The Presidents/Chief Executive
CORPORATE GOVERNANCE REGULATORY FRAMEWORK
With a view to further strengthen the corporate governance regime and to align the same with international standards/principles, the existing Fit & Proper Test (FPT) Criteria and other Corporate Governance regulatory requirements for the Sponsor Shareholders, members of the Board of Directors, Presidents/CEOs and Key Executives of banks/DFIs have been reviewed. Accordingly, State Bank of Pakistan (SBP), while exercising the powers conferred under Section 17H of the State Bank of Pakistan Act, 1956 read with Section 41 of the Banking Companies Ordinance 1962, has formulated a comprehensive Corporate Governance Regulatory Framework (“CGRF”) for Banks/DFIs (enclosed).
2. The salient features of the CGRF are as follows:
- Consolidation of all instructions/circulars/guidelines, issued from time to time, related to corporate governance of banks/DFIs.
- Alignment of the corporate governance requirements with international standards/principles on corporate governance, domestic laws/rules/regulations and industry best practices.
- Strengthening and rationalizing Fit & Proper Test Criteria for all categories of persons subject to FPT assessment.
- Enhancement of the role of banks/DFIs in FPT assessment by introducing the requirement of Standard Operating Procedures (SOPs) for self-assessment.
- Empowerment of the Board of Directors through enhancing their roles and responsibilities related to overall governance of the bank/DFI.
3. All banks/DFIs are, therefore, required to comply with the revised instructions for all future appointments with immediate effect. Moreover, the board composition shall be in accordance with the CGRF, whenever it is reconstituted after the expiry of the current term.
4. The banks/DFIs are also required to furnish the information of prospective Sponsor Shareholders, Board members, Presidents/CEOs and Key Executives on revised FPT Proforma attached herewith. The banks/DFIs must ensure accuracy and completeness of the information /documents while submitting the same to SBP. In case of any discrepancy, appropriate enforcement action(s) may be taken against the bank/DFI and/or the concerned person submitting the FPT documents.
5. Further, considering that FPT is a continuous process, any violation of these instructions, circumvention, concealment, misreporting and delay in submission of information to SBP may result in strict penal action under the relevant provisions of Banking Companies Ordinance 1962.
6. The list of circulars/relevant instructions that stand superseded with the issuance of this circular is attached for information.
7. Please acknowledge receipt.
- Corporate Governance Regulatory Framework
- FPT Proforma
- List of circulars/relevant instructions that stand superseded
- Shareholding Returns in Excel Format (as mentioned in Annexure C of CGRF)