KARACHI: Since last financial crisis, most of the countries have revised their regulatory instructions particularly focusing on the enhanced role of independent directors in the ever-changing pace of the financial markets, said a SBP statement on Wednesday.
Accordingly, SBP has also issued revised instructions on independent directors of the banks/development finance institutions. According to the revised instructions, revision of the definition of independent director has been made, keeping in view the domestic regulatory/legal regime and international best practices.
New definition is somewhat more stringent than the previous one. Thus it will help in identifying and preventing conflict of interest situation to a greater extent.
Minimum number of independent directors has been increased from 25 percent to 33 percent of the total Board members with effect from March 31, 2018.
Separate meeting of the independent directors of a bank/DFI has been suggested at least once in a year. It is the core responsibility of State Bank of Pakistan (SBP) to ensure financial stability of the banking industry by providing continuous supervisory support and guidance.
