lesson 18 - Virtual University of Pakistan

Banking Laws and Practices-BNK601 VU

LESSON 18

PAKISTAN BANKING AND FINANCE SERVICES COMMISSION ACT, 1992

THE CO-OPERATIVE SOCIETIES AND CO-OPERATIVE BANKS (REPAYMENT OF

LOANS) ORDINANCE, 1966

Establishment of Federal Bank for Co-Operative and regulation of Co-Operative Banking

Act, 1977

Federal Bank for Co-Operative and Regulation of Co-Operative Banking (Account) Rules

PAKISTAN BANKING AND FINANCE SERVICES COMMISSION ACT, 1992

Object:

The object and purpose of establishment of the commission was to promote merit and transparency in recruitment of bank officers through competitive examination and interview as well as conducting test for promotion, advice Federal Government on matters relating to requisite qualifications, methods of recruitment in officer grade-2 (OG-2) and higher grades in financial institutions. The commission was required to submit annual report to the President of Pakistan.

In this Act we shall cover the following aspects/ statutory provisions:

• Definitions

• Establishment of the Commission

• Salary, allowances and privileges

• Term of office

• Resignation and filling of vacancies

• Functions of the Commission

• Recruitment to posts in Financial Institutions

• Funds of the Commission:

• Appointment of officers, employees, etc

• Report of the Commission

• Power to amend Schedule

• Act to override other laws

• Power to make rules

Definitions: the definitions as contained in the Act are given hereunder:

“Commission” means the Pakistan Banking and Finance Services Commission established under section 3;

"Financial institution" means an institution referred to in the Schedule;

"Member" means a member of the Commission;

"Recruitment" means initial appointment otherwise than by promotion or transfer;

"Rules" means rules made under section 14; and

(f)"schedule" means the schedule to this Act.

Establishment of the Commission: Sec 3

There shall be established for the purposes of this Act a commission to be called the Pakistan

Banking and Finance Services Commission and consisting of a Chairman and not more than four members appointed by the Federal Government.

Salary, allowances and privileges: Sec 4

The Chairman and the Members shall be entitled to such salary, allowances and privileges as the

Federal Government may determine from time to time

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Term of office: Sec 5

The Chairman and Members shall hold office for such term as may be determined by the Federal

Government

Resignation and filling of vacancies: Sec 6

The Chairman or a Member may, by statement under his hand addressed to the Federal Government, resign his office.

Any vacancy occurring in the membership of the Commission due to death, resignation or removal shall be filled by the appointment of another person by the Federal Government.

Functions of the Commission: Sec 7

The functions of the Commission shall be— to conduct open competitive examinations for recruitment to Grade III or higher posts in the financial institutions; to conduct interviews and tests for recruitment to posts in grades higher than Grade III, except where such recruitment is excluded from the purview of the Commission by the Federal Government; to conduct tests for promotion of existing employees from lower cadres to Grade III and above, if so required by a financial institution; and to advise the Federal Government on matters relating to qualifications for, and methods of recruitment to, posts in Grade II or higher grades in the financial institutions, if so required by the Federal Government

Recruitment to posts in Financial Institutions: Sec 8:

Recruitment to all posts in Grade iii or higher grades in a financial institution shall be made on the advice of the Commission:

Provided that the Commission may, on the direction of the Federal Government advise any financial institution for recruitment in any post or grade

The Commission may exempt any professional or class of professionals, like engineers, lawyers and chartered accountants, from appearing in any written test or examination conducted by the

Commission.

A financial institution shall not disregard, or act contrary to, the advice of the Commission without the prior approval of the Federal Government, and where the Federal Government grants such approval it shall record its reasons for doing so.

Funds of the Commission: Sec 9

There shall be constituted for the Commission a fund to which shall be credited all sums received under sub-section (2) and out of which shall be defrayed all expenditure incurred by the

Commission, including expenditure on the emoluments of the Chairman and members and the officers, employees, experts. And consultants of the Commission

Every financial institution shall make to the Commission such payments to defray its expenses as the

Commission may, with the approval of the Federal Government, demand

Appointment of officers, employees, etc: Sec 10

For the efficient performance of its functions, the Commission may appoint its officers, employees, experts and consultants on such terms and conditions as may be prescribed.

Report of the Commission: Sec 11

The Commission will submit to the President annually a report on the work done by the

Commission.

