SBP imposed heavy monterey penalty on Pakistani Banks
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The State Bank of Pakistan (SBP) has imposed around Rs531 million as monetary penalty on commercial banks during the nine months (July-September) for violating various regulatory instructions.
According to the central bank, the commercial banks were more non-compliant during the third quarter (July-September) of the current calendar year 2022.
It imposed Rs290.36 million as penalty on six banks during the third quarter for violating various regulatory instructions, including the customers’ due diligence (CDD) and Know Your Customer (KYC).
During the quarter, the banks, which faced monetary penalties included Bank Al Habib, Rs140.03 million; Meezan Bank Limited, Rs81.72 million; National Bank of Pakistan (NBP), Rs25.87 million; MCB Bank, Rs19.22 million; JS Bank Limited, Rs13.49 million; and Faysal Bank Limited, Rs10.03 million.
These banks have been penalised for violating provisions mostly pertaining to CDD/KYC, asset quality, foreign exchange and general banking operations. The SBP has advised the banks to strengthen their controls and processes in the identified areas. During the second quarter (April-June) 2022, the State Bank imposed the penalty on three commercial banks, including JS Bank Limited, Habib Bank Limited and the Bank of Punjab.
Meanwhile, in the first quarter (January-March) 2022, the SBP had slapped a penalty amounting Rs108.93 million on four banks, which included Askari Bank, Albaraka Bank, National Bank of Pakistan and U Microfinance Bank.
Albaraka Bank and U Microfinance Bank have been penalised for violating regulatory instructions pertaining to the anti-money laundering (AML) and counter financing terrorism (CFT).
From July 2019, the central bank had started public disclosure of penal action against banks.
“The enforcement actions are an integral part of the regulatory regime, which involves imposition of monetary penalties and other actions against institutions and individuals for violations of laws, rules, regulations, guidelines or directives issued by the SBP from time-to-time,” according to a circular issued by the central bank.
To bring more transparency and strengthen market discipline, the SBP has decided to publicly disclose significant enforcement actions.
The enforcement actions initiated by the central bank helped increase in compliance level by the banks during the current calendar year.
The SBP imposed a monetary penalty of around Rs1.09 billion on the commercial banks during July-September of 2021. In aggregate, the penalty amounting to Rs1.45 billion was imposed on the banks in the last year.
The breakup of significant actions against the banks on a quarterly basis during 2021 shows: January-March, Rs97.6 million; April-June, Rs525.25 million; July-June, Rs465.04 million; and October-December Rs58 million.
