Bank boards advised to effectively execute duties
Jul 06, 2009
BANK boards should provide the necessary control over managers to protect deposits and achieve a robust financial sector, a central bank official has said. Justine Bagyenda, the executive director for supervision, said it was in the interest of the board
By Sylvia Juuko
BANK boards should provide the necessary control over managers to protect deposits and achieve a robust financial sector, a central bank official has said. Justine Bagyenda, the executive director for supervision, said it was in the interest of the board to appraise themselves over the operations of their financial institutions.
“Although the day-to-day routine of banks’ business is delegated to the officers and employees, you still remain responsible for the consequences of unsound policies whether they involve lending, investing, protecting against internal fraud or any other activity,†she stressed.
Bagyenda said weak and poor governance had largely been responsible for the financial and economic crisis globally as well as Uganda’s banking crisis in the late 1990s.
“All the crises that have rocked the world are pointing to weakness in the boardroom. If the board members don’t understand the business of the institutions they head, later on, the institution is bound to fail,†Bagyenda told banks’ board members during a meeting at the Imperial Royale Hotel in Kampala, recently.
She said the responsibilities of the board members are well stipulated in the Financial Institutions Act (FIA) 2004, adding that the central bank ensures that only competent board members are appointed by conducting a vigorous vetting process, training and issuing guidance notes.
However, the sector is faced with a skills gap, which the central bank and bankers’ association have addressed by conducting a training programme at the Uganda Institute of Bankers.
“With the entry of new banks, we are seeing movement of staff across banks and they are paid highly. We are trying to solve it through training.â€
Bagyenda noted that technology and globalisation had elevated banking to another level due to the increase in the complexity of banking and associated risks.
BANK boards should provide the necessary control over managers to protect deposits and achieve a robust financial sector, a central bank official has said. Justine Bagyenda, the executive director for supervision, said it was in the interest of the board to appraise themselves over the operations of their financial institutions.
“Although the day-to-day routine of banks’ business is delegated to the officers and employees, you still remain responsible for the consequences of unsound policies whether they involve lending, investing, protecting against internal fraud or any other activity,†she stressed.
Bagyenda said weak and poor governance had largely been responsible for the financial and economic crisis globally as well as Uganda’s banking crisis in the late 1990s.
“All the crises that have rocked the world are pointing to weakness in the boardroom. If the board members don’t understand the business of the institutions they head, later on, the institution is bound to fail,†Bagyenda told banks’ board members during a meeting at the Imperial Royale Hotel in Kampala, recently.
She said the responsibilities of the board members are well stipulated in the Financial Institutions Act (FIA) 2004, adding that the central bank ensures that only competent board members are appointed by conducting a vigorous vetting process, training and issuing guidance notes.
However, the sector is faced with a skills gap, which the central bank and bankers’ association have addressed by conducting a training programme at the Uganda Institute of Bankers.
“With the entry of new banks, we are seeing movement of staff across banks and they are paid highly. We are trying to solve it through training.â€
Bagyenda noted that technology and globalisation had elevated banking to another level due to the increase in the complexity of banking and associated risks.