Druk PNB Bank Limited(DPNBL) incorporated in Bhutan is a Joint Venture Bank with 51% share holding by Punjab National Bank, a leading public sector Bank in India.

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Role and Responsibility of Individual Directors

  1. A bank is a separate corporate body; it is not an actual person but an artificial entity and acts through its ‘Board of Directors’.
  2. As 51 % of the share capital of the bank is owned by Punjab National Bank, India there are three Directors from Punjab National Bank and one Bhutanese promoter and one will be appointed from the public after issuance of public issue. The Directors are expected not only to take interest in the banks’ activities concerning their own fields of activity but also to deliberate on all matters of general policy affecting the bank’s functioning including those concerning their staff. In other words, every director is expected to function in a manner most conducive to the interests of the bank on which he/she serves and to the welfare of the nation as a whole.
  3. A Director, other than the Chief Executive Officer (CEO) is not an employee of the bank.
  4. A Director other than the CEO as an individual, has no power to act on behalf of the bank nor can he/she give any direction to any employee of the bank on behalf of the management. Unless any power has been specifically delegated to a Director by the Board by way of a resolution, he/she exercises power only as a member of collective body, sitting alongwith other on the Board of Directors. An individual Director or a Committee of the Board may be authorised by the Board to finally decide a matter or make a recommendation to the Board for its direction.
  5. A Director while discharging duties of his/her office must act honestly and with due diligence. He/She is expected to act with that amount of care and prudence which an ordinary person is expected to take in his/her own business.
  6. A director who is directly or indirectly concerned or interested in any contract, loan, arrangement or proposal entered into or proposed to be entered by or on behalf of the bank shall, as soon as possible after the relevant circumstances, have come to his/her knowledge, disclose the nature of his/her interest to the Board when any such contract, loan, arrangement or proposal is discussed unless his/her presence is required by the other Directors for the purpose of eliciting information and no Director so required to be present shall vote on any such contract, loan, arrangement or proposal.
  7. Every director of the bank shall, before, entering upon his/her duties, make a declaration of fidelity and secrecy in the form prescribed for the purpose.
  8. The Chief Executive Officer of the bank shall exercise such powers and discharge such duties as may be delegated to him by the Board. The CEO shall be responsible for the efficient management of the bank on behalf of the Board. It is through him that the programme, policies and decisions approved by the Board are made effective and again it is through him the Board gets the responses and reactions of those at various levels of the organization to its deliberations. It is he/she who interprets the policy decided upon by the Board to the employees of the bank and issues instructions in pursuance of the Board’s policies and ensures that these instructions are carried out.
  9. In the discharge of their duties, the non – official Directors are expected to observe the following guidelines:
    1. Directors are expected to disclose to the Board the nature of interest, if any in any proposal. They shall not be present at the meeting of the Board when such a proposal is discussed, except when Board requires his/her presence for certain explanations in the matter.
    2. Directors shall not sponsor any individual proposal nor wouId they pressurise the concerned Branch Heads to sanction loans or other facilities to the constituent.
    3. In the matter of personnel management, Directors shall not sponsor individual case(s) of employee(s) or officer(s) regarding their recruitments, transfers, promotions, postings and other related matters.
    4. Directors should desist from sending any instructions to the individual officer(s) of the bank or give directions to such officer(s) on any matter. Such cases, if any, should be routed through the CEO of the bank.
    5. Directors are not required to watch the routine of every day’s business of the bank. It is the Chief Executive Officer alongwith officers who has to manage the affairs of the bank. The Board has to oversee implementation of policies and performance of the bank at the corporate level.
    6. Directors are expected to work collectively as a team in the board meetings and not involve themselves in the conduct of the day-to-day affairs of the bank. If any information is required, it should be sought only for the purpose of taking a decision or reviewing the situation at the Board level
  10. Except for loans granted under the institution’s service schemes duly approved by its Board; no financial institution shall grant favored terms to its Directors, officers or employees. In other words, except for loans granted under the institution’s staff loan schemes, any loan to a Director, officer or employee must be subject to same terms and conditions as to any other borrower.
  11. The following principles are at the heart of ethical conduct by Directors of the bank.
    1. to avoid conflict of interest;
    2. to avoid misuse of position;
    3. to prevent misuse of information gained through the financial institution’s operations either for personal gain or for any purpose other than that intended by the financial institution;
    4. to ensure completeness and accuracy of relevant records;
    5. to ensure confidentiality of communication and transactions between the financial institution and its customers; and
    6. to ensure fair and equitable treatment of all customers and others who rely on, or are associated with the financial institution.
  12. Directors must not engage directly or indirectly in any business activity that conflicts or competes with the financial institution’s interests. These activities include, but are not limited to, the following:-
    1. The Directors of the bank shall fully disclose to its Board any commercial, financial, agricultural, industrial, or other business interests with which they or members of their families may at any time directly or indirectly be interested and shall refrain from voting on any matter related thereto which becomes the subject of Board action: provided that such an interest, if so disclosed, shall not disqualify the interested party for the purpose of constituting a quorum.
    2. Directors must not accept costly entertainment from customers, potential customers and suppliers. However, Directors may accept token gifts of no commercial value, if the acceptance of such gifts would not place the Director in a compromising position. Under no circumstances should gifts in the form of cash, bonds, negotiable securities, personal loans, airline tickets or use of vacation property be accepted.
  13. Directors must not use the Bank’s name or facilities for personal advantage in investment or retail purchasing transactions, or in similar types of activities. Directors and their staff, and their relatives must not use their connection with the Bank to borrow from or become indebted to customers or prospective customers. The use of position to obtain preferential treatment, such as in purchasing goods, shares and other securities is prohibited.
  14. Directors must not use the Bank’s facilities and influence for speculating in commodities, gold, silver, foreign exchange or securities, whether acting personally or on behalf of relatives. Such misuse of position may be grounds for dismissal. Directors should also refrain from ‘ back-scratching’ exercises with staff and Directors of other Banks to provide mutually beneficial transactions in return for similar facilities, designed to circumvent these ethical guidelines.
  15. No Director shall use any information which he/she may obtain in the discharge of his/her duties about the Bank itself, or any of its customers, for his/her personal or financial gain.
  16. No Director shall deal in the securities of any company listed or pending listing on a stock exchange at any time when he/she is in possession of information obtained as a result of his/her employment by, or his/her connection with the Bank which is generally not available to shareholders of that company and the public, and which, if it were so available, would likely bring about a material change in the market price of the shares or other securities of the company concerned.
  17. Director who possesses insider information is also prohibited from influencing any other person to deal in the securities concerned or communicating such information to any other person
  18. Directors must take every precaution to protect the confidentiality of customer information and transactions. In accordance with Article 23 of the FIA, no Director shall divulge information regarding any customer, or any correspondence, accounts or dealings of the financial institution or its customers, to any person other than administrative or judicial authorities.
  19. The important policies laid down by Government / Royal Monetary Authority (RMA) and/or instructions issued by them will normally be placed before the Board. The directors are expected to address themselves to policy formulations and performance appraisal leaving other operational aspects to be handled by the Chief Executive Officer and other senior Executives of banks under powers delegated to them by the Board. Some of the important areas on which the directors may bestow particular attention are compliance with the policies of RMA/Government, observance of cash reserve and statutory liquidity ratio, efficient management of personnel, funds and branch control, profitability, overall sectorial deployment of funds, loans to sick units, performance budgeting and house keeping and customer service including vigilance and avoidance of frauds. Emphasis should be on policy formulation, management information and monitoring.

