Central bank cautions
Sep 14, 2009
BOARD members of non-banking financial institutions (NBFI) have been warned against interfering in management issues. “Once you set policies and procedures, implementation should be left to management.
By Sylvia Juuko
BOARD members of non-banking financial institutions (NBFI) have been warned against interfering in management issues. “Once you set policies and procedures, implementation should be left to management. Your role should be to review periodically whether management is on track,†Justine Bagyenda, the central bank executive director for supervision, said.
She was addressing board of directors of NBFI at Imperial Royale Hotel in Kampala last week. NBFIs include microfinance deposit taking institutions (MDIs) and credit institutions.
She asked board members to provide oversight and control of the management team to protect customer deposits.
Bagyenda said the consequence of poor corporate governance structures and weakness in supervision were responsible for Uganda’s banking crisis in the late 90’s.
“The licensing criteria of 1993 which allowed family-owned institutions brought problems,†she said. “Ineffective corporate governance has the potential to cause financial instability of the respective institution.â€
Bagyenda reminded board members that they would be responsible for imprudent policies. She added the introduction of electronic banking products had elevated intermediation to another level and increased risks.
“This requires that institution’s risk management systems must be robust and the tools to control risks adequate,†she advised.
BOARD members of non-banking financial institutions (NBFI) have been warned against interfering in management issues. “Once you set policies and procedures, implementation should be left to management. Your role should be to review periodically whether management is on track,†Justine Bagyenda, the central bank executive director for supervision, said.
She was addressing board of directors of NBFI at Imperial Royale Hotel in Kampala last week. NBFIs include microfinance deposit taking institutions (MDIs) and credit institutions.
She asked board members to provide oversight and control of the management team to protect customer deposits.
Bagyenda said the consequence of poor corporate governance structures and weakness in supervision were responsible for Uganda’s banking crisis in the late 90’s.
“The licensing criteria of 1993 which allowed family-owned institutions brought problems,†she said. “Ineffective corporate governance has the potential to cause financial instability of the respective institution.â€
Bagyenda reminded board members that they would be responsible for imprudent policies. She added the introduction of electronic banking products had elevated intermediation to another level and increased risks.
“This requires that institution’s risk management systems must be robust and the tools to control risks adequate,†she advised.