The State Bank of Pakistan (SBP) has slapped fines totalling Rs775.5 million on eight banks and one foreign exchange company for rules violations. According to a SBP statement, the penalties, levied in the first quarter of 2024, were for non-compliance with instructions related to foreign exchange transactions, customer due diligence and general banking operations. Details of the enforcement actions by the SBP provided on its website show that Bank Alfalah Limited received the largest fine, totalling Rs187.652 million between January and March, for the infringement of regulatory instructions about FX and general banking operations. The bank has been advised to enhance its internal procedures to prevent such infractions from happening again. For violating regulatory directives related to foreign exchange, know your customer, customer due diligence, and general banking activities, the SBP imposed a penalty of Rs143.376 million on Habib Bank Limited.

The SBP has directed the bank to make sure that the regulatory requirements are strictly followed to prevent similar incidents from happening again in the future. Bank Al Habib Limited was fined Rs117.239 million for breaking regulations regarding foreign exchange and customer due diligence. Apart from facing penalties, the bank has been asked to enhance its systems and controls to guarantee strict adherence to the regulatory directive and prevent the recurrence of comparable violations. Other banks that faced financial penalties included Meezan Bank Limited (Rs106.200 million), Habib Metropolitan Bank Limited (Rs70.915 million), MCB Bank Limited (Rs52.900 million), MCB Islamic Bank Limited (Rs38.544 million), the Bank of Khyber (Rs30.741 million), and the Royal Exchange Company (Rs27.975 million).

The State Bank stated that the enforcement measures are not a judgement on the financial stability of these entities, but rather are based on noncompliance with regulatory requirements. The advances of the banking sector recorded muted growth during January-June 2023; private sector advances contracted while the public sector availed additional financing mainly for commodity finance operations, according to the SBP’s mid-year performance review of the banking sector issued in September last year.

Credit: Independent News Pakistan