participate meaningfully in the country's economic transformation.
• The World Bank has emphasized that reforms in Bhutan's financial sector, particularly those harnessing digital technology, will be critical to expanding access, promoting collateral-free lending, and modernizing payment systems.
• Bhutan is leveraging its high levels of digital connectivity to drive financial inclusion, with fintech innovations such as the National Digital Identity (NDI) project and FintechBhutan supporting innovation through regulatory sandboxes.

Statistics:

• *34% of adults hold a formal bank account*, leaving a significant number without access to basic financial services.
• *28% of women hold a formal bank account*, underscoring persistent barriers-including social norms, limited financial literacy, and challenges in accessing banking infrastructure.
• *76% of the population maintains savings accounts*, but a significant portion of these accounts are underutilized or hold minimal balances.
• *Only one-fifth of adults have the ability to borrow through formal channels*, restricting opportunities for entrepreneurship and economic growth.
• *95% of households own a smartphone*, and nearly all have internet and mobile access, providing a solid foundation for digital financial inclusion.

Sources:

• World Bank
• RMA
• World Economic Forum