October 13, 2006	Friday	Ramazan 19, 1427

KARACHI, Oct 12: The State Bank on Thursday asked the banks to immediately stop the practice of passing on the penalties imposed on them to their customers. This is not surprising as banks have the tendency to extract maximum from the customers.

“It has been observed that some banks and DFIs are engaged in the practice of recovering the amount of penalty imposed by State Bank for violating regulations, guidelines, directives etc., from their customers by including a standard clause to this effect in their agreements or documents,” said a circular issued by the SBP.

The penalty imposed on banks and DFIs because of their negligence or oversight should not be passed on to their customers who do not have any responsibility in this respect, said the central bank.

“It is the duty of the banks and DFIs to make sure that all SBP regulations, guidelines and directives are meticulously complied with at all times,” it added.

In exceptional cases where a specific requirement is not being complied with, banks and DFIs should approach SBP for exemption or relaxation which will be considered on the merit of the case, the SBP circular said.

However, the central bank did not warn and impose any extra penalty on banks involved in this illegal activity.