SBP empowered to change bank management

NA unanimously adopts bill which strengthens hand of banking regulator by placing sweeping powers at its disposal.

ISLAMABAD: The National Assembly on Thursday unanimously adopted a bill which strengthens the hand of the banking regulator by placing sweeping powers at its disposal.

The Banking Companies (Amendment) Bill, 2010, would enable the State Bank to change management in banks, impose losses on shareholders by writing down their capital, intervene and take control of banks, appoint administrators to manage banks and restructure banks when symptoms of crisis emerge.

The bill moved by Minister of State for Foreign Affairs Hina Rabbani Khar on behalf of Minister for Finance Dr Abdul Hafeez Shaikh, was unanimously passed by the house without any amendment. Zahid Hamid of PML-N withdrew his amendments, saying that the bill was unanimously passed by the Senate.

It was said in the statement of objectives and reasons of the bill that, due to financial crisis worldwide, the ever-changing dimensions of the banking business continue to create newer challenges and risks for bank depositors, regulators and the financial system as a whole. Therefore, it is necessary to provide matching tools to bank regulators for cooperative measures with a view to maintain financial stability.

The proposed amendments in the Banking Companies Ordinance 1962 are in the context of strengthening the necessary tools of bank regulation and supervision to safeguard against various risks.

The National Assembly also unanimously approved ‘The Federal Board of Revenue (Amendment) Bill 2010 as passed by the Senate with an aim to empower the Federal Board of Revenue (FBR) to establish a Welfare Foundation and fund relating thereto for its retired and serving regular employees.

According to the statement of objectives and reasons, the bill will improve overall efficiency of the FBR and its field formations by specifying performance standards of the employees and giving incentives on the observance of such standards. The overall efficiency of the FBR will be enhanced by the establishment of a policy board with public and private sector representation.

Meanwhile, Prime Minister Yousaf Raza Gilani has said that the government is serious in the bid to resolve the issue of natural gas provision to Punjab like other provinces.

Responding to a point of order in the National Assembly raised by Abid Sher Ali, he said there are legal constraints which bar the federal government to provide adequate gas to Punjab. However, he said the government is determined to resolve the issue as early as possible.

He said that, according to the Constitution, areas producing gas have the first right to use – therefore the required quantity of gas could not be supplied to Punjab in the winter season.

The prime minister said that the issue of gas and electricity load management is also on the agenda of dialogue currently in progress with the PML-N.

He said that the government had also offered the Punjab government to take up the issue in the Council of Common Interests, which was not agreed to by Punjab.

Gilani added that the federal government is ready to bring this issue before a joint sitting of parliament as it is eager to resolve it on a priority basis.

Published in The Express Tribune, February 25^th, 2011.