SBP up­dated Act is­sued

The Pak Banker - - FRONT PAGE - Muham­mad Yasir

State Bank of Pak­istan (SBP) has is­sued its up­dated SBP Act 1956 in which it was given mus­cles by the Na­tional As­sem­bly and Se­nate of Pak­istan re­lated to its au­ton­omy and au­thor­ity to ex­er­cise in­de­pen­dent as per its do­main. The amend­ments in the Act was made through Bills which were pro­posed by law­mak­ers and de­manded by In­ter­na­tional Mon­e­tary Fund (IMF) to link re­forms to its pro­gram of Ex­tend Fund Fa­cil­ity to Pak­istan.

Ac­cord­ing to the Act, cen­tral bank has been given au­thor­ity to set up an in­de­pen­dent Mon­e­tary Pol­icy Com­mit­tee (MPC) which re­cently formed and made an an­nounce­ment as per given man­date. It in­volves mea­sures for cen­tral bank to con­trol bor­row­ing of the govern­ment from the bank­ing sys­tem. SBP was given au­thor­ity to pro­tect de­pos­i­tors of the banks and help them main­tain­ing their liq­uid­ity. The cap­i­tal of the Bank shall be one hun­dred mil­lion Ru­pees (Rs 100 mil­lion) , which shall be fully sub­scribed , paidup and held ex­clu­sively by the Fed­eral Govern­ment and shall not be trans­fer­able or sub­ject to en­cum­brance.

The cap­i­tal may be in­creased by a res- olu­tion of the Board sub­ject to the ap­proval of the Fed­eral Govern­ment and no re­duc­tion of the cap­i­tal shall be per­mit­ted at any time. Not­with­stand­ing any­thing to this Act or in any other law for the time be­ing in force, the Bank may es­tab­lish and main­tain a sub­sidiary or a trust for the fol­low­ing pur­poses, namely for cater­ing to all train­ing needs of the Bank em­ploy­ees, fi­nan­cial sec­tor and other agen­cies, or­ga­ni­za­tions or in­sti­tu­tion per­tain­ing to bank­ing and fi­nance.

The in­sti­tu­tion shall be set up for han­dling the func­tion of re­ceipt, sup­ply and ex­change of Bank notes and coins which are le­gal ten­der; and for is­sue , sup­ply, sale and pur­chase of prize bonds, hold­ing draws thereof and other Na­tional Sav­ings in­stru­ments. The Act stated that the Fed­eral Govern­ment bor­row­ing from the Bank shall be such that at the end of each quar­ter they shall be brought to zero bar­ring the ways and means limit that shall be de­ter­mined by the SBP Board from time to time. The debt of the Fed­eral Govern­ment owed to the Bank as on the 30th April, 2011, shall be re­tired not later than twelve years from that date.

SBP is the len­der of last re­sort where the cir­cum­stances so war­rant and a sched­uled bank ap­proaches the Cen­tral Bank for fi­nan­cial fa­cil­ity to im­prove its liq­uid­ity and where the bank in the opin­ion of the SBP, is sol­vent and can pro­vide ad­e­quate col­lat­eral to sup­port the fi­nan­cial fa­cil­ity. SBP may pro­vide the fi­nan­cial fa­cil­ity, in ac­cor­dance with the reg­u­la­tions made by the Bank in re­la­tion thereto.

SBP Bank shall have power to is­sue such di­rec­tives, in­struc­tions and reg­u­la­tions in what­so­ever form as may be nec­es­sary for car­ry­ing out the func­tions of the Bank un­der this Act or any other law and shall be bind­ing and en­force­able. SBP may take any en­force­ment ac­tion in­clud­ing im­po­si­tion and col­lec­tion of pe­cu­niary penal­ties upon le­gal and nat­u­ral per­sons for con­tra­ven­tion of this Act, any law be­ing ad­min­is­tered by the SBP

Ac­cord­ing to Act, SBP shall not, ex­cept as au­tho­rised to en­gage in trade or oth­er­wise have a di­rect in­ter­est in any com­mer­cial, in­dus­trial or other un­der­tak­ing ex­cept such in­ter­est as it may in any way ac­quire in the course of the sat­is­fac­tion of any of its claims, but all such in­ter­est shall be dis­posed of at the ear­li­est pos­si­ble mo­ment. SBP shall not pur­chase its own shares or the share of any other bank or of any com­pany, or grant ad­vances or loans upon the se­cu­rity of any such shares. SBP shall not ad­vance money on the mort­gage, or oth­er­wise on the se­cu­rity, of im­mov­able prop­erty or doc­u­ments of ti­tle re­lat­ing thereto, ex­cept where such ad­vance is made to any of its of­fi­cers or ser­vants for build­ing a house for his per­sonal use against the se­cu­rity of the said house.

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