KARACHI, June 12: The State Bank wants banks and development finance institutions (DFIs) to fire their employees involved in fraud and forgery instead of allowing them to leave somewhat gracefully.

In a letter dated June 11 the SBP said it had noted that some banks and DFIs instead of terminating the services of persons involved in fraud/forgery “prefer to accept their resignations.” This makes it possible for “such unwanted persons” to join other financial institutions.

The central bank has issued some guidelines for the banks and DFIs to discourage the entry of such persons in the financial system.

It has asked all banks and DFIs to reinforce their existing procedure of verification of antecedents of persons seeking employment within a period of 30 days from the date of issuance of this letter. “The revised procedure of verification of antecedents of these persons should inter alia include obtaining of satisfactory confidential reports in writing on the integrity, stability etc., of the applicant from all their former employers (financial institutions only).”

The SBP has also sought information of the persons who were forced to tender resignation “on account of fraud/forgery/ disciplinary action or any other charge against the interest of bank/DFI etc., when proved after holding due inquiry.” The State Bank has also sought information of the persons terminated or dismissed from the service on the above said charges. The banks and DFIs have been asked to send this information for more than last 10 years (January 1 1993 to May 31 2003) by the end of this month. The information is supposed to be sent to the SBP on a specially prescribed format.

“The banks/DFIs shall, thereafter, continue reporting of said information within 7 days from the date of accepting of forced resignation or termination of services of such employees as the case may be.” The central bank has warned the banks and DFIs that non-compliance of the above instructions would attract penal provisions under banking laws.