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ACT VII OF 2011 ACT VII OF 2011 BANKING COMPANIES (AMENDMENT) ACT, 2011 An Act further to amend the Banking Companies Ordinance, 1962 [Gazette of Pakistan, Extraordinary, Part - I 2nd April, 2011] F. No. 22(16)/2008-Legis. dated 2-4-2011.---The following Act of Majlis-e-Shoora (Parliament) received the assent of the President .on the 29th March, 2011 and is hereby published for general information: Whereas it is expedient further to amend the Banking Companies Ordinance, 1962, (LVII of 1962), for the purposes hereinafter appearing; It is hereby enacted as follows: 6. Amendment of section 42, Ordinance LVII of 1962.---In the said Ordinance, in subsection (1), in clause (d) , in sub-clause (v), for the full stop, at the end, a semicolon shall be substituted and thereafter the following new clause shall be added, namely: "(e) without prejudice to the generality of this section or any provision of this Ordinance-- (1) if the State Bank is satisfied that one or more of the circumstances exist under which a banking company, (i) has become or is likely to become insolvent; (ii) has suspended or is likely to suspend payments as these fall due; (iii) has defaulted or is likely to default in making payments to depositors; (iv) is carrying on its business in a manner detrimental to the interests of its depositors, creditors or other stakeholders; (v) has contravened any provisions or any restrictions or condition imposed on its licence; (vi) has engaged any director, chief executive or an officer of a banking company Avvho is or is likely to be detrimental to the interests of the banking company or its depositors or otherwise undesirable; (vii) has created hindrance, delay or obstruction for the State Bank in performance of its supervisory functions; (viii) has wilfully destroyed, concealed or moved outside of Pakistan all or part of its assets, the administration, operation and books or records; (ix) has failed to meet capital adequacy or minimum capital requirements prescribed by the State Bank; (x) has defrauded its depositors and creditors; (xi) is wilfully engaged in or is being used for criminal activities; (xii) is part of a financial group which is under liquidation, or inrespect of which a custodian, receiver, administrator or liquidator has been appointed; (xiii) is a branch or subsidiary of a banking company whose, licence to carry on banking business in the country of its origin has been cancelled; (xiv) has breached requirements under any document of commitment to the State Bank; or (xv) is otherwise in a situation or circumstance which in the opinion of the State Bank may materially impair the ability of the banking company to make payments, meet its obligations or otherwise continue its operations, the State Bank may, keeping in view the gravity of the situation and compliance behavior of the banking company, from time to time, invoke any one or more of the following actions, namely: (i) require the banking company to submit a plan of action to redress any discrepancies; (ii) require the banking company or Board of Directors of the banking company to furnish documents of commitment for compliance with the measures prescribed by the State Bank and to secure the interests of its depositors; (iii) where the banking company or the Board of Directors fail to provide documents of commitment or fulfil its obligation under the same pursuant to clause (ii), the State Bank may-- (iv) take any action under sections 41A, 41B or section 47; and (b) carry out any capital reduction and cancel any portion of shares of the banking company which is depleted or unrepresented by available assets or dilutes the participation of the existing shareholders by issuing shares to such persons and at such consideration as may be determined by the State Bank. Any order passed by the State Bank under this sub-clause shall have effect notwithstanding, the provisions contained in sections 96 to 107 of Companies Ordinance, 1984 (XVIII of 1984) or any other law for the time being in force. The State Bank shall exercise the power reasonably, fairly and justly; (1A) The State Bank shall provide an opportunity of being heard to the banking company or aggrieved person before making the order and if the State Bank is of the opinion that any delay would be detrimental to the public interest or the interest of the banking company, or its depositors, the State Bank may, at the time of giving the opportunity aforesaid or at any time thereafter and pending the consideration of the representation aforesaid, if any, make an appropriate interim order. (IA) The banking company or the aggrieved person shall have the right of appeal to the Central Board of Directors of the State Bank; and (1B) Nothing contained in this section shall be read to dilute or affect powers of the State Bank otherwise conferred in the Ordinance."