Four Pakistani banks fined over Rs 83 million for violating laws

The State Bank of Pakistan building in this undated image.  - SBP
The State Bank of Pakistan building in this undated image. – SBP
  • Banks were asked to increase their systems and controls.
  • The largest fine of Rs 26.500 million was imposed on UBL.
  • Currency manipulation was investigated.

KARACHI: 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.

A total fine of Rs 83.157 million was imposed on these four financial institutions in the first quarter (July-September) of the current financial year for violating the central bank’s directions regarding foreign exchange, customer due diligence and general banking operations.

According to details of the significant enforcement action that SBP posted on its website on Tuesday, UBL received the biggest penalty, amounting to Rs 26.500 million, followed by BoP (Rs 21.569 million), JS Bank (Rs 18.510 million). Was the place. and ABL (Rs 16.578 million).

Banks were penalized for breaking rules related to KYC, foreign exchange trading and general banking activities.

Apart from punitive action, these banks have been advised by SBP to strengthen their systems and controls to prevent regulatory violations in future.

According to SBP, the punitive actions are based on deficiencies in compliance with regulatory directions and do not comment on the financial soundness of these banks.

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

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

Lower foreign exchange liquidity, lower net open foreign exchange positions held by banks and greater currency volatility and uncertainty were cited as the main reasons for banks’ spreads being higher.

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

The SBP’s annual flagship publication, Financial Stability Review for 2022, said the expansion was mainly driven by investment, while growth declined.

Contained defaults and high profitability supported the solvency of banks as the capital adequacy ratio stood at 17.0% – well above the minimum regulatory requirement of 11.5%.

The Islamic banking segment also witnessed a strong growth of 29.6% during 2022.

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