September 07, 2006	Thursday	Sha'aban 13, 1427

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ISLAMABAD, Sept 6: The Securities and Exchange Commission of Pakistan (SECP) has directed the Crescent Standard Investment Bank to repay to the individual depositors after the commission suspended its board of directors and appointed new administrator, the National Assembly was informed on Wednesday.

In response to a calling attention notice submitted by five opposition members, federal minister for parliamentary affairs Sher Afgan Niazi said the bank had invested in the shares of its associated companies to the tune of Rs2.163 billion. This included investment in 22.8 million shares of PICIC Development Financial Institution.

Individual deposits in the bank are over Rs1.6 billion, according to official documents.

Mr Niazi said the SECP had directed the bank to immediately cease issuance of further certificates of interest and deposits. The bank had also been directed not to extend any financial facility to its associated companies, he added.

The SECP has appointed Badruddin Khan as the new administrator of the bank and asked the defunct management to inject Rs2 billion into the bank.

The minister said the bank had maintained parallel books of account amounting to Rs5.252 billion which was not being reported in the published accounts.

The bank had advanced loans amounting to Rs1.54 billion to its associated company for investment in real estate. Another Rs655 million was advanced to various real estate brokers.

He said the bank was also found borrowing at alarmingly higher interest rates (40-50 per cent) from other banks.

“The bank is in violation of various rules and regulations of the prevalent regulatory framework,” Mr Niazi stated in his written reply.

About the revival plan for the bank, he said the sponsors were continuously insisted by the SECP to inject further capital in the bank and take risk management measures to safeguard its assets.

Instead of injecting capital, the sponsors submitted revival plans to the SECP. All those plans were based on merger of Crescent Group companies with the bank, he maintained.

But the financial position of the companies proposed to be merged was not only weak but also fast deteriorating.