1PL 8AnklnC

CCMAnlLS C8ulnAnCL
1962

lormaLlon parLles lnvolved maln clauses and amendmenLs





88A (lll
SLMLS1L8)
1/30/2010

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C8Cu MLM8L8S
nAML 8CLL nuM8L8 CCn18l8u1lCn
O A?LSPA !AvLu (C8Cu 8L8LSLn1A1lvL) 11 20
O lA8?AL L8vLZ PACuL 14 20
O MA8luM 1AnvLL8 31 20
O SPuMlALA nCu8LLn 48 20
O SuM8uL MASCCu 31 20
100


3
1nL 8ANkING CCMANILS CkDINANCL 1962
CkDINANCL No LVII CI 1962
7Lh !une 1962
An Crd|nance to conso||date and amend the |aw re|at|ng to
8ank|ng compan|es
Whereas lL ls expedlenL Lo consolldaLe and amend Lhe law relaLlng Lo
8anklng companles now 1herefore ln pursuance of Lhe roclamaLlon of Lhe sevenLh day of
CcLober 1938 and ln exerclse of all powers enabllng hlm ln LhaL behalf Lhe resldenL ls pleased Lo
make and promulgaLe Lhe followlng Crdlnance
A large secLlon of Lhe sLaLe banks duLles were wldened when Lhe SLaLe 8ank of aklsLan AcL 1936 was
lnLroduced lL requlred Lhe sLaLe bank Lo regulaLe Lhe moneLary and credlL sysLem of aklsLan and Lo
fosLer lLs growLh ln Lhe besL naLlonal lnLeresL wlLh a vlew Lo securlng moneLary sLablllLy and fuller
uLlllzaLlon of Lhe counLry's producLlve resources ln lebruary 1994 Lhe SLaLe 8ank was glven full
auLonomy durlng Lhe flnanclal secLor reforms Cn !anuary 21 1997 Lhls auLonomy was furLher
sLrengLhened when Lhe governmenL lssued Lhree AmendmenL Crdlnances (whlch were approved by Lhe
arllamenL ln May 1997) 1hose lncluded were Lhe SLaLe 8ank of aklsLan AcL 1936 8anklng Companles
Crdlnance 1962 and 8anks naLlonallzaLlon AcL 1974 1hese changes gave full and excluslve auLhorlLy Lo
Lhe SLaLe 8ank Lo regulaLe Lhe banklng secLor Lo conducL an lndependenL moneLary pollcy and Lo seL
llmlL on governmenL borrowlngs from Lhe SLaLe 8ank of aklsLan
art|es |nvo|ved MlnlsLry of flnance S8 and approved by naLlonal assembly
DIS1INC1IVL ILA1UkLS
- 8uslness of banklng shall use Lhe word bank" or any of lLs derlvaLlves as a parL of lLs name
- 8anklng companles ln aklsLan wlll be a publlc llmlLed company and wlll also have Lhe word llmlLed"
or LLd ln lLs name - Lxcluslve rlghLs for Lhe use of cheques for wlLhdrawal or Lransfer of deposlLs of
money

8ANkING 8USINLSS
1he ordlnance has deflned Lhe forms of buslness ln whlch banklng companles may engage or noL
allowed Lo engage ln

CAI1AL CI 8ANkING CCMAN - SLaLe 8ank of aklsLan has Lo deLermlne and prescrlbe Lhe
mlnlmum pald up caplLal - 1hls ordlnance also lays down Lhe condlLlons whlch a banklng company musL
saLlsfy before sLarLlng lLs buslness
8CAkD CI DIkLC1CkS SecLlons 1313A138 and 13C deal wlLh Lhe elecLlons and Lenure of Lhe
members of Lhe board of dlrecLors A dlrecLor elecLed under 13A shall hold Lhe offlce for maxlmum slx
years
kLSLkVLS SecLlon 21 deflnes Lhe meLhod of preparlng Lhe reserve fund from Lhe gross proflL SecLlon
22 prescrlbes LhaL every bank musL malnLaln a percenLage(speclfled by S8) of lLs Llme and demand
llablllLles wlLh Lhe S8



