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Four Pakistani banks fined over Rs83m for violating laws

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1 year ago

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  • Banks told to enhance their systems, controls.
  • UBL received the largest fine of Rs26.500m.
  • Probe was conducted into currency manipulations.

KARACHI: The State Bank of Pakistan (SBP) fined United Bank Limited (UBL), The Bank of Punjab (BoP), JS Bank Limited (JSBL) and Allied Bank Limited (ABL) for violating banking laws.

These four financial institutions were fined a total of Rs83.157 million in the first quarter (July-September) of the current fiscal year for violating the central bank’s directives regarding foreign exchange, customer due diligence and general banking operations.

According to the details of the significant enforcement action that the SBP posted on its website on Tuesday, UBL received the largest fine, amounting to Rs26.500 million, followed by BoP (Rs21.569 million), JS Bank (Rs18.510 million) and ABL (Rs16.578 million).

The banks were penalised for breaking rules pertaining to know your customer and customer due diligence, foreign exchange trading and general banking activities.

In addition to penal action, these banks have been advised by the SBP to strengthen their systems and controls to prevent future regulatory infractions.

The penal actions are based on deficiencies in the compliance of regulatory instructions and do not constitute a comment on the financial soundness of these banks, according to the SBP.

Last year, the government launched investigations into banks that it claimed were manipulating currencies to increase their gains and profits.

However, neither the findings of the report nor the penalty or fiscal action taken against the banks were made public.

Short forex liquidity, short net open forex positions held by the banks and greater currency volatility and uncertainty were cited as the main reasons why the banks’ spreads were higher.

Despite the economic troubles that the country faced in 2022, the banking industry remained resilient which witnessed a strong growth of 19.1% in its assets.

This expansion was mainly driven by investments while advances decelerated, said the SBP’s annual flagship publication, the Financial Stability Review for 2022.

The contained delinquencies and higher profitability supported banks’ solvency as the capital adequacy ratio stood at 17.0% – well above the minimum regulatory requirement of 11.5%.

The Islamic banking segment also observed robust growth of 29.6% during 2022.

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Irfan Siddiqui meets with the PM and informs him about the Senate performance of the parliamentary party.

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2 days ago

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The head of the Senate’s Foreign Affairs Standing Committee and the PML-N’s parliamentary leader paid Prime Minister Muhammad Shehbaz Sharif a visit in Islamabad.

Senator Irfan Siddiqui gave the Prime Minister an update on the Parliamentary Party’s Senate performance.

Additionally, Senator Irfan Siddiqui gave the Prime Minister an update on the Senate Standing Committee on Foreign Affairs’ performance.

He complimented the Prime Minister on his outstanding efforts to bring Pakistan’s economy back on track and meet its economic objectives.

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Business

SIFC Increases Direct Foreign Investment: Investment in the Energy Sector Rises by 120%

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The Special Investment Facilitation Council is intended to help Pakistan’s energy sector attract $585.6 million in direct foreign investment in 2024–2025. The amount invested at the same time previous year was $266.3 million.

This is a notable 120% rise, mostly due to investments in gas exploration, oil, and power. Such expansion indicates heightened investor confidence and emphasizes the development potential in important areas.

The State Bank reports that foreign investment in other vital industries has increased by 48% to $771 million.

This advancement is a blatant testament to SIFC’s efficient investment procedure and quick project execution.

The purpose of the Special Investment Facilitation Council is to establish Pakistan as an investment hub by aggressively promoting regional trade and investment in the energy sector and other critical industries.

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Business

Discos report losses of Rs239 billion.

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When compared to the same period last year, the data indicates that discos have decreased their losses in the first quarter of the current fiscal year.

The distribution businesses recorded losses of Rs239 billion in the first three months of the current fiscal year, a substantial decrease from the Rs308 billion losses sustained during the same period the previous year.

Additionally, the distribution businesses’ rate of recovery has improved. It has increased to 91% in the first quarter of this year from 84% in the same period last year, indicating success in revenue collection.

Regarding circular debt, the Power division observed a notable change. Last year, between July and October, the circular debt grew by Rs301 billion. Nonetheless, this year’s first four months saw a relatively modest increase in circular debt, totaling about Rs11 billion.

These enhancements show promising developments in the electricity sector’s financial health in Pakistan, where initiatives are being made to accelerate recovery rates and slow the expansion of circular debt.

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