WHY STATE BANK OF PAKISTAN IS NOT TAKING ANY ACTION ON CONTINUES PRUDENTIAL REGULATION VIOLATION

This is very alarming situation for the people of Pakistan that State Bank of Pakistan is not properly regulating the Banks of Pakistan, despite many warnings given by SBP to different and heavy financial penalties were imposed on them and later paid by the banks. But State Bank of Pakistan is completely failed to monitor& prevent the fraud actives with in bank. Consequently All bank are continues committing unlawful activities and are not scared of Regulator (State Bank Of Pakistan).thou SBP has  always imposed penalty and fine on the culprit Pakistani Banks for intentional violation , it is very appalling to notice that Millions of Rupees of Shareholder are paid in fine and they are deprived from their lawful earning per share, it is also to be reported that MCB Bank has double accounting books and actual profits with collaboration of audit from are retain by Mian Mansha through many illegal manners, e.g purchase of property on higher prices comparative to prevailing market rates , in shape of commissions , renovation of bank property at higher rates in contradiction of market comparative rates, Bones paid to bank executive in several Million of Rupees where bank is operated at "Allah tawakal" on its own 

under mentioned are some of violation pointed-out by state bank of Pakistan in the year 2007, unfortunately MCB Bank Ltd did not improvise their bank operations attitude so far.

State Bank of Pakistan Inspection 2007 ­ List of Observations

Sr. No.     Annexure No        .Irregularity Short

1	A‐1	Bank failed to obtain copy of accounts  relating to the business of the borrower
2	A‐2	Bank failed to ensure maintenance of "current assets to current liabilities ratio" of the borrower.
3	A‐3	The bank allowed financing to defaulters without recording justification thereof.
4	A‐4	Bank failed to obtain ECIB reports before grant of financing.
5	A‐5	Financing Facilities were approved by the bank without obtaining Borrowers Basic Fact Sheet.
6	A‐6	Financing Facilities were approved by the bank with discrepant Borrowers Basic Fact Sheet.
7	A‐7	An Instance where unauthorized debit transactions were allowed in customer's account
8	A‐8	The bank allowed unsecured financing in excess of Rs. 0.50 million to any one person.
9	A‐9	Instances where the bank did not maintain minimum prescribed margin for financing against shares
10	A‐10	Instances where periodical verification of hypothecated / pledged stock was not made /made irregularly by the bank officials in violation of its own Sanction Advice/instructions
11	A‐11	An Instance where bank failed to maintain debt to equity ratio requirement of NEPRA while extending finance to customer
12	A‐12	Application for Finance was not obtained from customers while granting Loans and Advances.
13	A‐13	Bank took exposure against the shares issued by the same company/subsidiary company/sponsor Directors.
14	A‐14	Instances   where   stock   reports   on   pledged/hypothecated   stocks/   receivables   were   not   obtained/obtained irregularly in violation of bank's own poliocy
15	A‐15	Miscellaneous discrepancies were noticed in documentation covering Loans and Advances.
16	A‐16	An Instance where margin requirement was set.
17	A‐17	Bank granted deferrals/waivers  against some documents required under  Prudential Regulations  for Corporate and Commercial banking/bank's own manuals
18	A‐18	Instances where Bank 's prescribed Application for Finance was not used for granting Loans to borrowers
