The option to merge it with BDBL is questionable while a decision on its legality would be announced soon
BOiC: A decision on the issue of legality surrounding the controversial Business Opportunity and information Centre (BOiC) will be reached soon, finance minister Namgay Dorji said.
“We consulted the Royal Monetary Authority and the Bhutan Development Bank Limited for feasibility of merger, but this is still an option,” Lyonpo Namgay Dorji said. “The government has consulted several parties and the decision would be passed soon.”
The Office of the Attorney General, one of the parties consulted, recommended the government to constitute BOiC as a state owned enterprise, a registered company for it to be entitled to a licence, which would enable it to deliver financial services as mandated by the central bank.
While the intentions of establishing BOiC has not been questioned per se, the National Council during its summer session had flagged the issue of its legality and had resolved to seek the Supreme Court’s interpretation on its establishment after submitting the issue to His Majesty the King.
Then, the Prime Minister had asked the Council to justify how the government had breached existing legislations in establishing BOiC and has maintained since then its establishment was legal.
Although the move was not to be construed as the government admitting to the Council, the Cabinet formed a task force to review issues surrounding the BOiC saga, and “bring closure to this issue,” according to the prime minister.
One of the options the government was looking at was to merge BOiC with Bhutan Development Bank Limited (BDBL). However, the legitimacy of a merger is still questionable because reliable legal sources said BOiC is not an entity, but an organisation created and owned by an elected government, and that a merger can only occur between two entities.
The National Council was perhaps right in pointing out the organization’s legality because according to reliable legal sources, BOiC is not an entity, but “simply an organization formed at the whims of the government.”
Merging the two would have also mean that BDBL be given some authority to screen proposals as well as have a say on sanctioning the loans. However, sources pointed out that using the bank’s counters to deliver services, as is the arrangement now is a misuse of the bank and against the bank’s mandate.
In order to deliver financial services, the central bank mandates that an organization must be subject to its licensing requirement.
Chapter 3, Section 11 of the Financial Services Act, 2011, states, “No person shall offer financial services as a business without obtaining the appropriate license under this Act or the regulations under it…”
According to the Office of the Attorney General, being a registered corporate organization could allow it to avail a licence and meet the Central Bank’s requirement, as well as enable secondment or transfer of civil servants.
The conversion into a registered establishment would also allow BOiC to hire the services of BDBL as an agent for a fee to deliver its services across the country
In the last meet the press session, the Cabinet had asserted that BOiC was not illegal. The Prime Minister said he had made it clear to the National Council, that if the institution were illegal the government would correct it but not to divulge that it is “not legal without legal arguments.”
“Because the National Council submitted an appeal to His Majesty The King, it is our responsibility to look into it and review,” Lyonchoen had said. “Although there was no legal argument proving that it is not legal, merger was one of the options.”