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The State Bank of Pakistan (SBP), amending Prudential Regulations for corporate/commercial banking, Wednesday allowed the chairman of the board of banks/DFIs to become a member of any one of the specialised board committees. Earlier, chairman of board was even not permitted to become a member of the specialised committees formed to share the load of activities, however with current amendment to the regulation, chairman of board have also been allowed to chair any one of the board committees except audit and risk management committees.
The SBP referring to the Prudential Regulation G-1 relating to corporate governance/board of directors and management, has announced to make amendment to para 10 of the Prudential Regulations aimed at facilitating banks and DFIs. According to BPRD Circular Letter No 33 of 2015, issued to the Presidents/Chief Executives of all banks/DFIs, para 10 of Section B. Responsibilities of the Board of Directors Prudential Regulation G-1 has been replaced as under:
"To share the load of activities, the Board may form specialised committees with well-defined objectives, authorities and tenure. These committees, comprising of at least one non-executive Board member, shall oversee areas like Audit, Risk Management, Credit, and Recruitment, Remuneration & Nomination, etc. The Chairman of the Board may chair and/or be a member of any one of the Board Committees except Audit and Risk Management Committees. Further, the Audit Committee of the Board shall invariably be chaired by an Independent Director. These committees of the Board should neither indulge in day-to-day affairs/operations of the bank nor enjoy any credit approval authority for transactions/limits. These committees should apprise the Board of their activities and achievements on regular basis." According to the SBP, all other instructions on the subject will remain unchanged.

Copyright Business Recorder, 2015

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