19	A‐19	Instances where documents covering Financing Facilities were not obtained
20	A‐20	Instances where documents covering Corporate Loans and Advances were left blank
21	A‐21	An Instance where Director Loan was not disclosed as subordinated with bank
22	A‐22	Instances where stock reports of the borrowers obtained in compliance with R‐12 for Corporate Banking contained miscellaneous discrepancies
23	A‐23	Instances where RMG included certain conditions in Application of Finance for monitoring  purpose which were not monitored by Credit Risk Control department
24	A‐24	Bank included a clause in Sanction Advice whereby the bank held the right to change the mark up during the tenor
		of the Loan.
25	A‐25	Instances where audited accounts of the borrower contained discrepancies
26	A‐26	Facilities were approved and disbursed for unproductive purposes
27	A‐27	KIBOR was not used as benchmark rate for determining rupee pricing inCorporate lending.
28	A‐28	Instances where the bank accepted insurance policies of insurance companies that were not on the approved panel of the bank in violation of bank's own instructions
29	A‐29	Instances where Bank was extending unusual services to the borrowers
30	A‐30	Instances where value of stock as per stock report did not reconcile with audited accounts
31	A‐31	Proper utilization of Loan was not ensured against the purpose of Loan as mentioned in approval.
32	A‐32	Instances where credit facilities were allowed in excess of the sanctioned limit
33	A‐33	Instances   where   hypothecated/mortgaged   assets  held   as  security   against   Loans   and  Advances   were   not insured/under insured
34	A‐34	Instances where quarterly call reports to assess the business of borrowers on ongoing basis were not prepared  in violation of bank's own policy
35	A‐35	Bank did not act prudently to safegaurd its own interest.
36	A‐36	Instances where Bank failed to furnish complete information/data through monthly statements of CIB‐i & CIB ‐ii to Credit Information Bureau
37	A‐37	Stock reports did not contain bank wise break up of outstanding amount secured against  hypothecation of stock or receivables on pari passu basis.
38	A‐38	Instances where miscellaneous discrepancies were found in case files/credit approval / credit administration
39	A‐39	Bank failed to obtain written confirmation from the borrower for proper utilization of Loan proceeds.
40	A‐40	Instances where facilities were disbursed to borrowers without getting proper approval from competent authority
41	A‐41	An Instance where charge over hypothecated/mortgaged assets of the borrower  was not created  with SECP
42	A‐42	Instances where the bank allowed financing to the brokers against third party shares (client accounts) without any appropriate documentation to this effect
43	A‐43	Bank allowed financing against shares in excess of 5% of a Commercial banks' paid up capital.
44	A‐44	Instances where fresh valuation of fixed assets was not conducted despite lapse of  more than three years from previous valuationion
45	A‐45	Instances where the bank failed to obtain required Loan documents in violation of their own  BOD approved credit manual and Sanction Advice.
46	A‐46	Instances where pledged stock was not being properly monitored/ maintained  in violation of bank's own policy
47	A‐47	Instances where margin shortfall in securities against Loans & Advances was observed in violation of bank's own approval
48	A‐48	Instances  where  ranking  charge  was  not  upgraded  to  the  1st   pari passu  within  the  stipulated  time  given  in Sanction Advice

