20000210

Ishrat proposes restructuring of SBP board

RECORDER REPORT

KARACHI: State Bank Governor, Dr. Ishrat Hussain on Wednesday, proposed restructuring its board of directors and placing people of impecable reputation to exercise oversee the management and provide policy guidance.

In his address of welcom , delivered on the occasion of the Chief Executive's address to the heads of banks, NBFIs, Leasing and Modarabas companies at the SBP, Dr. Ishrat Husain expressed his firm commitment to the agenda of revival of the economy.

"I can assure you that as a member of your economic team that both the finance minister and myself are fully committed to meeting the economic challenges," said the Governor.

He said that revitalising the financial sector and putting it on a sound, healthy and strong foundations is the key for revival of the economy.

"As a first step we are working hard to identify and induct professional managers of reputable integrity to head the financial institutions, so that they lead the organisation to new heights of performance," he said.

While proposing the restructuring of the board of directors, Dr. Ishrat said that the SBP will act vigilantly to supervise and regulate the functions of these institutions.

"The best international practice suggests that if we have a combination of right managers and effective boards we can bring unfortunate practices which had characterised our financial institutions in the past to an end," he said. Given the limited resources, the State Bank is unable to monitor the performance of each institution continuously, therefore, under way to introduce incentives, systems and processes including performance evaluation and accountability for results to encourage self-regulation and prudent banking practices.

He thanked the chief executive for providing full support in initiating this cultural change from a situation where connections and personal loyalty mattered to a new culture in which merit and performance are the key criteria. "We cannot change things overnight but I can assure you that we will do our best to bring about this fundamental change in a way that it is sustainable in the long run," he said.