Please refer to the instructions issued vide AC&MFD Circular No. 03 dated June 10, 2014.
2. The regulatory framework for Microfinance Banks (MFBs) has evolved with the development of the microfinance banking industry. Now, with a view to further strengthen corporate governance regime, it has been decided to include the following instructions;
a. MFBs shall conduct prior self assessment of the fitness and propriety of their Board Members, Presidents/CEOs and Key Executives and furnish an undertaking to this effect as per enclosed format (Annexure E – 4).
b. The Board of Directors or the concerned Board Committee of the MFB shall be responsible to appoint, determine compensation package (including retirement benefits), promotion/ demotion and renewal of the employment contracts of the Key Executives.
c. MFBs shall ensure that none of the Key Executive positions shall be filled by an executive on acting/additional charge basis for more than six (6) months.
3. Accordingly, the MFBs shall ensure that all fresh appointments as well as reappointments and/or renewals of employment contracts of Presidents/CEOs, Directors and Key Executives are strictly made in accordance with the revised instructions.
4. Failure to comply with the instructions contained in this circular and the FPT Criteria for MFBs shall invoke penal provisions of the Microfinance Institutions Ordinance, 2001.
5. Further, the Board of Directors are encouraged to formulate an organization-wide rotation policy to ensure that the Key Executives are rotated appropriately after having served on a particular position for a reasonable time (five to six years).
6. All other instructions on the subject shall remain the same.
7. Please acknowledge receipt.
Encl: As Above