The Presidents/Chief Executives,

All Banks/DFIs

Dear Sirs/Madam

Amendments in Prudential Regulations G-1(B

Please refer to Regulation G-1(B) of Prudential Regulations for Corporate/Commercial Banking, regarding ‘Responsibilities of the Board of Directors’ as amended from time to time. Para 10 of Regulation G-1(B) allows the Board to form specialized committees with well-defined objectives, authorities and tenure. It further provides that such committees of the Board should neither indulge in day-to-day affairs/operations of the bank nor involve enjoy any credit approval authority for transaction/limits.

2. It has been decided to add an additional Para 10A in Regulation G-1(B) to read as under:

“10A. The Board of those banks which are operating as subsidiary of a foreign bank and joint venture DFIs, if deemed absolutely necessary, may delegate authority to a relevant committee of the Board to review/approve credit facilities over and above minimum threshold as determined by the Board of Directors. Further, such Board Committee must be chaired by a director having relevant experience to review/approve credit facilities. However, the management shall not be absolved of its responsibility of properly scrutinizing the credit proposals in terms of Bank’s/DFI’s approved credit policy and managing such credit on day to day basis.”

3. All concerned Banks/DFIs are advised to follow the amended regulation in letter and spirit. Any deviation or non-compliance of the same shall attract punitive action under the relevant provisions of the Banking Companies Ordinance, 1962.
4. All other instructions on the subject shall remain unchanged.
5. Please acknowledge receipt.