Power to amend Schedule: Sec 12

The Federal Government may, keeping in view the purposes of this Act, by notification in the official Gazette, amend the Schedule so as to add any entry thereto or omit or modify any entry therein.



Ac t to override other laws: Sec 13

T he provisions of this Act shall have effect notwithstanding anything contained in any other law, or in any instrument, deed or other documents relating to a financial institution.

Power to make rules: Sec 14

The Commission may, with the approval of the Federal Government, by notification in the official

Gazette, make rules, for carrying out the purposes of this Act.

Since the scenario in the banking sector has undergone, transformation and shifted from governmental control and nationalization to a privatized sector. Hence designing and implementing the recruitment policies of the respected banks is now the sole prerogative of the Board of Directors of the respective Banks. Hence the importance of this Ordinance is overshadowed by the new realities.

The co-operative societies and co-operative banks (repayment of loans) ordinance, 1966

This Ordinance extends to the whole of the province of the Punjab, except the Tribal Areas. It shall come into force at once.

The concept of co-operative and formation of Co-operative societies and Co-operative bank appears to be a priority area for the governments to support and provide institutional framework to those persons and segments of the society which do not hold sufficient assets and collaterals to offer to the banks and financial institutions for securing loans/ advances.


• Definitions

• Repayment of loans

• Supply of information to the Registrar

• Service of notice to the borrowers

• Determination of liability when loan is not admitted

• Securing and repayment of loans

• Recovery of loans

• Restrictions on registration of documents:

• Restrictions on alienations

• Power of Registrar when making inquiry

• Penalty

• Procedure

• Power to make rules

• Bar of Jurisdiction

Definitions: the definitions as contained in the Act are given hereunder:

“Act ” means the Co-operative Societies Act, 1925 (Sind VII of 1925);

“ Assistant Registrar ” means an Assistant Registrar of Co-operative Societies appointed or deemed to have been appointed under the Act to assist the Registrar;

“Benami loan ” means a loan the real beneficiary or recipient whereof a person other than the person is in whose name the loan is advanced or granted;

“ Borrower ” includes in case of a benami loan, the real beneficiary or recipient of the loan;

“co-operative bank” means a co-operative society established for carrying on banking business and having as its principal object the financing of other co-operative societies registered or deemed to be registered under the Act;

“co-operative society ” means a society which having as its object the promotion of economic interest of its members in accordance with co-operative principles, is registered or deemed to be registered under the Act;

“Government ” means the Provincial Government of the Punjab


Banking Laws and Practices-BNK601 VU i.

“loan” means a loan (including [a benami loan or] any transaction which in the opinion of the Registrar is in substance a loan), whether of money or in kind, which is not secured or is in-sufficiently secured, and taken from a co-operative society by any person, whether a member of such society or not, or from a co-operative bank by any person but not an

Agricultural Co-operative Society, Dairy Farming Co-operative Society or Poultry Farming

Cooperative Society having in each case a working capital not exceeding five hundred thousand rupees], and includes,— ii.

Finance as defined in the Banking Tribunals Ordinance, 1984.

iii.

Any amount which is due from any such person to a co-operative society or a co-operative bank, whether taken as a loan or not; iv.

any amount due from any such person to a co-operative society or a co-operative bank under a decree passed by a Civil Court or an award given by an arbitrator or a decision of the

Registrar, whether in exercise of his original or appellate jurisdiction; and v.

any loan due from any such person to a co-operative society or a co-operative bank which is the subject matter of any pending suit, arbitration proceedings, appeal or revision, whether under the Act or before any Court.

Explanation

— A loan is “insufficiently secured” if it is not secured by mortgage, pledge, hypothecation or assignment of such property of the borrower or of his surety or of both, as in the case of a loan not exceeding five hundred thousand] rupees, the Assistant Registrar, and in the case a loan exceeding five hundred thousand] rupees, the Registrar may think adequate;

“Registrar” means a Registrar of Co-operative Societies appointed or deemed to have been appointed under the Act, and includes a person upon whom all the powers of a Registrar have been conferred under the Act.

Repayment of loans: Sec 3:

Notwithstanding anything contained in any other law for the time being in force or in any agreement or other instrument, award or decree of any Court, every loan outstanding, whether barred by limitation or not, in whole or in part and every loan, any installment whereof is outstanding shall, unless repaid earlier, be repaid and secured in the manner provided in section 7].

