Since the last financial crisis, most of the countries have revised their regulatory instructions, particularly focusing on the enhanced role of the independent directors in the ever-changing pace of the financial markets.
Accordingly, SBP has also issued revised instructions on the independent directors of the banks and development finance institutions.
Revision of the definition of independent director has been made, keeping in view the domestic regulatory/legal regime and international best practices. The new definition is somewhat more stringent than the previous one.
It will help in identifying and preventing conflict of interest situation to a greater extent. The number of minimum independent directors has been increased from 25pc to 33pc of the total board members with effect from March 31, 2018. A separate meeting of the independent directors of a bank/DFI has been suggested at least once in a year.
It is the core responsibility of the State Bank of Pakistan (SBP) to ensure financial stability of the banking industry by providing continuous supervisory support and guidance. For this purpose, the SBP endeavours to strengthen the good governance regime in the banking industry through continuously reviewing and updating its regulatory instructions to cope with the domestic challenges, as well as, to stay in line with the international standards.