KARACHI: The State Bank of Pakistan (SBP) has on Monday revised the Corporate Governance Regulatory Framework which means strengthened the regulatory for Banks and Development finance institutions (DFIs) to meet international standards, ARY News reported quoting central bank statement.
The objective of this revision is to “further strengthen the corporate governance regime of banks and DFIs and to align the same with international standards and best practices”, the statement read.
“The framework covers Fit & Proper Test (FPT) Criteria and other Corporate Governance regulatory requirements for the sponsor shareholders and beneficial owners, members of the Board of Directors, Presidents and CEOs and key executives of banks and DFIs.”
Since the last amendments carried out in 2007, it is the first revision in which all the existing regulatory requirements related to corporate governance have been consolidated.
The central bank said it is to improve consistency, understanding and usability for stakeholders.
Here are some of the major changes as per SBP
The board is now required to collectively have adequate knowledge, expertise and skill-mix related to the business model, overall size, complexity and risk profile of the bank and DFI.
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Moreover, the board should have at least one female director who should not be a family member of any other director or sponsor shareholder of the bank or DFI.
Further, the maximum age of a President or CEO has been reduced from 70 years to 65 years.
This change in age will be applicable to new Presidents or CEOs. The existing Presidents or CEOs will continue till the completion of their current tenures irrespective of their age and may also be considered for another term till the age of 70 years.
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