BoB CEO fails to get third term due to term limit

The Bank of Bhutan (BoB) was ranked as the best performing bank in 2024 with a record Nu 1.526 bn profit. This is important as other banks did not fare as well in the same year.

Only the National Pension and Provident Fund (NPPF) did better with a record Nu 3.7 bn in profit.

Given the BoB performance, the BoB Board and Druk Holding and Investments (DHI) recommended that the CEO, Dorji Kadin, be given a third term of another three years.

As a part of the regulatory process, it sent its recommendation to the Royal Monetary Authority (RMA) to get the fit and proper clearance for the CEO.

However, the recommendation hit a major legal snag in terms of the Financial Services Act 2011 and the Corporate Governance Rules and Regulations (CGRR) 2024 drawn from it.

Section 35 of the Act says ‘A Chief Executive Officer of a licensed financial institution shall be a full-time employee and shall hold office for such period, not exceeding five years at a time, subject to the approval by the Annual General Meeting.’

Section 99 of the CGRR says, “A CEO of a regulated entity shall be appointed for a term not exceeding the tenure specified in Section 35 of the Act, which may be extended for another term. The CEO may be eligible for the CEO position in another regulated entity after observing a minimum cooling period of six months.”

The above simply means that CEOs of Financial Institutions (FIs) regulated by RMA cannot get more than two terms.

A source in RMA said that RMA’s hands are tied in this situation as it has to follow the Act and the CGRR.

The source said that DHI and BoB had the option of giving the CEO two five year terms or it could have made his second term for five years but under the law a third term is not allowed.

The RMA Act and regulations in turn are drawn from international best practices where the norm is to not give more than two terms to CEOs, especially when it comes to sensitive positions like FIs.

The RMA source said that if FIs want to give a longer tenure to their CEOs then they can give it up to 5 years per term.

DHI had approached the RMA trying to justify the third term saying it was just an extension of the second term as RMA allows a total of 10 years in two terms. However, RMA rejected this and went by the book.

In the meantime, a DHI official said that the selection process for a new BoB CEO is ongoing, and no official announcement has been made yet.

There was some confusion as one of the candidates for the CEO post had sent out a tendrel invite, and the invitees assumed he would be the new BoB CEO, but this was withdrawn again by the same candidate.

A DHI official said the process is still ongoing, and once it is done then an official announcement will be made.