SBP Slams Penalties of Over Rs. 800 Million on 10 Commercial Banks

State Bank of Pakistan (SBP) has continued taking strict actions in the financial sector by slamming penalties of over Rs. 800 million on 10 commercial banks for violating regulatory laws and loopholes in the banking operations.

A team of the central bank carried out extensive audits of banks’ operations and regulatory implementation and sternly penalized banking companies without issuing a warning or any show-cause notices.

In July, SBP imposed a penalty of Rs. 184 million on four banks on the same account. However, banks did not take caution to fix such regulatory issues and improve their operations. Majority of these banks violated regulations in areas related to AML/CFT, Consumer Protection, Consumer Protection and Asset Quality.

The tough action is part of the steps needed to get off the Financial Action Task Force (FATF) greylist.

Below are the details of penalties slapped on these banks by the State Bank of Pakistan.

Habib Bank Limited

HBL faced a fine of Rs. 320 million due to deficiencies in the areas of AML/CFT and erroneous deduction of service charges from customers. The bank has been advised timelines to bring improvements in its systems/controls to avoid recurrence of such lapses/violations in the future.

MCB Bank

MCB Bank was imposed a penalty of Rs. 159.152 million for deficiencies found in the areas of AML/CFT. The bank has been advised timelines to improve the KYC/CDD processes and integrate eKYC system with the core banking system.

Dubai Islamic Bank

SBP imposed a penalty of Rs. 77.9 million on Dubai Islamic Bank mainly on deficiencies in the areas of AML/CFT and Assets Quality. Moreover, the bank has been advised timelines to rectify the operational lapses and improve the control environment to avoid recurrence of such lapses/violations in the future.

JS Bank

JS Bank was penalized with a fine of Rs. 70.37 million by the central bank on deficiencies in customer due-diligence process, misutilization and non-classification of loans etc.

The bank has been advised timelines to enhance its systems/process for customer risk profiling (CRP), transaction monitoring and identification of Politically Exposed Persons (PEPs).

The bank also faced a penalty in July.

Silk Bank

Silk Bank also faced a penalty of Rs. 53 million on the deficiencies in customer due diligence practices, imprudent lending practices, non-classification of loans.

Moreover, in view of the strategic deficiencies in transaction monitoring system & name screening process, the bank has been advised an action plan/timelines for replacement of their existing TMS and acquiring of name screening solution.

Bank Alfalah

The bank was fined with the penalty of Rs. 52.7 million in August due to the violations of foreign exchange regulations such as restrictions to remit import advance payments, export documentation and non-submission of documents against advance payment.

Allied Bank Limited

Allied Bank faced a penalty of Rs. 32.75 million. The bank was penalized on breach of various limits of Equity Investment/related deficiencies in the customer due diligence process.

The bank has been advised the timelines to bring equity investment and exposure to related party group within the prescribed limit and revise KYC/CDD process.

Sindh Bank

Sindh Bank was imposed a penalty of Rs. 15 million on deficiencies in customer due diligence practices, imprudent lending practices, non-classification of loans.

Moreover, in view of the strategic deficiencies in transaction monitoring system & name screening process, the bank has been advised an action plan/timelines for replacement of their existing TMS and acquiring of name screening solution.

Summit Bank

Summit Bank was fined with an amount of Rs. 13.07 million on deficiencies in customer due-diligence process, misutilization of loans and non-classification of loans.

The bank has been advised to timely update customer profiles & properly document the reasons behind large value transactions.

Habib Metropolitan Bank

Habib Metropolitan Bank was imposed a penalty of Rs. 10 million by SBP on a violation of foreign exchange regulations relating to splitting the import advance payments into smaller transactions.

What Should Be Next?

Although the management of these commercial banks are dejected but they have to pay a heavy price of penalty that will eat up their revenues significantly. These banks should lay focus on their business and operations to avoid penalties next time.

Banks, which did not come in the radar of the central bank, should be vigilant and fix their issues at earliest as possible to avoid such penalties in the future.


  • An FATF blacklisting will hit the economy very hard and might cause some of these banks to collapse. It’ll be glorious when it happens!

  • I suggest to SBP kindly checkout all the branches and franchise of Glaxy money exchange they are totally fraud company and they are working without deal slip with their customers and use duplicate CNICs, expire CNICs and do not take Source of fund with thier customers and many voilation with KYC/CDD and also use B Program which is not shown in front or SBP


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