The State Bank of Pakistan (SBP) said that commercial banks might be misusing the term ‘politically exposed persons’ (PEPs) to obstruct the process of providing financial services to citizens, reported dawn news. An State Bank of Pakistan team, led by deputy governor Saeed Ahmed, testifying before the Senate Standing Committee on Finance and Revenue — headed by Salim H. Mandviwala said that under SBP rules, PEPs included heads of state or government; senior politicians; senior government, judicial or military officials; senior executives of state-owned entities; and senior tax and audit officers. Senators had expressed concerns that banks were discriminating against politicians and their extended families and denying them financial services, such as opening bank accounts, as if they were criminals for being associated with politics or being related to politicians. They demanded that the central bank put an end to this campaign. The standing committee directed the central bank to hold an immediate meeting with banks to set some standards and carry advertisements in newspapers to inform the people of their financial rights.
The refusal of the banks to open the accounts of politicians could be due to following reasons. First, it is a fact that most of the names on the list of loan defaulters belong to politicians; but that list belongs to an earlier era when banks were nationalised and susceptible to political pressure.
Second, it is true that members of certain professions, including journalists and lawyers in addition to politicians, have been known to misuse the power that comes to them by virtue of their work and have demanded special treatment in their personal dealings with various institutions, including banks. But the real issue here is that banks don’t really need customers. In an environment where they can acquire their liquidity from the State Bank and then lend it all to government with no risk, it should not be a surprise that efforts to mobilise deposits and seek out borrowers have slackened completely. In every area, banks have taken a very reluctant attitude towards providing services to their clients. It is hard to blame them, given that they don’t have to work in order to post their record profits.
So long as government remains the largest provider and consumer of bank liquidity, the rest can complain all they want to — there is nothing we can do to change the attitude of banks towards their rank-and-file customers.
pk.shafaqna.com