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CWLkS CI S1A1L 8ANk CI AkIS1AN S8 ls auLhorlzed Lo conLrol advances from banks Lo clrculaLe
Lhe lnformaLlon wlLhouL dlscloslng Lhe source Lo submlL Lo Lhe lederal CovernmenL a reporL on cases of
wrlLe off of loans eLc every year Lo sLop banks lncorporaLed ln aklsLan or ouLslde buL operaLlng ln
aklsLan by accepLlng deposlLs Lo make sure LhaL no lndlvldual or company ls carrylng on banklng
buslness wlLhouL llcense Lo cancel Lhe llcense of banks on Lhelr malfuncLlonlng Lo make sure LhaL every
bank prepares a balance sheeL and lncome sLaLemenL on lasL worklng day of each year and dlsplays Lhelr
coples aL ma[or offlces ln aklsLan
O rohlblLlon of employmenL of managlng agenLs and resLrlcLlons on cerLaln forms of
employmenL
O 8esLrlcLlons on removal of records and documenLs
no bank shall move ouLslde aklsLan any of lLs records relaLlng Lo lLs buslness wheLher Lhey
are funcLlonlng or noL wlLhouL permlsslon ln wrlLlng of Lhe SLaLe 8ank
O 8esLrlcLlons as Lo paymenL of dlvldend
no bank shall pay any dlvldend on lLs shares unLll all lLs caplLallzed expenses
have been compleLely wrlLLen off
O rohlblLlon of common dlrecLors

(shumalla)

CWLk CI S8 1C INSLC1 8ANkING CCMANILS lL ls obllgaLory for Lhe SLaLe 8ank of aklsLan Lo
lnspecL banklng companles from Llme Lo Llme so as Lo evaluaLe Lhelr managemenL and performance
(Sect|on 40 8CC 1962) lL ls obllgaLory for Lhe banklng companles Lo produce Lhelr books and records
as and when demanded by an lnspecLlng offlcer of Lhe SLaLe 8ank (Sect|on 40 Sub Sect|on (4) 8CC
1962)
INSLC1ICN 8 1nL S8 1he S8 has Lhe auLhorlLy Lo penallse and/or lmpose flnes on banklng
companles lncludlng havlng Lhe banklng company wlnds up ln accordance wlLh Lhe flndlngs of Lhe
lnspecLlon reporL (Sect|on 49 8CC 1962)
AMALGAMA1ICN AND WINDING U CI A 8ANkING CCMAN erLalnlng Lo Lhe amalgamaLlon of
banks Lhe S8 has a well deflned procedure 1he banklng companles lnvolved ln Lhe amalgamaLlon
musL prepare a comprehenslve and well deslgned scheme of amalgamaLlon conLalnlng full Lerms and
condlLlons 1hls scheme wlll puL ln drafL form Lo Lhe shareholders of each concerned banklng company
separaLely lf and when lL ls approved by a resoluLlon passed by a LwoLhlrds ma[orlLy of Lhe
shareholders of each banklng company lL wlll be submlLLed Lo Lhe S8 for formal approval wlLhouL
whlch Lhe merger cannoL go Lhrough (Sect|on 48 8CC 1962) Any banklng company holdlng a llcense
under SecLlon 27 of Lhe AcL cannoL volunLarlly wlnd up wlLhouL flrsL obLalnlng a cerLlflcaLe from Lhe S8
abouL lLs lnablllLy Lo repay lLs credlLors (Sect|on S9 8CC 1962) A deflnlLe legal and procedural
framework exlsLs for Lhe wlndlng up proceedlngs 1he provlslons lay down LhaL only Lhe Plgh CourLs ln
aklsLan can allow wlndlng up and ln such cases Lhe S8 wlll be Lhe offlclal llquldaLor (9
Sect|ons 60 to 82 8CC 1962


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8ANkING MCn1ASI8
O 1he offlce of a 8anklng MohLaslb can be operaLed Lo carry ouL Lhe followlng duLles
1 LnLerLaln complalnLs abouL banklng LransacLlons from cusLomers borrowers banks or from
any oLher organlsaLlon (Sect|on 82A 8CC 1962)
2 8esolve Lhe complalnLs afLer proper lnvesLlgaLlon lnLo and dlscusslon of Lhe maLLers wlLh
boLh Lhe banklng company and Lhe complalnanLs whlle malnLalnlng an aLmosphere of
goodwlll LhroughouL 1he complalnLs dealL by Lhe 8anklng MohLaslb wlll be relaLed Lo Lhe
8anklng buslness only and noL Lo employee relaLlons (Sect|on 82A 8CC 1962)

