Banks advised to curb unethical practices

KARACHI - Banking Mohtasib Pakistan Mansur-ur-Rehman Khan has said that the total number of formal and informal complaints received by Banking Mohtasib Secretariat under the category of frauds has reached an alarming level in 2010 due to the parallel banking operations of banks staffers. There have been increasing instances of parallel banking and complaints about misappropriation of funds deposited by innocent customers. The number of such complaints registered by BMP rose to 13 per cent over the comparative figure in 2009, the Banking Ombudsman said while addressing a press conference at the release of the Banking Mohtasib Pakistan Annual Report 2010 here on Wednesday. Speaking to the journalists, he said a clean separation from bank service allows the delinquent employee to work in another bank and create a potential for further frauds there. Therefore, the banks not only need to improve their audit and internal control systems and ensure integrity of their staff, especially at the branch level, but also to make a database of such tainted ex-employees maintained with Pakistan Banks Association (PBA) that can help prevent reputation of frauds and promote consumer confidence in the banking system. Following the mechanism and details of the employees to be mentioned in the PBAs database should be mandatory for every bank before appointing any person, he said, A proposal by the Secretariat has already been forwarded to the State Bank of Pakistan in this regard and we strongly hope that the central bank, in consultation of all stakeholders, would soon to come up with solid regulations to check and control the unethical and criminal practices of the banks employees, he added. Meanwhile, according to the findings of the report, the employees involved in serious irregularities either leaves the service when they perceive that their misdoings are going to be discovered, or their services are dispensed with by asking them to resign. This trend endangers the credibility of the banking system as it has been seen that these persons continued to indulge in unhealthy banking practices at their new jobs in other banks, the report stated. The report revealed that the number of consumer product complaints received by BMP declined to 303 in 2010 against 455 in 2009. There could be two reasons that can be attributed to the substantial fall in the number of complaints in this category: a reduction in the number of total clients/consumers, and improvements made by the banks in service standards, particularly with reference to consumer credit. The report showed that the total number of formal complaints stood at 1047 during last year compared to 1608 complaints in 2009. In terms of complaint disposal, 35 per cent of total complaints received were granted another 38 per cent declined and 17 per cent rejected while 10 per cent were reported pending at the year-end. Almost all of which except a few requiring re-hearing have since been resolved, the report concluded.