January 7, 2006	Saturday	Zilhaj 6, 1426

KARACHI, Jan 6: The State Bank for the first time in the banking history got an access to all database of banks that enabled the central bank to have an in-depth study of any bank, identify weakness and locate wrong decisions, banking sources told Dawn on Friday.

The SBP used to inspect performance of a bank with sampling of data and prepare reports on the basis of samples.

“The State Bank, which got the access to database of four major banks from the middle of last month, will now monitor every move and minutely read decisions taken by the banks,” said a banker on the condition of anonymity.

The sources said that banks were reluctant to give an access to entire database to the SBP, but being a sole regulating authority, the central bank imposed the decision by itself.

The database of United Bank, Allied Bank, National Bank and Habib Bank are now in the access of the SBP inspection team.

The sources said that it was a positive move because a better performance report would come out through the SBP, but at the same time it might hurt the banks that used to compromise on quality of loans and advances for business purposes. There are numerous complaints that banks prefer to give loans to their favourites and offer little to depositors who are actual stakeholders of a bank. It is a general perception that banks used to go beyond the limit while making write-offs.

“The entire database of banks is enough to tell the story and a better picture with discrete details would be available,” said the banker. He said the denationalized banks were still carrying a lot of unwanted banking practices. Banks never make their business secrets public, arguing that these are business secrets which make some of their decisions doubtful.

“The SBP is now able to identify money laundering, which has been a major concern for the central bank and the government, but it still exists in some banks,” said the banker.

Though the money laundering is not new in the banking system, for Pakistan it has become a serious issue after the 9/11 incident. The US put enormous pressure on counties like Pakistan to check the flow of money and curb every possibility of money laundering.

The SBP launched training for its people to specialize in money laundering and the output is much better. The immediate result was an increase in remittances through the banking channel.

“The skill to locate money laundering would be used better after getting entire database of banks,” said the banker.

The electronic networking of banks, which provides quick service to the customers for transaction, sometimes facilitates money laundering. Some bankers say that electronically transferred money remain untraced. But with the access to database, the banks can not now hide these transactions, they add.

The sources said the SBP got the access to database for the year 2005. They said that now the SBP report on the banks would be more comprehensive and would result in better ratings of a bank. These reports would also help credit rating agencies get better idea about the performance of a bank while assigning ratings.