No independent director will be considered a defaulter if the finance company with which they are associated defaults, the central bank said in a circular.

Under the existing rules, independent directors, though separate from the shareholding of a finance company, were deemed defaulters when the company defaulted.

As a result, many skilled individuals with clean records were reluctant to serve as independent directors at finance companies.

To address this issue, the central bank introduced a new rule, stating that independent directors will not be held responsible for loans taken by a finance company.

Consequently, independent directors will not be considered defaulters if the finance company defaults, in compliance with Section 16(5) of the Finance Company Act 2023.

The central bank issued the circular today regarding the appointments of independent directors at finance companies.