The Royal Monetary Authority of Bhutan was established in the year 1982 under the Royal Monetary Authority of Bhutan Act 1982 to carry out the central banking functions of the country.
In November 1992, the Financial Institutions Act of Bhutan 1992 was passed by the National Assembly which provided the RMA with the legal framework to issue licenses to the financial institutions and to regulate, supervise and inspect their operations. It was under this Act that the RMA established the Financial Institutions Supervision Division (FISD) to carry out the functions of financial sector regulation and supervision.
The Royal Monetary Authority of Bhutan joined as the member of South Asian Insurance Regulatory Forum in the year 2000 to strengthen the insurance regulation and supervision in Bhutan and since then, the RMA has been participating in the annual conference held by the forum. Subsequently, on 10th April 2006, RMA hosted the 4th SAIRF meeting with participants from Nepal, Sri Lanka and India. RMA also joined the International Association of Insurance Supervisors (IAIS) as member in 2005 and since then, RMA has been participating in the annual conference hosted by the IAIS.
With regard to insurance supervision, the Financial Institutions Supervision Division has been supervising the Royal Insurance Corporation of Bhutan, the only insurance company in Bhutan, with main focus on its investment activities. In 2003, an insurance unit was created under the Financial Institutions Supervision Division to regulate and supervise insurance business as part of the RMAâs efforts to strengthen insurance regulation and supervision in Bhutan. However, due to the absence of insurance regulations compounded by lack of trained manpower, it has not been able to effectively supervise insurance business in Bhutan.
Currently, the RMA is in the process of finalizing the draft Financial Services Act and the Insurance Regulations, which will enable it to have in place an effective insurance regulatory framework to facilitate effective supervision and monitoring of insurance business in the country.