SBP creates 4-tier administrative system

Posted on 09.08.06 by StockPK Team @ 9:57 am    

The State Bank of Pakistan on Thursday announced creation of new four-tier administrative system.

The new administrative system of the central bank will create financial markets and reserve management cluster under which there will be a banking finance group, which will focus on high priority credit sectors such as infrastructure financing, housing finance, Islamic banking, SME and microfinance.

Governor SBP for the last few months has been trying hard to start infrastructure financing in the country and in this regard it is expected that state-controlled Industrial Development Bank (IDBP), by turning it into new banking entity, will be sole financial institution for infrastructure financing in the country.

The SBP governor was instrumental and determined to press hard for the issuance of presidential ordinance for establishing new banking entity in place of IDBP.

Issues related to housing finance could not be resolved because provincial governments are not cooperating with the central bank and the chief ministers of all the four provinces, along with governor of the central bank speed up the resolving of impending issues, for which the central bank has already prepared number of working papers with practical suggestions.

In order to resolve the SME issues, this month the SBP governor has constituted a consultative group.

However, the central bank, which was empowered in Finance Act-2006 to deal with such micro finance institutions, having negative financial ratios, so far has not taken any policy or bold administrative actions against such institutions with the result that with the passage of time the micro financing sector is turning from bad to worst.

The official press note said, “The role of subsidiaries will be redefined to create greater organisational synergy and to ensure management of their affairs in more cohesive and transparent manner,” but gave no details.

The 4-cluster will be headed by two deputy governors or en executive director of the bank.

Governor Shamshad Akhtar in her official communication, sent to executives, officers and staff members of the central bank announced the details of 4-tier administrative system of the central bank.

A task force was constituted some months ago to finalise the details. A press note of the central bank, released the notified changes.

Financial markets and reserve management cluster will manage the sensitive sectors like domestic financial markets and monetary management, international markets and investments, financial market strategy and conduct of exchange policy.

To have fair approaches and policies towards the external and internal matters of the bank,

The monetary policy and research cluster will have four separate departments including monetary policy department, economic analysis department, research department and statistics and data warehousing department.

She announced constitution of four principal management committees, which were previously got little attention during the last six years and attracted criticism from market players.

These committees are monetary policy committee, headed by the SBP governor, enterprise risk committee, headed by the SBP governor, investment committee headed by executive director financial markets and reserve management cluster and finally HR and corporate strategy committee, headed by the SBP governor.

The Banking Supervision Department has been empowered to “enforce actions” on the basis of its on-site inspection of banks and DFIs.

However, implementation of Basel-11, risk management has been transferred to core banking policy and regulation group.

This group will also responsible for banking policy, regulation and for resolution of problem banks.

The press note said, in addition to the four clusters, under direct supervision of governor, six new departments will perform.

These are office of corporate secretary, strategic and corporate planning, external relations, general council’s office, risk management, internal audit and compliance and governor’s secretariat.

In order to resolve issues arising as a result of the implementation of the re-organisation plan of the central bank, a committee, jointly headed by corporate secretary and director HR, has been constituted with the mandate to recommend resolution of issues in consultation with all group heads.

Source: The News