49	A‐49	An  Instance  where  margin  requirement  for  insurance  was  not  complied  with  while  allowing  disbursdisbursed disbursement  in violation of bank's own policy
50	A‐50	Instances where facilities were not renewed after lapse of considerable time
51	A‐51	Instances where per party insurance limit was exceeded and the same were not referred to relevent department before disbursement  in violation of bank's own instructions
52	A‐52	Instances where terms of Sanction Advice were not followed/complied with
53	A‐53	Instances  where  Loans  and  Advances  were  renewed/  disbursed   without  obtaining  required  documents  in violation of bank's own credit policy / Sanction Advice
54	A‐54	Instances where party was allowed to take the goods out of pledge stock without issuing the Delivery Order (DO)
55	A‐55	Instances where hypothecated/pledged/mortgaged assets held  as security against  Loans and Advances were not comprehensively insured
56	A‐56	Instances  where  Bank  failed  to  ensure  effective  control  over  the  pledged  assets  in  violation  of  bank's  own policy/sanction letter
57	A‐57	Instances where pledged stock site was assigned to a muccadum without authorization from CRC or allocation was not  made by CRC in violation of bank's own policy (ref:guidelines regarding valuers and muccadums dated 05‐03‐ 07
58	AG‐1	Instances where due deligence was not exercised  by the bank while extending  development (Tractor) Loan (Reg‐ R‐3)
59	AN,V   G‐2	Instances where guidelines for livestock financing were not followed while providing Loan to Milk providers (Reg‐ 22 &23)
60	AG‐3	Instances where  adequate measures were not taken at the time of disbursement and recovery of Agri‐Loan (Reg‐ 2)
61	AG‐4	Instances where prudent measures  were not taken by the bank  while dealing with  development(Tractor) Loan (Reg‐2 &11)
62	AG‐5	Instances where miscellaneous discrepancies were found in violation of Prudential Regulation (Regulation R‐10)
63	AG‐6	Instances where Agriculture Division at head office failed to classify a Loan on objective basis despite being over due for than 90 days
64	A‐(CF)‐1	Excessive mark‐up was charged from the customers in violation of Consumer Operation Instruction
65	A‐(CF)‐2	Monthly installment of the borrower exceeded declared income by the borrower
66	A‐(CF)‐3	Bank did not report the delinquent accounts below 90 days  in ECIB in violation of BSD Circular No.6 of 2006
67	A‐(CF)‐4	Bank did not ascertain the debt burden of the borrower
68	A‐(CF)‐5	Facilities to related persons were approved
69	A‐(CF)‐6	Assest of the bank could not be monitored effectively by the bank to avoid losses
70	A‐(CF)‐7	Significant fields in Financial Agreement were left blank
71	A‐(CF)‐8	Loan was not secured by way of hypothecation of vehicles.
72	A‐(CF)‐9	Bank  did  not  obtain  a  written  declaration  from  the  borrower  of  his  financial  exposure  with  other  Financial Institutions
73	A‐(CF)‐10	Cash was collected from the customer other than authorized place of business premises
74	A‐(CF)‐11	Bank allowed more than 50% debt burden
75	A‐(CF)‐12	Mark‐up was charged after the expiry of loans.
76	A‐(CF)‐13	Cash was collected without insurance cover contrary to instructions explained in minimum requirement part‐B for Consumer Finance
77	A‐(CF)‐14	Assets of the bank were disposed off lower than the Forced Sale Value determined by the valuator in violation of bank's own policy
78	A‐(CF)‐15	Customers were not issued NOC inspite of final settlements in violation of bank's own policy
79	A‐(CF)‐16	Residual amounts of different closed Loan accounts were not re‐ imbursed to customers
80	A‐(CF)‐17	Bank could not collect all required legal documents after the expiry of reasonable time period in violation of bank's own policy
81	A‐(CF)‐18	Excess amount was realized through auction of repossessed vehicles and was not reimbursed to the customers.
82	A‐(CF)‐19	Concessional mark‐up rate of 20% was being offered to employees who left the bank job in violation of bank's own policy
83	A‐(CF)‐20	Repaying capacity of the borrower was not ascertained effectively.
84	A‐(CF)‐21	Due wheightage to information in data check report was not given before approving the Loans
85	A‐(CF)‐22	Repeatedley single person became the beneficiary of Auto Auctions mostly at bid offers lower than Market / FSV prices determined by the valuators.
86	A‐(CF)‐23	Neither key of the vehicle nor Delivery Acceptance Form (DAF) was signed by the customer in violation of Bank's own policy.
87	A‐(CF)‐24	Instances where hypothecated/mortgaged assets held as security against Loans and Advances were not insured
88	A‐(CF)‐25	Instances where Bank did not obtain ECIB reports before grant/renewal of Financing Facilities
89	A‐(CF)‐26	Instances where neither key of the vehicle nor delivery acceptance form (DAF) was signed by the customer in violation of bank's own policy
90	A‐(CF)‐27	Instances where repeatedly single person became the beneficiary of auto auctions mostly at BID offers lower than market/fsv prices determined by the valuators

