A parliamentary panel on Friday approved amendments to the Banks Nationalisation Act 1974 that will allow only two service terms to the presidents of state-owned commercial banks - a step that will close the doors for reappointment of blue-eyed boys for an indefinite period.
The Senate Standing Committee on Finance and Revenue agreed on three amendments, which would also give protection to minority shareholders in government-owned banks. Senator Saleem Mandviwalla of the Pakistan Peoples Party chaired the meeting.
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The National Assembly has already passed the bill. However, the Senate committee has made certain changes to the language of the bill, which will require a fresh approval from the lower house of parliament before it is sent to the president for authorisation.
In 2007, the Pervez Musharraf government had amended the Banks Nationalisation Act through the Finance Bill aimed at keeping in place the then president of National Bank of Pakistan, Syed Ali Reza, for a third term.
Reza was first appointed president in 2000 and then in July 2003. He was again appointed for one year in 2009 and then for another year in 2010.
However, in January 2011, the Supreme Court of Pakistan declared the appointment unlawful and unconstitutional. The court ruled that the government did not have powers to amend the Banks Nationalisation Act through the Finance Bill.
Reza, who was the longest serving NBP president, is among the prime accused in the Rs18.5 billion scam in the Bangladesh branch of NBP from 2001 to 2012. The National Accountability Bureau is investigating the scam.
The Banks Nationalisation Act 1974 allows the federal government to reappoint a bank president for another term of three years in consultation with the State Bank of Pakistan. The fresh amendment, however, has restored the pre-2007 status.
The government appoints the presidents of NBP, Zarai Taraqiati Bank, Small and Medium Enterprises Bank and First Women Bank.
According to the amended bill, the number of directors in state-owned banks has been fixed at a minimum five and maximum seven including private directors. These directors can only be removed under a procedure laid down in the Companies Ordinance 1984.
The amended bill also protects the rights of minority shareholders in these banks.
The Senate committee approved amendments to the Banks Special Courts Ordinance 1984, giving the right of appeal against acquittal of an accused person.
The existing law only provides the right of appeal against conviction. In September 2013, the Law and Justice Commission of Pakistan had approved insertion of a new clause into the existing law for giving the right of appeal against the acquitted.
The parliamentary panel also approved a bill that would result in scrapping of the Equity Participation Fund, which was established in 1970 but had become dormant. The fund had been established to foster and accelerate growth of small and medium-sized industrial enterprises in the private sector.
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The Industrial and Development Bank of Pakistan managed the equity fund and the government was in the process of privatising the bank, said an additional secretary of the Ministry of Finance.
Under the winding up process, it has already distributed Rs1.14 billion among shareholders. The previous government formally closed down the fund in 2012.
Most of the Rs1.14 billion went to the State Bank of Pakistan (Rs747.2 million) and the federal government (Rs186.8 million).
Published in The Express Tribune, April 9th, 2016.
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