Scribd
Upload
38 views

Lesson Plan 19 20

The document discusses corporate governance in banking and financial institutions in Pakistan. It outlines the need for corporate governance to protect depositors' interests and maintain their confidence. The State Bank of Pakistan (SBP) regulates the monetary and credit systems and oversees banking operations through prudential regulations. The SBP requires annual financial reporting and audits by banks to comply with relevant ordinances and ensure transparency. Laws governing banking in Pakistan include the Banking Companies Ordinance 1962, State Bank of Pakistan Act 1956, and others relating to financial transactions, money laundering, and dispute resolution.

Uploaded by

Hassan Malik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
38 views

Lesson Plan 19 20

The document discusses corporate governance in banking and financial institutions in Pakistan. It outlines the need for corporate governance to protect depositors' interests and maintain their confidence. The State Bank of Pakistan (SBP) regulates the monetary and credit systems and oversees banking operations through prudential regulations. The SBP requires annual financial reporting and audits by banks to comply with relevant ordinances and ensure transparency. Laws governing banking in Pakistan include the Banking Companies Ordinance 1962, State Bank of Pakistan Act 1956, and others relating to financial transactions, money laundering, and dispute resolution.

Uploaded by

Hassan Malik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 4

Corporate Governance

Lecture Plan Session 19-20

Corporate Governance in Banking and Financial Institutions in Pakistan

1. Need and Background

1.1 Banks willingness to accept deposits, manage lending and take risks.

1.2 Retain depositors confidence for successful operations and sustainability.

1.3 Vulnerability of depositors to the whims of managerial misadventures.

1.4 First the protection of depositors interests as “Trustee” and then “Optimize” the
shareholders’ interests.

1.5 Basel committee on Banking Supervision (BCBS) established by the central


bank governors of the Group of Ten (G-10) countries in 1947, providing a forum
for regular cooperation on banking supervision to enhance understanding of key
supervisory issues and improve the quality of banking supervision world wide.

1.6 The committee’s secretariat is located at the Bank for international settlements
(BIS) in Basel (Switzerland). BCBS has its own governance arrangements,
reporting lines and agendas guided by the central bank governors of G-10
countries. The Basel Committee formulates broad supervisory standards and
guidelines and recommends statements of best practice in banking supervision in
the expectation that other nations authorities will take steps to implement them
through their own national systems,

1.7 The Basel Committee along with its sister organizations,

- The international organization of securities commissions and


international Association of insurance supervisors together make
up the Joint Forum of international financial regulators.

1.8 Based III is a global, voluntary regulatory framework on bank capital adequacy,
stress testing and market liquidity risk. This third installment of the Basel
Accords was developed in response to the defencies in financial regulation
revealed by the financial crisis of 2007 – 09. The measures aim to strengthen the
regulation, supervision and risk management of banks

1.9 Based III was agreed upon by the members of the Basel Committee on Banking
Supervision in November 2010, however implementation was extended
repeatedly to 31 March 2019.

1.10 From the perspective of banking industry, corporate governance also includes in
its scope the manner in which their Boards of Directors govern the business and
affairs of institutions and their functional relationship with senior management
and regulatory mechanism of the state institutions.

2. The State Bank of Pakistan (SBP)

2.1 SBP is the Central Bank of the country established on July 1, 1948

2.2 According to SBP Act 1986, the state bank is responsible for regulating the
monetary and credit systems of Pakistan

2.3 Federal Government of Pakistan has 100% ownership of capital of state bank

2.4 Management of State Bank

- Central Board of Directors.

- Board of Directors Comprises of a Governor (Chief Executive).

- One or more Deputy Governors.

- Seven Directors nominated by the Federal Government.

- Governor (Chief Executive) is appointed by the President of Pakistan


and his term of office is 3 (three) years.

- Governor Position is “Constitutional” is eligible for reappointment


provided he has not completed 65 years of age.

- The term of office of Deputy Governor is five years.

2.5 Responsibilities of the SBP

- Formulation and monitoring the monetary and credit policy with


respect to macro-economic policy objectives of Govt; of Pakistan

- Issuing of currency notes backed by proportional reserve system


including gold and silver bullion, approved securities, SDRs and
approved foreign exchange

2.6 Bankers to the Government (Federal and Provincial Governments), issue of


cash for salaries, accepting cheques, deposits, drafts, transferring government
funds.

2.7 Adviser and Agent to the Government


- Recommendations on economic, financial and monetary matters,
agriculture credit, industrial finance, exchange control, mobilization of
savings, planning and development.

2.8 Bankers Bank and the lender of the last resort.

2.9 Controller of credit and bank rate

2.10 Exchange Control (Foreign Exchange regulation Act 1947). Full control over
the movement of capital from and to the country.

3. Prudential Regulations

SBP Effectively regulate and monitor the banking operations in Pakistan

4. Audit and Financial Reporting requirements for Banks

4.1 Annual financial statements should comply with the banking companies
ordinance 1962 and must be filed annually with the State Bank of Pakistan by
March 31st. the State Bank may, under special circumstances, extend the due
date by a period up to three months.

4.2 Banks are required to publish their annual and quarterly (except for the fourth
quarter) financial statements in the national press and display these at each
branch office. The financial statements for the second quarter must be
reviewed by the auditors.

4.3 Other requirements, where applicable, for banks regarding language of


reports, consolidated financial statements, directors reports, availability of
printed reports and accounting records are the same as for listed public
companies as per SECP Code.

5. Laws of Banking in Pakistan

- Banking Companies ordinance 1962.

- Companies Ordinance 1984.

- State Bank of Pakistan Act. 1956.

- Negotiable Instruments Act. 1881

- Bankers Books Evidence Act. 1891

- Financial Institution (Recovery of Finances) ordinance 2001.


- Foreign exchange regulation Act. 1947.

- Anti – Money Laundering Act. 2010.

- Banking Mohtasib, the amendment in BCO 1962, has added the provisions
for establishment of office of Banking Mohtasib under section 82 – A.

You might also like