The State Bank of Pakistan has been given sweeping regulatory powers in order to effectively and pre-emptively avert any crises that emerge from the banking sector such as the liquidity crunch of 2008.

ISLAMABAD: The National Assembly adopted a bill on Monday which drastically amends the Banking Companies Ordinance, 1962, and empowers the State Bank to change management of banks, impose losses on shareholders by writing down their capital, intervene and take control of banks and appoint administrators to manage banks or restructure banks when symptoms of crisis are determined.

The bill seeks to add sub section (4) in section 14, of the ordinance — “Notwithstanding any provisions of this ordinance, the State Bank, if satisfied, may require any banking company, through an order in writing, to increase its paid-up capital by such amount within such period and in such manner as may be specified in the order.”

Similarly, the addition of section 5 in the same clause relates to SBP’s powers of directing any banking company to “reduce, divest or transfer to fit and proper person his shareholding in the said company by such amount within such period and in such manner and at such price as may be specified in the order”.

Under the amendment to section 19 of the ordinance, the SBP may restrict any banking company from accepting deposits from any class of depositors.

Dewan Ashiq Hussain Bokhari, chairman of the standing committee on the cabinet secretariat, presented the bill to amend the National Commission for Human Development Ordinance, 2002, seeking to reduce the tenure of NCHD chairman to three years from five years and expiry of contract on attaining 65 years of age.