The State Bank of Pakistan (SBP) has announced a major reform aimed at strengthening coordination between banks and their wholly owned subsidiaries. Under the updated Corporate Governance Regulatory Framework, bank board members are now permitted to serve as board members of their associated exchange companies.
According to the SBP’s circular, amendments to Regulation G-4, Para 1(f) clarify that while directors and CEOs of banks cannot hold positions in unrelated financial entities, they may serve as directors in exchange companies fully owned by their bank, subject to the submission of an additional affidavit.
This reform enhances transparency and corporate oversight, allowing banks to better supervise their exchange subsidiaries without violating governance rules.
The circular further states that independent directors of the Pakistan Stock Exchange (PSX) may also serve on bank boards, provided they have no financial interest in other restricted entities.
Last year, the SBP permitted commercial banks to establish their own exchange companies to strengthen foreign exchange operations — a move that has since led to the creation of several new exchange entities across Pakistan.
