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SBP IMPOSES MORATORIUM ON KASB BANK.

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The moratorium imposition on the KASB Bank on the week end was the major development on the banking industry front which speaks a lot about the role of the central bank as a prudent and cautious financial regulator which has helped to uplift the image of the banking sector performance all over the world.

It may be noted that under Banking Companies Ordinance 1962 State Bank of Pakistan has imposed Moratorium on KASB Banking restricting payment of certain debts and obligations from the bank however it will continue to receive all payments and recoveries due with the bank.

According to SBP the decision was taken in order to protect the interest of depositors and other stakeholders and due to financial health and other circumstances of KASB Bank Limited. ("the bank") the Federal Government on the application of the State Bank of Pakistan and in exercise of the powers conferred upon it under the Section 47 of the Banking Companies Ordinance 1962 has placed KASB Bank Ltd under moratorium for a period of six (06) months with effect from close of business as of November 14 2014.

Consequently the payment of certain debts and obligations from the bank would be suspended while it would continue to receive all payments/recoveries due to the bank.

The Federal Government has directed the State Bank of Pakistan to consider reconstruction or amalgamation of the bank as per the provisions of the Banking Companies Ordinance 1962 within six months.

It is the endeavor of the State Bank of Pakistan to ensure smooth functioning of banks in the best interest of depositors. Keeping this in view payment to the depositors of the bank having account balance of up to Rs300000/- per depositor per account on the date of placing of the bank under moratorium will not be affected. In this manner more than 92.33 percent of total account holders will be able to operate their accounts. The account holders with balance of more than Rs300000/- as of effective date however would be able to withdraw upto the above permitted threshold only.

The State Bank of Pakistan has always worked to safeguard the interests of depositors as well as the banking system of the country. The overall banking system is well capitalized and functioning smoothly. KASB Bank Ltd consists of just 0.6 percent of the total assets of all banks and the State Bank of Pakistan will ensure a resolution of the same in the best interest of the depositors and the banking system.

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Publication:Pakistan & Gulf Economist
Date:Nov 23, 2014
Words:420
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