ISLAMABAD  -  The  Senate  on Saturday passed the Banking Companies (Amendment) Bill, 2024 unanimously aimed at making the banking sector more robust.  Minister for Finance and Revenue Muhammad Aurangzeb move the bill further to amend the Banking Companies Ordinance, 1962 [The Banking Companies (Amendment) Bill, 2024] as reported by the Standing Committee in the House.

The Statement of objects and reasons of the bills says that the Banking Companies Ordinance (BCO), 1962 provides a comprehensive framework for the banking industry in Pakistan. In the wake of dynamic nature of the bank sector, State Bank of Pakistan (SBP) continuously works to refine and update this important legislation to align it with international standards, best practices and changing financial landscape.

In order to ensure consistency with the international standards and best practices related to bank resolution, amendments are being proposed which include: designating SBP as a resolution authority for the banking companies; setting out resolution objectives; clearly stating recovery triggers and powers; articulating resolution triggers along with necessary legal safeguard; enhancing resolution tool kit; providing for resolution funding; making liquidation process more efficient; cooperation and coordination with other regulators and supervisory authorities on resolution matters; protection of SBP and its officials for action taken in good faith and their indemnity; and brining Microfinance Banks (MFBs) under the scope of BCO’s resolution regime.

To provide explicit coverage to the legal framework for Islamic banking business in BCO, 1962, separate chapter on Islamic banking has been drafted. These Islamic banking related amendments will not only strengthen the legal framework for Islamic banking but will also be the first step as per the Federal Shariat Court’s directions and will pave the way towards interest free economy.

Some other amendments being proposed will strengthen SBP’s regulatory capital regime, promote financial inclusion, facilitate convenient access to unclaimed deposits and relevant data to the general public; and make the process of filing complaints with the Banking Mohtasib simple and swift.

 Earlier, the minister moved a motion under Rule 263 of the Rules of Procedure and Conduct of the Business in the Senate, 2012, that the requirement of sub-rule (2) of Rule 99 of the said Rules be dispensed with in order to take into consideration at once the Banking Companies (Amendment) Bill, 2024 as reported by the Standing Committee which was adopted by the House.