Family-dominated boards not good for banks: SBP.

 
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KARACHI -- State Bank of Pakistan Governor Dr Reza Baqir on Tuesday said in a seminar that concentration of banks' shareholding to a few families and their nominees on the boards is against good governance practices and may adversely impact the effectiveness of the board.

During his inaugural address in a seminar on 'Emerging Trends in Good Governance of Banking Sector' in South Asian Association for Regional CoopAeration (Saarc) countries highlighted the importance of efficient and robust governance structure in banking for sustainable economic growth.

The seminar was also attended by delegates from Afghanistan, Bangladesh, Bhutan, Sri Lanka and Nepal.

Baqir said that independent directors play an important role in banks by exercising their neural judgment and protect the interest of minority shareholders. He also mentioned that corporate governance practices in public sector banks are generally weak and less transparent due to likely political intervention in internal affairs.

'There is a need to rationalise the shareholding structure of these banks to minimise the undesirable role of governments in their affairs,' said the governor.

He emphasised that boards with femAale representatives and diversified experience in the fields of IT, risk management, finance and economics can...

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