SBP relaxes condition for banks/DFIs

KARACHI: The State Bank of Pakistan (SBP) has relaxed the condition to provide details by financial institutions regarding persons dismissed from a bank on account of fraud or any disciplinary action.

In a circular issued on Wednesday, the central bank decided that the banks and development financial institutions would not require to report the information of the persons terminated or forced to tender resignation from services on account of fraud, forgery, disciplinary action, etc to the SBP.

The SBP; however, advised the banks and DFIs to enforce their existing system and procedure to prevent the entry of unwanted persons in the banking industry.

The SBP made latest amendments to the regulations issued on June 11, 2003 in which the central bank had advised the banks to discourage the entry of persons who have been involved in fraud and forgery cases with their previous employers.

In the previous notification issued 13 years ago, the central bank had also observed that the banks / DFIs instead of terminating the services of persons involved in fraud, forgeries, disciplinary action, etc, prefer to accept their resignation.

“In this way, such types of unwanted persons are able to join other financial institutions.”

Considering such exercise, the central bank had directed the banks to provide the information of person(s), who were forced to tender resignation (instead of termination of services) on account of fraud, forgery, disciplinary action or any other charge against the interest of the bank / DFI, etc, when proved after holding due inquiry.

Besides, the banks / DFIs should provide information of those persons who were terminated / dismissed on similar charges.