Thimphu Dzongkhag Court recently ordered Phajo Nidup from Paro to repay multiple loans availed from Druk Punjab National Bank (PNB) within six months.

Between 2018 and 2019, Phajo availed loans from PNB six times, amounting to more than Nu 300 million (M).

Phajo Nidup admitted to the court that he obtained these loans both in his own name and in the names of some friends.

PNB filed two separate cases against Phajo Nidup: one involving four loans totaling Nu 107M, and another involving two loans totaling Nu 200M. These amounts exclude interest and penalties.

The court mentioned that Phajo Nidup has only repaid one loan so far, amounting to Nu 21.5M. He took this loan in 2019 to build a five-storied house.

The case was complicated for the court because Phajo Nidup obtained the loans by mortgaging various lands to PNB. However, some of these lands were also mortgaged with other banks to obtain additional loans, which is not permitted.

Regarding the Nu 107M loan case, the court stated that if Phajo does not repay the loans on time, PNB can auction his mortgaged lands based on the current market rate.

If the auctioned items are not sufficient to cover the total loans, Phajo Nidup must pay the difference. The court also ordered that if there are no buyers for the mortgaged lands, PNB could transfer the thram to its company name.

Phajo Nidup explained to the court that his businesses did not perform well, which affected his ability to repay the loans.

In the Nu 200M loan case, which Phajo Nidup obtained in the name of  Tshering Wangyel, the court stated that PNB failed to follow the know-your-customer policy and lacked proper verification.

As a result, the court ordered Phajo Nidup to pay only 70 percent of the loans. The remaining 30 percent was divided among Tshering Wangyel and nine PNB officials with five percent, and   the company with 25 percent.

While deciding the case of Phajo Nidup versus PNB, the court noted deficiencies in the financial institutions. Some banks did not register the mortgages, some registered them without dates, and some mortgage agreements lacked dates.

Meanwhile, the court also ordered Phajo Nidup to repay loans to the Royal Insurance Corporation of Bhutan Limited (RICBL) within three months. Between 2008 and 2019, Phajo obtained seven loans totaling more than Nu 30 million in his name, his wife’s name, and the names of other friends.

Today, he owes Nu 36.243M including principal, interest, and penalties.

The court specified that if Phajo fails to repay the loans on time, RICBL could auction his mortgaged lands based on the current market rate. If the properties from the auction are insufficient to cover the total loans, Phajo Nidup is required to make up the difference.

Additionally, the court ordered that if there are no buyers for the mortgaged lands, RICBL could transfer the thram to its company name.