O 1he complalnanL shall flrsL Lake up hls/her grlevances wlLh Lhe concerned bank lf Lhe maLLer ls noL
resolved wlLhln Lhree monLhs Lhe 8anklng MohLaslb wlll reglsLer Lhe complalnL (Sect|on 82D)

CnANGL CI NAML 8 8ANkING CCMAN SecLlon 88 prescrlbes LhaL only SLaLe 8ank of aklsLan can
auLhorlze change of name of a banklng company
AMLNDMLN1S IN MLMCkANDUM CI ASSCCIA1ICN SecLlon 89 of 8anklng Companles Crdlnance
1962 clarlfles LhaL amendmenLs ln Lhe memorandum wlll noL be effecLlve unLll SLaLe 8ank of aklsLan
CerLlfles Lhem formally
AMLNDMLN1S IN 1nL 8CC 1hls ls noL an exhausLlve LreaLlse as lL seLs ouL lnLerpreLaLlon of only Lhe
slgnlflcanL amendmenLs proposed by Lhe llnance 8lll 2007 (Lhe 8lll) ln Lhe lncome 1ax Crdlnance 2001
Lhe Companles Crdlnance 1984 (Lhe CC) Lhe 8anklng Companles Crdlnance 1962 (Lhe 8CC) Lhe
lnsurance Crdlnance 2000 (Lhe lC)L1C
lorelgn branches and subsldlarles of Lhe banklng companles lncorporaLed ln aklsLan broughL wlLhln
Lhe purvlew of deflnlLlon of banklng company
8ranches of forelgn banks operaLlng ln aklsLan under a llcense lssued by Lhe SLaLe 8ank lncluded
wlLhln Lhe deflnlLlon of a company and a banklng company (for Lhe purpose of amalgamaLlon)
ln respecL of amalgamaLlon of banklng companles a forelgn banklng company shall noL be requlred Lo
hold a meeLlng of lLs shareholders lf a cerLlflcaLe ls lssued by lLs head offlce ln respecL of approval of Lhe
scheme
owers of Lhe lederal CovernmenL ln respecL of forms of buslnesses Lo be carrled ouL by Lhe banklng
companles shall be Lransferred Lo Lhe SLaLe 8ank
8anklng companles allowed Lo lssue perpeLual noncumulaLlve preference shares
lf a banklng company meeLs Lhe mlnlmum caplLal requlremenL and caplLal adequacy raLlo lrrespecLlve
of pasL accumulaLed losses lL shall be ellglble for paymenL of dlvldend ouL of lLs proflLs for Lhe sald year
sub[ecL Lo cerLaln condlLlons
SLaLe 8ank empowered Lo malnLaln a panel of audlLors belng ellglble for audlL of banklng companles



6
SLaLe 8ank empowered Lo revoke Lhe appolnLmenL of audlLors of a banklng company downgradlng
Lhe caLegory of Lhe audlLor and removal from Lhe panel of audlLors for a perlod up Lo flve years
AudlLor shall be llable Lo reporL all Lhe maLLers of maLerlal slgnlflcance Lo Lhe SLaLe 8ank
Scope of lssuance of dlrecLlons guldellnes and lnsLrucLlons by Lhe SLaLe 8ank broadened
AmendmenLs ln Lhe sLaLuLe ln respecL of powers responslblllLles and funcLlonlng of 8anklng
MohLaslb
ShelLer agalnsL legal proceedlngs Lo credlL lnformaLlon provlders agalnsL lssues relaLed Lo dlsclosure of
lnformaLlon
Mlcroflnance banks allowed recelvlng forelgn currency remlLLances
SLaLe 8ank empowered Lo speclfy mlnlmum caplLal requlremenLs for Mlcroflnance banks
1axaLlon of 8anklng Companles would be governed by speclal provlslons of Lhe newly lnLroduced
SevenLh Schedule rovlslon for bad debLs classlfled under Lhe rudenLlal 8egulaLlons of Lhe SLaLe 8ank
of aklsLan oLher Lhan subsLandard provlslons are allowable as deducLlon WlLhholdlng provlslons no
longer appllcable Lo a 8anklng Company as reclplenL
1axaLlon of Sharlah compllanL lslamlc banklng would be LreaLed aL par wlLh convenLlonal banklng
Scope of exclse duLy on non fund banklng servlces has been enhanced