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SBP issues new rules for banks, DFIs on donations

RECORDER REPORT

KARACHI: The State Bank of Pakistan has devised rules for banks and development financial institutions to put a check on donations, restricting them to get prior approval of shareholders in such cases.

The central bank issued a circular on Wednesday directing the banks and DFIs to strictly observe the new rules regarding donations, contribution for charitable, social, education or public welfare purposes.

"Only those banks which meet provisioning and capital adequacy requirements prescribed by the State Bank and pay positive rates of return to their depositors can make donations," said the circular.

Every donation or contribution to be made must carry the prior approval of the board of directors, it added.

All donations or contributions to be made during the year must be specifically approved by the shareholders in their Annual General Meeting.

Banks and DFIs were further directed to expressly disclose in their Annual Accounts the total donation/contribution during the year made in excess of Rs.100,000.

In the case of donations where any director or his spouse has interest in the donees, the names of such directors, their interest in the donee and the names and addresses of all donees, should also be given.

The auditors of the banks will also report whether the bank has complied with all the requirements in their report to the State Bank in accordance with the guidelines given in the earlier circular issued by the SBP and subsequent amendments.

Each bank and DFI will furnish the SBP with a statement for each financial year indicating the names of persons and the amount of donation/contribution made to each donee during the year within 30 days of the close of the financial year.

This statement must be accompanied with a certificate signed by the Chief Executive that the bank has met all the requirements set out by the SBP for making donations/contributions, the circular said.