Brief Introduction of the Banking Institution in acordance to the course Statutory Compliance.

1. State Bank of
Pakistan
PRESENTED BY :SHEHROZ AHMED ADIL – 10833
PRESENTED TO : SIR GHULAM MURTAZA KORAI

2. History of State Bank of
Pakistan
Late Governor Zahid Hussain presenting an address of welcome
on the occassion of the opening ceremony of the
State Bank of Pakistan on July 1, 1948.

3. History of State Bank of
Pakistan
Quaid-e-Azam performing
the opening ceremony of
the State Bank of Pakistan

4. History of State Bank of
Pakistan
Quaid-e-Azam delivering his inaugural address on the occasion of the
opening ceremony of the State Bank of Pakistan on July 1, 1948

5. State Bank of Pakistan
• Mr. Ashraf Mahmood Wathra
Governor, State Bank of Pakistan
• Mr. Kazi Abdul Muktadir
Deputy Governor
• Mr. Saeed Ahmad
Deputy Governor

7. ADMINISTRATIVE
ORGANIZATION
To run and monitor the bank it is divided into
three parts.
• CENTRAL BOARD OF DIRECTORS
• CENTRAL DIRECTORS
• FIELD OFFICE

8. Statutory Obligations

9. STATUTORY CASH
RESERVE
• In terms of Section36(1) SBP Act, 1956, every
scheduled bank is required to maintain with
State Bank a balance the amount of which shall
not at the close of business or any day be less
than such percentage of Time & Demand
Liabilities in Pakistan as may be determined by
State Bank.
• Presently the requirement is 5%.

10. STATUTORY LIQUIDITY
REQUIREMENT
• In terms of Section 29(1) of Banking Companies
Ordinance, 1962 every banking company shall
maintain in Pakistan in cash, gold or un-
encumbered approved securities valued at price
not exceeding "the lower of cost or the current
market price" an amount which shall not at the
close of business in any day be less than such
percentage of the total of its time & demand
liabilities in Pakistan, as may be notified by
State Bank from time to time.
• Presently the requirement is 15%.

11. MAINTENANCE OF
LIQUIDITY AGANINST
CERTAIN LIABILITIES
• In terms of Rule 6 of NBFIs Rules of Business, all
NBFIs are required to invest 14% of their liabilities
defined in the Rule, in Government Securities, NIT
Units, shares of listed companies or listed debt
securities in the prescribed manner. For the purpose
of this rule, liabilities shall not include NBFIs
equity, borrowings from financial institutions, lease
key money, deferred taxation not payable within 12
months, dividend payable within two months,
advance lease rentals and deposits from financial
institutions. In addition, they are also required to
maintain cash balance with State Bank, which shall
not be less than 1% of their liabilities as defined
above.

12. SUBMISSION OF ANNUAL
AUDITED ACCOUNTS BY
NBFIs
• Under Rule 17 of NBFIs Rule of Business, all
NBFIs are required to invest to submit their
annual audited accounts within a period of 6
months after the close of their accounting year.

13. ANNUAL ACCOUNTS
• At the expiration of each calendar year every
banking company incorporated in Pakistan, in
respect of all business transacted by it, and
every banking company incorporated outside
Pakistan, in respect of all business transited
through its branches in Pakistan, shall prepare
with reference to that year a balance-sheet and
profit and loss account as on the last working
day of the year in the prescribed forms(Section
34 of Banking Companies Ordinance, 1962).

14. SUBMISSION OF
RETURNS
• The accounts and balance-sheet referred to in
section 34 together with the auditor’s report as
passed in the annual General Meeting shall be
published in the prescribed manner, and three
copies thereof shall be furnished as returns to
the State Bank within three months of the close
of the period to which they relate (Section 36 of
Banking Companies Ordinance, 1962).

