ISLAMABAD, March 11: Banks have failed to satisfy Competition Commission of Pakistan (CCP) against their alleged involvement in fleecing the depositors by working as a cartel.
Sources told Dawn on Tuesday that during two hearings held in Karachi and Islamabad, the senior executives of 42 banks could not disprove the allegations that they were promoting cartalisation to charge unfair fees and pay less profit to their depositors.
Senior Member of CCP Mr Ghaffar, who presided over the two hearings, the sources said, could not be convinced by the bankers, forcing the commission to shortly take action against them.
However, the sources said, the State Bank of Pakistan felt annoyed over the commission’s observations against the banks and believed to have asked it to stop inquiring the issue. But the central bank officials were told that the job of the commission was to ensure fair play and prudent business practices and penalise those who get themselves involved in unfair profiteering by establishing cartels. The SBP was informed that the interest of consumers will have to be protected by the commission.
However, the sources said that the commission might take a lenient view against the banks which were not directly involved in promoting cartalisation.
The sources said that as the hearings had been completed the commission was expected to soon propose penalties against most of the banks found involved in cartalisation.According to IMF 2007 report, banks of Pakistan and Colombia remained on top in the world in terms of earning huge profits.
Earlier, the commission had prima facie found the banks involved in cartalisation and ordered investigation.
Currently there is a penalty for any bank involved in cartalisation. But under the competition law, bank executives could also be individually penalised.
There are harsher punishments in the developed countries against cartalisation. In the United States the punishment is 14 years imprisonment while in some European countries it is up to 25 years. In the foreign world, forming a cartel is a criminal offence while it is a civil offence in Pakistan.
It is also said that there is a lacuna in the competition law which needs to be removed so that anybody found guilty of promoting cartalisation could be removed from the directorship of any company.
Meanwhile, it is also learnt that the Commission has not received ‘tied sourcing’ of funding to effectively run its affairs. It needs Rs200 million annually as ‘tied sourcing’ which could be provided by different official agencies.
Also, the government has not approved the salary package of the members of the commission.However, a decision has been taken to set up a competition consultative group to institutionalise its inclusive approach of seeking advice and suggestions to promote competition in Pakistan.
The group will comprise eminent persons essentially drawn from sector-specific regulatory agencies, relevant professional bodies and the private sector. There will be a 15-member group which will be meeting periodically to discuss and deliberate on the issues pertaining to competition. The objective, according to the commission’s officials, is to provide a platform for informal feedback and guidance with respect to the commission’s ongoing actions and proposed initiatives.
It is learnt that the government has eventually provided Rs50 million as seed money for running the affairs of the commission and it is also hoping to get another Rs100 million.
For capacity building international donor agencies, particularly the World Bank, plan to initially offer $10 million during the current financial year.
