The commitment was made during Prime Minister Jigme Y Thinley's recent four-day visit to India.
"This facility will be used as and when we face a shortage," said an official, who was part of the Bhutanese 42-member delegation during Thinley's July 14 visit.
As of now, the Royal Monetary Authority (RMA), the country's central bank, has managed the shortage by borrowing from the State Bank of India (SBI) at an interest rate of 10 per cent.
RMA pledged hard currency as collateral to borrow. From March until now, the central bank had borrowed about Rs 200 crore from SBI, the state-run Kuensel reported.
"The standby credit line facility could be used to liquidate the borrowing from SBI, from which we've borrowed at a higher interest and for other import-related payments," said a central bank official.
"The central bank and finance ministry will now have to work on modalities like interest rates on the standby credit facility, but this is a good news," said the official.
With more than 80 per cent of Bhutan's trade with India alone, the demand for Indian rupee has been steadily rising within the country in tandem with growing disposable incomes and increasing imports.
Central bank officials explained that rupee flows in the Bhutanese economy have demonstrated a cynical pattern that revolves around mega projects.
At the commissioning of mega projects, the economy experiences a rupee surplus and when such projects, like Chukha and Tala, wind up, the economy faces a shortage.