15. MINIMUM CAPITAL
REQUIREMENTS
• In terms of Section 13 of Banking Companies
Ordinance, 1962 no banking company shall
commence business unless it has a minimum paid
up capital as may be determined by the State Bank
or carry on business unless the aggregate of its
capital and unencumbered general reserves is of
such minimum value within such period as may be
determined and notified by the State Bank from
time to time for banking companies in general or for
a banking company in particular.
• As present, all banks operating in Pakistan are
required to maintain capital and unencumbered
general reserve, the value of which is not less than
8% of their risk weighted assets. Additionally they
are also required to maintain a minimum paid up
capital of Rs.500 million.

17. Traditional Developmental

18. Monetary
and Fiscal
Government
targets
Macro
Economic
Growth

19. Off Site
On Site NBFIs

20. As an agent to the Government:
• Purchase and sale gold, silver or approved
foreign exchange
• Maintain Exchange rate fluctuations.
• Management of the foreign exchange reserves.

21. • Economic growth
• Utilization of country’s resources.
• Development of new financial institutions and
debt instruments.
• Establishment of Development Financial
Institutions (DFIs)
• Directing the use of credit according to selected
development priorities.
• Providing subsidised credit, and development of
the capital market.

22. ANTI-MONEY LAUNDERING
REGULATIONS
FOR BANKS & DFIs
STATE BANK OF PAKISTAN

23. REGULATION -1
REPORTING OF TRANSACTIONS
(STRs/CTRs)
1. Banks/ DFIs shall comply with the provisions of AML Act,
rules and regulations issued there under for reporting
suspicious transactions/currency transactions in the
context of money laundering.
2. Banks/ DFIs shall implement appropriate internal policies,
procedures and controls for meeting their obligations under
AML Act.
3. Banks/ DFIs shall pay special attention to all complex,
unusually large transactions, and all unusual patterns of
transactions, which have no apparent economic or visible
lawful purpose.

24. 4. The transactions, which are out of character or are
inconsistent with the history, pattern, or normal
operation of the account including through heavy
deposits, withdrawals and transfers, shall be viewed
with suspicion, be properly investigated and
referred to Compliance Officer for possible reporting
to Financial Monitoring Unit (FMU) under AML
Act.

25. REGULATION - 2
RECORD KEEPING
1. Banks/ DFIs shall maintain all necessary records on transactions,
both domestic and international, including the results of any
analysis undertaken (e.g. inquiries to establish the background
and purpose of complex, unusual large transactions) for a
minimum period of ten years from completion of the transaction.
2. The records shall be sufficient to permit reconstruction of
individual transactions including the nature and date of the
transaction, the type and amount of currency involved and the type
and identifying number of any account involved in the transactions
3. Banks/ DFIs shall satisfy, on timely basis, any enquiry or order
from the relevant competent authorities including law enforcement
agencies and FMU for supply of information and records as per
law.

26. REGULATION - 3
INTERNAL CONTROLS, POLICIES,
COMPLIANCE, AUDIT AND
TRAINING
1. Each Bank/ DFI shall formulate its own AML/CFT policy
duly approved by their Board of Directors and cascade the
same down the line to each and every business location
and concerned employees for strict compliance. The
detailed procedures and controls shall be developed by
banks/ DFIs in the light of policy approved by the Board.
2. In formulating policies, procedures and controls, banks/
DFIs shall take into consideration money laundering that
may arise from the use of new or developing technologies.

27. 3. Banks/ DFIs shall apply their AML/ CFT policies to
all of their branches and subsidiaries outside
Pakistan to the extent that laws and regulations
of the host country permit.

28. Compliance
1. Banks/ DFIs shall develop appropriate AML/ CFT
compliance program, including at least, the
appointment of a management level officer as the
compliance officer to ensure that all the above
regulations are being complied by Banks/ DFIs.
2. Banks/ DFIs shall ensure that the compliance
officer, as well as any other persons appointed to
assist him, has timely access to all customer records
and other relevant information which they may
require to discharge their functions.