SBP allows bank directors to serve on boards of wholly owned exchange companies

The State Bank of Pakistan (SBP) has revised its Corporate Governance Regulatory Framework, allowing directors and senior executives of banks to also serve on the boards of exchange companies wholly owned by their respective institutions.

According to a notification issued by the central bank, the amendment — made to Regulation G-4, Paragraph 1(f) — is designed to strengthen governance linkages between banks and their exchange company subsidiaries. The policy change is expected to enhance coordination, compliance, and strategic oversight across related financial entities.

Under the updated regulation, a bank’s president, CEO, or director may hold a directorship in an exchange company fully owned by that bank, provided they submit an additional affidavit.

The SBP clarified that the amendment applies strictly to exchange companies wholly owned by banks and does not extend to other financial entities. Existing restrictions remain in force, prohibiting bank officials from serving as directors in stock exchanges, brokerage firms, credit information bureaus, or any institutions owned or controlled by such entities.

The amendment forms part of SBP’s broader effort to align governance structures and ensure consistent regulatory oversight within the banking and foreign exchange sectors.