LAHORE, Jan 19: The State Bank of Pakistan deposed before the Lahore High Court on Wednesday that the decision to submit classified information about certain bank depositors to the Central Board of Revenue was taken under a requirement of the International Monetary Fund.

The SBP counsel, Barrister Dilawar Mahmood (a former LHC judge), also informed the LHC division bench that the bank issued the circular notice to all commercial banks on June 20, 2003 under a direction by the CBR that wanted to know on a biannual basis personal details of depositors whose annual profit on their deposits was Rs10,000 and above for the IMF.

Comprising Justice Sheikh Abdur Rashid and Justice Muhammad Bilal Khan, the division bench, proceeding in an intra-court appeal moved by the central bank, observed that the bank as a statutory body under the State Bank of Pakistan Act, 1956, was not subservient to the dictates of the CBR and as such was not bound to accept any such directive, even by the federal government, as to toy with standard banking practices.

The court asked the counsel if he could apprise it of the reason why the CBR issued such directive and why the State Bank accepted it. The court also wanted to know when and under what circumstances such a decision was taken. It wondered why the State Bank agreed to perform a duty for the CBR which it could perform by itself.

Advocate M.D. Tahir, on whose constitutional petition the high court's single bench struck down the SBP circular letter, contended that section 46(2) of the State Bank Act and section 33 of the Banking Companies Ordinance, 1962, stipulated secrecy of bank deposits and restrained the banks from passing such information under any circumstances. He submitted that the SBP was competent to issue circular letters to banks only for regulatory and administrative purposes.

Further hearing of the intra-court appeal was adjourned sine die after its counsel requested putting the matter off to enable him to get information by the SBP. The appeal by the State Bank challenged an LHC decision under which its circular letter to commercial banks was struck down as unconstitutional and in contravention of internationally accepted banking practices.

Justice Muhammad Ghani (retired) in his judgment on Feb 18, 2004, declared that the SBP circular violated article 9 of the constitution as it clearly contravened the fundamental rights of the people who also included bank depositors.