ISLAMABAD: The joint session of parliament on Wednesday approved an amendment to the State Bank of Pakistan (SBP) Banking Services Corporation Ordinance 2001 to enable the central bank to meet emerging operational needs of the banking sector.
According to a report by Bloomberg in this regard, the majority of lawmakers gave an approval to amend the Banking Services Corporation (Amendment) Bill, 2021, during a joint meeting of the parliament’s upper and lower houses.
The report says that the bill seeks to reduce the Finance Ministry’s oversight of the SBP by removing its nominee on the central bank’s board, however, a report by Dawn which quotes Law Minister Dr Farogh Naseem said the present law has nothing to do with the IMF, since it’s an altogether different legislation.
As per the Bloomberg’s report, the passage of the bill would help the government in clearing at least one hurdle in the deal with the IMF for resuming the extended fund facility. The loan is a necessary cushion for the South Asian economy, which has seen imports swell as it emerges from Covid-induced disruptions and inflation surge to the fastest in Asia.
The situation has weighed on the rupee, which is Asia’s worst performer in the past six months.
However, Dawn has clarified that the objects and reasons of the amendment are to optimise the operational efficiency of the banking sector regulator, enabling a clause on the creation of subsidiaries by the SBP Banking Services Corporation with the approval of the board has been introduced for operational efficiency.
The amendment has incorporated a sub-section in section 9 of the ordinance in line with good governance for appointment of an acting managing director within 60 days from the date of occurrence of vacancy, provided that the managing director will be appointed within three months from the date of the occurrence of vacancy.
The amendment proposes exemption of gratuity and provident fund of SBP employees from attachment, as already provided for, in case of pensioners to make the ordinance consistent with the existing compensation benefits.
Changes have been made in several clauses of section 28 of the ordinance to provide adequate protection to the central bank and its officers for actions taken in good faith.
Moreover, a new section 24A has been proposed to legally protect the proceedings and committees of the board from any questions arising only on the grounds of any vacancy or any defect in the constitution of the board.
To recall, IMF had posed its concern over the autonomous status of the State Bank of Pakistan as the government had committed on granting autonomy to the central bank to the Fund in March 2021.
