Bank directors given permission to serve on boards of subsidiary companies
The State Bank of Pakistan (SBP) has revised its regulations to allow directors of banks to also serve on the boards of their wholly-owned subsidiaries, including exchange companies. The move aims to strengthen governance and coordination between banks and their affiliated entities.
In a circular issued under amendments to the Corporate Governance Regulatory Framework, the SBP updated Regulation G-4, Para 1(f), which previously restricted dual roles. The revised clause now states:
“No person can serve as a Director and/or President/CEO of a bank or DFI if he/she holds a substantial interest or is employed as Chairman, Director, CEO, Chief Financial Officer, Chief Internal Auditor, Financial Advisor, Research Analyst, Trader, or member (by whatever name/designation called) of:
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* an Exchange Company, except that the President/CEO or Director of a bank may serve as a director of an exchange company wholly owned by that bank, subject to submission of an additional affidavit;
* a Stock Exchange;
* a Corporate Brokerage firm/entity;
* a Credit Information Bureau; or
* any company/entity owned or controlled by the persons listed above.”
Additionally, the SBP clarified that an independent director of the Pakistan Stock Exchange (PSX) may also serve on the board of a bank or DFI, provided they have no associations with the restricted categories listed in the regulation.
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This policy update follows the SBP’s 2024 decision permitting banks to establish their own exchange companies to streamline foreign exchange operations. Since then, several banks have received approval to launch their exchange subsidiaries.
Source: Pro Pakistani