Four Pakistani banks fined more than Rs 83 million for violating the law

• Banks said to improve their systems and controls.
• UBL received the largest fine of Rs 26,500 crore.
• An investigation was conducted into currency manipulation.

KARACHI: The State Bank of Pakistan (SBP) has fined United Bank Limited (UBL), The Bank of Punjab (BoP), JS Bank Limited (JSBL) and Allied Bank Limited (ABL) for violating banking laws.

These four financial institutions were fined a total of Rs 83.157 million in the first quarter (July-September) of the current financial year for violating the central bank’s directives on foreign exchange, customer due diligence and general banking.

According to the details of the major enforcement action published by the SBP on its website on Tuesday, UBL received the largest fine of Rs 26,500 million, followed by BoP (Rs 21,569 million), JS Bank (Rs 18,510 million). and ABL (Rs 16,578 million).

Banks were penalized for violating rules on client and customer due diligence, foreign exchange transactions and general banking activities.

Apart from prosecution, these banks have been advised by the SBP to strengthen their systems and controls to prevent future regulatory violations.

The criminal proceedings are based on non-compliance with regulatory directives and are not a comment on the financial soundness of these banks, according to the SBP.

Last year, the government launched investigations into banks it alleged were manipulating currencies to boost their profits and profits.

However, neither the findings of the report nor the fines or tax measures taken against the banks were made public.

Low forex liquidity, open net forex positions held by banks and greater currency volatility and uncertainty were cited as the main reasons why bank spreads were higher.

Despite the economic problems the country faced in 2022, the banking sector remained resilient, posting a strong growth of 19.1% in its assets.

This expansion came mainly from investment, while advances slowed, the SBP’s annual flagship publication, the Financial Stability Review 2022, said.

Limited delinquencies and higher profitability supported banks’ solvency as the capital adequacy ratio stood at 17.0% – well above the minimum regulatory requirement of 11.5%.

The Islamic banking sector also saw strong growth of 29.6% in 2022.