KARACHI (Staff Report) – State Bank of Pakistan (SBP) has given exemption to all commercial and Islamic banks, micro-finance banks and DFIs for compulsory rotation of key executives on the position of Head of Legal, Company/Corporate Secretary, Chief Operating Officer (COO) and Deputy CEO/Deputy MD.
However, the central directed all banking companies to ensure implementation of rotation policy in letter and spirit at the earliest but not later than September 30, 2015. In this regard, banks will have to furnished compliance status to the central bank’s department by the end of first week of October, 2015
Earlier in March 2015, the central bank directed banks’ board of directors to formulate an organization-wide rotation policy within inter-alia ensuring that the key executives are rotated appropriately after having served on a particular position for a reasonable time (five to six years).
These key executives include Chief Financial Officer/Head of Finance/Head of Accounts, Head of Internal Audit, Country Treasurer/Head of Treasury Operations, Head of Risk Management, Head of Operations, Head of Compliance, Head of Human Resource (HR), Head of Information Technology (IT), Head of Islamic Banking, Overseas Executives and Head of Credit and/or Corporate, SME, Consumer, Wholesale, Retail etc.
However, for those key executives who have already completed six years in the same position, the rotation should take effect immediately after implementation of rotation policy. Under extreme situations only, the positions of Head of IT, Treasury, HR and Islamic Banking may be exempted from compulsory rotation, the SBP further added.
SBP directed banks’ board of director should approve the appointment, compensation package (including retirement benefits), promotion/demotion and renewal of the employment contracts of key executives.
The Banks/DFIs 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, it further said.
The SBP has been endeavoring to strengthen corporate governance regime in line with the international best practices. In this regard, a comprehensive FPT Criteria is already in place for Board members, Chief Executive Officers (CEOs) and Key Executives of Banks/DFIs.