STATEMENT INDICATING DOs AND DON’Ts FOR NON-OFFICIAL DIRECTORS ON THE BOARD OF THE BANK

DO’S

  1. Attend the Board/its committee’s meetings regularly and effectively.
  2. Study the Board/its committee’s papers thoroughly and use the good offices of the Chief executive Officer for eliciting any information at the Board meeting.
  3. Ask the Chief Executive Officer to furnish the Board papers and follow-up reports on definite time schedule.
  4. Involve himself/herself as Directors on the Board thoroughly in the matter of formulation of general policy and also ensure that performance of the bank is monitored adequately at Board level.
  5. Be familiar with the broad objectives of the bank and the policy laid down by the Government and the Royal Monetary Authority (RMA).
  6. AII constructive ideas for the better management of the bank and for making valuable contribution would be welcome.
  7. They must work as a team and not sponsor or be prejudiced against individual proposals. Management on its part is supposed to furnish full facts and complete papers in advance.
  8. Try to give as much of your wisdom, guidance and knowledge as far as possible to the management.
  9. Try to analyze the trends of economy, assist in the discharge of management’s responsibility to public and formulation of measures to improve customer service and be generally of constructive assistance to the bank management.

DON’T's

  1. Do not send/give any instruction/direction to any individual employee or officer of the bank in any matter.
  2. Do not involve in any matter relating to personnel administration – whether it is appointment/sponsoring or transfer / posting/ promotion/ redressal of individual grievances of any employee/officer.
  3. Do not interfere in the day-to-day functioning of the bank.
  4. Do not approach or influence for sanction of any kind of facility from an individual Branch Head or any other official.
  5. Do not involve in the routine of every day business and in the management functions.
  6. Do not participate in the Board discussion if a proposal in which Directors are directly or indirectly interested comes up for discussion except when specifically required to explain the matter. Disclose your interest well in advance to the chief executive.
  7. Do not reveal any information relating to any constituent of the bank to anyone as the Directors are under oath of secrecy and fidelity.
  8. Discourage the individual employee/officer approaching the Directors in any matter.
  9. The Director may indicate their directorship of the bank on your visiting card or letter head, but the logos or distinctive design of the bank should not, however, be displayed on the visiting card/letter head.
  10. Directors should not directly call for papers/ files / notes recorded by various departments for scrutiny etc. in respect of agenda items to be discussed in the meetings. All information/clarification that they may require for taking a decision will be made available by the executives.
  11. Directors are expected to ensure confidentiality of the Bank’s agenda papers/notes. Ordinarily, it is suggested that by way of abundant precaution, the Board/its committee papers may be returned to the bank after the meeting.
  12. Do not sponsor any loan proposal, buildings and sites for bank’s premises, enlistment or empanelment of contractor, architects, doctors, lawyers etc. Do not do anything which will interfere with and/or be subversive of maintenance of discipline, good conduct and integrity of the staff.

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