Discrimination against politicians: Senate panel approves bill to penalise bankers

ISLAMABAD: Amid disclosure of cancellation of credit card of a parliamentarian and treating politician in a discriminatory manner, the Senate Standing Committee on Finance unanimously approved Banking Companies Amendment Bill 2021, proposing one-year imprisonment and penalty up to Rs one million against bankers.

All those bankers refusing to open bank accounts or banking services to politically exposed persons (PEPs) including politicians and others, will have to face dire consequences under the proposed law.

The bill was tabled by the Chairman Senate Standing Committee on Finance Senator Taleh Mehmood in the Upper House of Parliament and the Senate panel on Friday approved it with amendments whereby the penalty amount in case of a violation by a bank officer was raised from Rs 0.1 million to Rs one million.

The Senate Standing Committee on Finance, which met under the Chairmanship of Senator Taleh Mahmood here at the Parliament House also inquired if the $250 mn recovered by UK crime agency were deposited into the State Bank or the Supreme Court within three days failing which the issue will be taken up in the next meeting of the senate penal.

The Senate panel also asked the FBR to make valuation of properties part of the budget exercise. The representatives of the Real Estate Agents Association said the valuation rate should be jacked up by 25 per cent.

A heated debate occurred on Banking Companies Amendment Bill 2021 between the members of the Senate committee and the representatives of the Ministry of Finance and State Bank of Pakistan who strongly opposed the bill, declaring refusing banking services to politically exposed persons a criminal offence for bankers.

They said bill or amendment affecting the constitution or functions of SBP can only be introduced or moved in Parliament once the federal government provides its consent. However, the Senate panel unanimously cleared the bill. “My credit card was cancelled by one of the banks without any reasons and no one is explaining the reasons for doing so.

How could the banks treat any class or segment of society in a discriminatory manner. If the PEPs are to be treated in a discriminatory manner then separate banking channels should be introduced for financial services,” said Senator Musadiq Malik from PML (N) while giving tough time to the Ministry of Finance and SBP high-ups opposing the bill. The senators were particularly irked over the absence of Governor State Bank of Pakistan and Chairman FBR from the meetings of the Senate committees, arguing that when laws like SBP’s Amendment Act 2021 have turned Governor SBP as 'Viceroy' they would treat the Parliament like a “rubber stamp”. The Senators were shocked when they came to know that the Deputy Draftsman from the Ministry of Law had come to attend the meeting instead of Secretary Law or any other senior official.

The Banking Companies Amendment Bill 2021 was tabled by Senator Taleh Mahmood on 27-12-2021 to further amend the Banking Companies Ordinance, 1962 [the Banking Companies (Amendment) Bill, 2021]. The SBP’s Director Banking Arshad Bhatti told the meeting that there were 32,000 accounts falling in this category which possessed 2 per cent of two deposits of the banking sector. He said that the proposed amendment in the Banking Companies Ordinance, 1962 is not required as the SBP has specifically advised all banks to follow ethical banking practices to avoid discriminatory practice(s) against any segment of society including Politically Exposed persons. He also explained banks are required to conduct customer due diligence before entering into a business relationship. Besides without complete COD requirements, they are prohibited from opening an account, commencing business relations, or performing any transaction.

The SBP’s Director Banking also referred to the redressal mechanism for the aggrieved persons by filing an appeal to the relevant Regulatory Authority (SBP in case of banks). When the Senators inquired as to how many actions the SBP had taken against violators so far, the SBP official said that he did not have data at the moment.