SBP Slaps Heavy Penalties on 4 Banks for Breaching Regulatory Guidelines
In the third quarter of 2023, the State Bank of Pakistan (SBP) has imposed significant penalties totaling over Rs. 83.157 million on four major commercial banks for their failure to comply with regulatory instructions. These penalties were linked to various areas such as foreign exchange, general banking operations, and customer due diligence. The SBP has also urged these banks to strengthen their internal controls and operational processes to prevent future regulatory violations. It's essential to note that these penalties do not indicate any financial instability within these banking institutions.
Karobar
KARACHI - The State Bank of Pakistan (SBP) has taken strict action, imposing penalties exceeding Rs. 83.157 million on four major commercial banks during the third quarter of 2023. The penalties were levied due to their non-compliance with regulatory instructions in areas such as foreign exchange, general banking operations, and customer due diligence.
The SBP, in its latest directive, not only imposed fines but also issued a stern warning to the banks. They were urged to ensure rigorous adherence to the regulatory guidelines and strengthen their operational frameworks to prevent any future violations. These actions were revealed in the details shared by the Banking Supervision Department-1 of the central bank on Wednesday, encompassing significant enforcement measures taken during the quarter concluding on September 30, 2023.
United Bank Limited, a prominent player in Pakistan's banking landscape, was penalized with an amount of Rs. 26.5 million. This fine was imposed due to violations related to foreign exchange (FX) and general banking operations. In addition to the monetary penalty, the bank was advised to bolster its internal controls and ensure meticulous compliance with the set regulatory instructions.
The Bank of Punjab faced the heat as well, with a penalty of Rs. 21.569 million. Their violations were linked to General Banking Operations (GBO). Like the other banks, they have also received guidance to reinforce their operational processes and controls to prevent any future regulatory breaches.
JS Bank Limited, another key player in Pakistan's financial sector, was fined Rs. 18.51 million. Their violations extended to areas concerning customers' due diligence (CDD/KYC), FX, and GBO. As with the other banks, JS Bank has been strongly advised to enhance their systems and controls to forestall any potential regulatory violations in the future.
Allied Bank Limited, a well-established banking entity in Pakistan, was not spared either. They were penalized with an amount of Rs. 16.578 million for breaches in regulatory guidelines related to General Banking Operations (GBO). In response, the bank has been directed to improve their internal processes to prevent future infractions.
The SBP clarified that these penalties were solely based on deficiencies in complying with regulatory guidelines and should not be construed as a reflection on the financial stability of the penalized banks.
