Bankislami: Funds given to meet depositors’ demand, says SBP
BankIslami said the support it received from the SBP had been used to pay off the depositors of KASB Bank. PHOTO: FILE
The State Bank of Pakistan (SBP) and BankIslami have clarified a news story titled “SBP grants Rs20b to BankIslami”. The SBP said it is a normal practice for central banks to provide funds to banks whenever they are under liquidity stress or to meet unexpected deposit withdrawal requests.
“Liquidity support up to Rs15 billion was offered to BankIslami in anticipation of heavy withdrawal by the depositors of defunct KASB Bank after its amalgamation with the former. This facility, valid for 180 days, is fully secured by the sukuk held by BankIslami.”
BankIslami said the support it received from the SBP had been used to pay off the depositors of KASB Bank, which to date amounted to more than Rs22 billion. KASB Bank’s merger with BankIslami was under a scheme of arrangement prepared under Section 47 of the Banking Companies Ordinance. “No competitive bidding is either required or has ever been done in Pakistan,” it said.
Published in The Express Tribune, July 16th, 2015.