KARACHI: The State Bank of Pakistan (SBP) has amended Prudential Regulations for Corporate & Commercial Banking, regarding "Responsibilities of the Board of Directors." According to the SBP, Para 10 of Regulation G-1(B) allows the Board to form specialized committees with well-defined objectives, authorities and tenure. It further provides that such committees of the Board should neither indulge in day-today affairs/operations of the bank nor involve, enjoy any credit approval authority for transaction/limits. Now the SBP has been decided to add an additional Para 10A in Regulation G-1(B) to read as under: "10A. The Board of those banks which are operating as subsidiary of a foreign bank and joint venture DFIs, if deemed absolutely necessary, may delegate authority to a relevant committee of the Board to review/approve credit facilities over and above minimum threshold as determined by the Board of Directors. Further, such Board Committee must be chaired by a director having relevant experience to review/approve credit facilities. However, the management shall not be absolved of its responsibility of properly scrutinizing the credit proposals in terms of Bank's/DFI's approved credit policy and managing such credit on day to day basis."

The SBP has advised all concerned Banks/DFIs to follow the amended regulation in letter and spirit. Any deviation or non-compliance of the same shall attract punitive action under the relevant provisions of the Banking Companies Ordinance, 1962.

Copyright Business Recorder, 2020