KARACHI: State Bank of Pakistan (SBP) on Tuesday restrained board / chairman of banks from appointing adviser in any capacity.
The central bank amended Prudential Regulations G-1 to substitute Para C-3, which is as under:
“3. The Chairman/Board shall not appoint an `Advisor’ in any capacity. Accordingly, all Banks/DFIs are advised to ensure appropriate skill mix of the Board keeping in view the overall risk profile of the institution.”
All banks/DFIs are advised to ensure compliance within six months of the date of issuance of the circular letter, the SBP said.
After which, the non-compliance shall attract punitive action under relevant provisions of the Banking Companies Ordinance, 1962.
Earlier the SBP through amendment dated April 24, 2009 issued the following:
“Chairman of the Board of Directors may, if deemed necessary, appoint one advisor to advise and facilitate him in discharge of his duties/responsibilities. The appointment of such an advisor will be subject to the following conditions:
a) The advisor must possess the required technical experience relating to banking and finance at a senior level to enable him/her to render a professional advice to the Board.
b) The terms of reference of the advisor shall be approved by the Board.
c) A reasonable remuneration may be paid to the advisor with the approval of the Board of Directors.
d) The advisor may attend the meetings of Board of Directors and Board Committees in which his/her participation is required but he/she will not be a member of the Board and/or its committees.
e) The advisor shall be required to sign an appropriate confidentiality agreement to ensure confidentiality of documents / information that may come to his/her knowledge, before assuming any such role.”