91	A‐(CF)‐28	Instances where excess amount was realized through auction of repossessed vehicles and was not reimbursed to the customers
92	A‐(CF)‐29	Instances where mark‐up was charged after the expiry of Loans
93	A‐(CF)‐30	Instances where  the borrower was allowed debt burden  beyond 50% as per product policy
94	A‐(CF)‐31	Instances where the assets of bank could not be monitored effectively by the bank to avoid losses
95	A‐(SME)‐1	Original Title documents were not obtained while extending the Financing Faility
96	A‐(SME)‐2	Board of Directors Resolution in case of facilities to limited companies contained discrepancies.
97	A‐(SME)‐3	Bank allowed Financing to defaulters without recording justification thereof.
98	A‐(SME)‐4	Proper cash flows analysis was not made while allowing facilities.
99	A‐(SME)‐5	eCIB report was not obtained while sanctioning the loans.
100	A‐(SME)‐6	Bank failed to obtain personal guarantees from the borrower.
101	A‐(SME)‐7	Bank failed to obtain Copy of Accounts relating to the business of the borrower.
102	A‐(SME)‐8	Bank failed to obtain obtain Borrower's Basic Fact Sheet.
103	A‐(SME)‐9	Miscellaneous irregularities were observed in Borrower's Basic Fact Sheet.
104	A‐(SME)‐10	Shortfall in Securities against Loans and Advances was observed in Violation of Credit Approval.
105	A‐(SME)‐11	Proper utilization of Loan was not ensured
106	A‐(SME)‐12	Bank failed to classify Loans Facility at a quarter end.
107	A‐(SME)‐13	Bank failed to obtain written declaration from the borrower for proper utilization of Loan Proceeds.
108	A‐(SME)‐14	Bank  failed  to furnish  complete  Information  / Data through  monthly  statements  of eCIB‐I  & eCIB‐II  to Credit Information Bureau
109	A‐(SME)‐15	Bank obtained Indemnity against penalty imposed by SBP from the borrower.
110	A‐(SME)‐16	Documents covering SME Financing were left blank
111	A‐(SME)‐17	Documents covering SME Financing were not obtained
112	A‐(SME)‐18	Miscellaneous documents were not obtained at the time of grant / renewal of Financing Facilities.
113	A‐(SME)‐19	Hypothecated / Mortgaged assets held as security against Loans and Advances were not insured / under insured in SME Financing.
114	A‐(SME)‐20	Bank did not obtain Stock Reports against Pledged / Hypothecated Stocks / Receivables.
115	A‐(SME)‐21	Miscellaneous discrepancies were observed in Audited Accounts of the borrower.
116	A‐(SME)‐22	Bank renewed the Stuck up Loans without justification.
117	A‐(SME)‐23	Bank debited customer loan account of the borrower leading to Markup in Markup.
118	A‐(SME)‐24	Miscellaneous discrepancies were noticed in legal documents
119	A‐(SME)‐25	Accounts of Running Finance limits were not fully adjusted and Credit Balance was not maintained at least once in a year in violation of Bank's own policy.
120	A‐(SME)‐26	Where Stock Position submitted as per Stock Report did not reconcile with Audited Accounts of the Borrower.
121	A‐(SME)‐27	Financing Facilities were extended to customer without approval of the competent authority.
122	A‐(SME)‐28	Hypothecated / Mortgaged assets held as security against Loans and Advances were not revalued after 3 years, in violation of Bank's own policy.
123	A‐(SME)‐30	Unauthorized debit transactions were allowed in customer's account.
124	A‐(SME)‐31	25 days Grace Period for payment of markup was not given to customer in violation of Bank's own Credit Policy.
125	A‐(SME)‐32	Bank failed to ensure effective control over the pledged assets in violation of Bank's won policy / Sanction Letter.
126	A‐(SME)‐33	Bank  failed  to  make  Periodical  Verification  of  Hypothecated  /  Pledged  Stocks  from  Bank's  Internal  Vigilance Officers in violation of Bank's own policy.
127	A‐(SME)‐34	Stamps of the Borrower, Blank Signed Letter Heads, Stock Reports or Delivery Orders, Stamps etc were found in Bank's record.
128	A‐(SME)‐35	Running Finance Facilities were extended for over one year period in violation of Bank's own policy
129	A‐(SME)‐36	Hypothecated / Pledged stock was not inspected by RM / GM in violation of Bank's own policy.
130	A‐(SME)‐37	Terms and Conditions of Sanction Advice / Approval of Finance were not met.
131	A‐(SME)‐38	Misleading / wrong information was provided to Approvaing Authorities in the Credit Proposal.
132	A‐(SME)‐39	Miscellaneous discrepancies were noticed in Sanction Advices / Approval of Finance (AOF) issued by the Bank.
133	A‐(SME)‐40	Miscellaneous discrepancies / irregularities were observed in Security Documents / Credit Files pertaining to SME Finance.
134	A (Islamic)‐1	No provision of writing / mentioning date was kept in the agency agreement between the bank and the borrower
135	A (Islamic)‐2	The  bank  accrued  profit  from  the  date  of  crediting  the  agents  account  rather  than  the  date  of  finalization  of Muarabaha
136	A (Islamic)‐3	The bank did not perform stock inspection rather it was performed by the borrower (agent) against the spirit of the Islamic Banking
137	A (Islamic)‐4	The bank did not disclose the cost and profit sseparatelyrately in case of Murabaha
138	A (Islamic)‐5	The sales invoices were in the name of the borrower instead of the bank against the spirit of the Islamic Banking
139	A (Islamic)‐6	The bank made disbursement  directly to the borrower (agent) instead of the supplier against the spirit of the Islamic Banking
140	B‐1	Bank indulged in window dressing by temporarily  showing an ostensibly different position of its accounts.
141	B‐2	Bank  did  not  monitor  accounts  in  which  transactions  were  unusual  in  nature  &  did  not  commensurate  with customer's given earning profile at the time of opening of account.