Govt approves all-male ZTBL board

The federal government has approved an all-male board of Zarai Taraqiati Bank Limited (ZTBL), violating an Act of parliament that binds it to ensure women representation in every public interest company.

The decision is also against the government’s policy of economic and social empowerment of women, which President Arif Alvi reiterated on Wednesday.

But a day earlier, the federal cabinet approved a nine-member board, including two ex-officio members, for ZTBL. It approved the appointment of Nadeem Lodhi as the chairman of ZTBL board of directors.

Other members of the board include Akbar A Jaffer from Sindh, Syed Javed from Khyber-Pakhtunkhwa, Farhan Malik from Punjab, Zaigham Mahmood Rizvi from Punjab, Harris M Chaudhry from the federal capital, Hassan Ali Chainio from Sindh while ZTBL president and Finance Division joint secretary will join as ex-officio officers. Due to disagreement over the name of chairman between the State Bank of Pakistan (SBP), finance ministry and a supra-body that is running ZTBL affairs, the board’s approval was delayed.

Earlier, it had been decided to appoint Zaigham Rizvi as chairman of the board but subsequently the government approved a Citi banker - Lodhi.

Prime Minister Imran Khan had constituted the supra body comprising Shaukat Tarin, Zubair Soomro and Atif Bokhari, which was vetting every decision made by the ZTBL president. The board’s constitution was in violation of the Companies Act 2017.

“Provided that public interest companies shall be required to have female representation on their board as may be specified by the Commission,” according to Section 154 of the Companies Act 2017.

To a question about whether it was mandatory for every public sector company including the banking company to appoint a woman on the board, the SECP replied, “Section 154 of the Act requires all public interest companies to have female representation on their boards as may be specified by the SECP.” Non-compliance with Section 154 attracts a penalty of up to Rs5 million and where the contravention is a continuing one, a further penalty up to Rs100,000 per day may be imposed, according to the SECP.

However, the finance ministry spokesman defends the decision of appointing an all-male ZTBL board. There was no legal requirement to appoint a woman on the ZTBL board under the Banks Nationalisation Act and SECP’s Corporate Governance Rules 2017, said Ministry of Finance spokesman Kamran Afzal.

It is now widely recognised that gender diversity on boards is more than just a cause for gender equity, as it brings real and measurable advantages to firms.

In a recent survey of 366 public companies across a range of industries in Canada, Latin America, the United Kingdom and the United States, consulting firm McKinsey & Co found that those with a balanced number of men and women in leadership were more profitable than companies without gender equity.

But the government of Pakistan Tehreek-e-Insaf (PTI) is reluctant to bring women to the public sector companies.

It is also mandatory under the SBP’s regulations to appoint women on the companies’ boards. Prudential regulations have adopted the Code of Corporate Governance of the SECP, therefore, the finance ministry is bound to nominate a female director for the ZTBL board, according to the sources.

According to the SBP’s regulation, “The guidelines are required to be followed by banks, DFIs incorporated in Pakistan. They will also follow Code of Corporate Governance issued by SECP so long as any provision thereof does not conflict with any provision of Banking Companies Ordinance 1962, prudential regulations and the instructions/ guidelines issued by the State Bank of Pakistan.”

ZTBL is the country’s premier public sector financial institution, which is responsible for meeting financing needs of the farming community.

However, ZTBL is in the red and the bank has almost stopped rolling over maturing loans at a time when the farming community needs financing the most due to locust attack.

Questions have also been raised over the manner the bank’s operations are run. In case of hiring insurance companies for crop loan insurance, the bank’s senior vice president-level officer was reportedly in touch with one of the three parties that have been shortlisted, according to the sources.

However, ZTBL President Shahbaz Jamil has directed to put the evaluation report on the website of Public Procurement Regulatory Authority (PPRA). The report showed that bids of Pakistan’s leading insurance companies were rejected.

In July this year, the ZTBL president informed a parliamentary committee that non-performing loans increased to Rs71-billion by June this year, including Rs53 billion under time-based classification and Rs17.7 billion under subjective classification being done on the instructions of SBP. The bank had total equity of Rs52 billion that turned negative by Rs19 billion at the end of June 2020.

Published in The Express Tribune, December 24^th, 2020.

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