KARACHI - The SBP Act 1956 mandates the State Bank of Pakistan to regulate the credit system of the country and empowers it through the Banking Companies Ordinance 1962 for this purpose.

Using its authority and powers, SBP decided to amalgamate KASB Bank into BankIslami in 2015 after  a moratorium was imposed by the federal government on its request to safeguard the interests of depositors and to ensure safety and soundness of the banking system of the country. This step was taken due to poor financial condition of defunct KASB bank and its inability to meet regulatory requirements despite opportunities being provided for an extended period of time, said a press release issued on Friday.

Since then a smear campaign was run in some quarters of media to dub this action by SBP against the law and malign its staff for misuse of authority. Taking notice of these reports, the National Accountability Bureau (NAB) initiated an inquiry into the matter and recently it has been learnt from its press release that an investigation has been authorised against the officials of SBP for alleged misuse of authority in terms of amalgamation of KASB Bank into BankIslami, the press release said.

SBP finds this decision of NAB to convert its inquiry into investigation disappointing since the inquiry report available in the media does not appear to have incorporated all the detailed input provided by SBP during the process and released through its communications to the general public. “Such one sided views lead to misjudgement about the authority of SBP as a guardian of the financial sector in general and the interest of depositors in particular. Further, it negatively impacts the motivation of SBP staff to discharge its duties without fear or favour,” it added.