The central bank has warned of “penal action” as the commercial banks are not complying with the banking regulations relating to the implementation of the orders of banking ombudsman and the Governor State Bank of Pakistan (SBP).
The regulator issued a circular Tuesday and told the executives and presidents of the country’s banks that it had taken serious notice of a “significant delay” being made by the banks in implementing Section 82 E (5) of the Banking Companies Ordinance 1962 (BCO).
The said law requires the banks to comply with the decision of Banking Mohtasib of Pakistan (BMP) within 40 days of the date of order. However, if an appeal against the decision of the Banking Mohtasib is referred to the SBP Governor, the aforesaid period of 40 days reckons from the date of decision of appeal.
“Instances have been noted where banks have not adhered to the aforementioned provisions of BCO and have complied with the orders of BMP and the Governor State Bank of Pakistan with a significant delay,” warned the central bank.
Taking a serious notice of such non-compliance, the State Bank has decided that any future violation of Section 82 E (5) of the banking regulations would be subject to penal action.
SBP advised the banks and DFIs to submit a “compliance report” of every order along with documentary evidence within one week of its compliance to the head of its Consumer Protection Department.
The compliance report, it said, may be submitted through the banks’ duly authorized officers at or above the rank of executive vice president or group head.
Section 82 E (5) of the Banking Companies Ordinance 1962 (BCO) provides that: “The findings of the Banking Mohtasib shall be implemented by the concerned bank or financial institution within forty days and compliance thereof shall be submitted accordingly”.
“In case an appeal against the decision of the Banking Mohtasib is preferred to the Governor State Bank, the aforesaid period of forty days shall be reckoned from the date of decision of appeal.”
