Minutes of meetings

It seems that State Bank of Pakistan (SBP), as a regulatory and supervisory body of the financial institutions in Pakistan, is not satisfied with the current system of recording of minutes of Boards of Directors (BoDs) and general meetings. According to a circular issued by the SBP on 7th January, 2020, it has instructed all financial institutions to ensure accurate recording of minutes of BoDs and general meetings reflecting the key deliberations, rationale for each decision made and significant concerns or dissenting views. All banks/DFIs have also been advised that recording of the Board Committee meetings should also be given as much care and attention as those of the full Board meetings and in the event of conflict of interest, the Board should detail in minutes as to how they have complied with the organisation's conflict of interest policy. Every Company Secretary will be required to submit duly certified copies of the draft minutes of the BoDs and general meetings within 21 days of the date of such meetings through Data Acquisition Portal (DAP) of State Bank of Pakistan. In case there is any change in the approved/final minutes from the draft minutes submitted earlier, the Company Secretary will also submit certified copies of such approved/final minutes within 10 days of the approval through DAP. Further, any change from the draft minutes must be underlined and mentioned in bold.

It may be mentioned that the SBP had always stressed upon proper and detailed recording of minutes of the BoDs and general meetings so as to reflect a comprehensive picture of the deliberations and decisions taken during these meetings. However, while these instructions were earlier conveyed properly to all the financial institutions, they did not follow these instructions in letter and spirit. As such, the SBP is constrained once again to further elaborate and consolidate all the instructions issued previously. It has asked the financial institutions to record their minutes more exhaustively, accurately and minutely so as to enable the SBP to have a comprehensive view of the current situation of the individual institutions. In keeping with this spirit, FIs have been instructed to ensure that the deliberations made by the participating board member(s) are duly reflected in the minutes of the meeting(s) using name tags and notes of dissent of any matter by board member(s), and rejection or deferral of any proposal of the management must be fully elaborated and recorded accordingly in the minutes.

It is not difficult to find the reasons behind this circular issued by the SBP. SBP wants to know the latest policy parameters and actions of every financial institution, current thinking of all the board members and various committee members on various subjects, conflict of interest situation(s) and how it is resolved finally and in a timely fashion. The purpose of all this exercise could also be to know the reaction of the financial institutions to the current policies of the central bank. The most important reason to issue these instructions could be to assess the financial position of banks/DFIs through the minutes of board meetings and if some institutions are in financial trouble, the SBP can take timely action to save the entire system or particular institutions from going under. Anyhow, we fail to understand the reasons for poor drafting of the minutes of the financial institutions which seems to be implied in the instant case. In our view, drafting of minutes is a specialized job and the person entrusted with this responsibility has to be a skilled person to convey the sense of the meetings accurately and transparently and in a very faithful manner to avoid any confusion. Hopefully, the financial institutions would be more careful in recording the minutes of their meetings after the issuance of this circular. The shift to this healthy practice would be more useful for bankers, the SBP and other stakeholders of the financial system.