Supply of information to the Registrar: Sec 4

Every co-operative society and co-operative bank, through its Manager or Secretary, shall—when a loan obtained from it is not repaid by the date on which it is due for repayment, bring such fact, together with full details of the case and the particulars of the borrower ( including in the case of a benami loan, the real beneficiary or recipient of the loan)and surety to the notice of Assistant

Registrar, when the amount of the loan does not exceed five hundred thousand] rupees; and to the notice of the registrar, when the amount of the loan exceeds five hundred thousands rupees; and

when so directed by the Registrar or the Assistant Registrar, as the case may be, within thirty days of receipt of such direction, furnish to the Registrar, or the Assistant Registrar, as the case may be, furnish full information in respect of all cases of loans falling under section 3 required to be repaid or secured under section 7.

Service of notice to the borrowers: Sec 5

On receipt of information under section 4 [or on his own information] in respect of any loan, the

Registrar or the Assistant Registrar, as the case may be, shall issue or cause to be issued a notice to the borrower and his surety requiring them to repay and secure the loan in accordance with the provisions of section 7.

A notice under sub-section (1) may be served



(a).

By giving or tendering it to the person named in the notice; or

(b).

By enclosing it in a cover and sending such cover by registered post, acknowledgment due, to the last known address of the person named in the notice; or

(c).

By affixing such notice on a conspicuous part of the last known residence of the person named in the notice; or

(d).

By publication of the notice in a newspaper.

Determination of liability when loan is not admitted: Sec 6:

Where any borrower or his surety, to whom notice under section 5 is issued, does not admit the loan or any liability arising there from, such borrower or surety, as the case may be, shall, within thirty days of the receipt of the notice, submit, either personally or by registered post (acknowledgment due), a written statement to that effect to the Registrar or the Assistant Registrar, by whom such notice was issued or caused to be issued, and such Registrar or Assistant Registrar, as the case may be, thereupon shall cause notice to be issued to the co-operative society, or the co-operative bank, as the case may be, and in the case of a benami loan, to the alleged beneficiary, and shall, after making such inquiry as he may consider necessary and giving the parties a reasonable opportunity of being heard, decide the matter.

Securing and repayment of loans: Sec 7

Within thirty days of the service of the notice under section 5, in a case where the borrower does not deny the loan or the liability arising there from, and in other cases, within thirty days of the decision of the Registrar or the Assistant Registrar, as the case may be, under section 6, the borrower and his surety shall—

secure the loan or the liability arising there from by mortgage, pledge, hypothecation or assignment of such property of the borrower or his surety or of both as in the case of a loan not exceeding five hundred thousand rupees, the Assistant Registrar, and in the case of a loan exceeding five hundred thousand rupees, the Registrar, may think adequate; and repay the loan after thirty days of the service of notice under section 5 when he does not deny the loan or the liability arising there from, and in any other case, after thirty days of the decision of the

Registrar or the Assistant Registrar, as the case may be, in eight months in four equal installments, the first installment being due on the day immediately succeeding the one month period of notice or, as the case may be, the decision of the Registrar or the Assistant Registrar specified above.

Recovery of loans: Sec 8:

If the amount of any loan or any part thereof to be repaid in accordance with the provisions of section 7 is not paid within the period or the periods specified in the said section, the same may, without prejudice to the provisions of section 10, be recovered according to the law and under the rules for the time being in force for the recovery of arrears of land revenue.]

Where the borrower is a firm, partnership, company or other association of persons (not being a company registered under the Companies Act, 1913, the liability of the members whereof is limited), the loan or any part thereof due from such borrower may be recovered from the assets of such firm, partnership, company or other association of persons, as the case may be, or from the members or partners thereof.

Restrictions on registration of documents: Sec 8-A

Notwithstanding anything contained in any other law for the time being in force no registering officer shall register any document relating to property, which is required to be registered under the provisions of clause ( a ), ( b ), ( c ) or ( e ) of section 17 of the Registration Act, 1908 ,or which is produced before him for voluntary registration, nor shall any Revenue Officer on the basis of any


Banking Laws and Practices-BNK601 VU such document effect any mutation in the record of rights under the provisions of any law for the time being in force, unless—

(1) ( a ) the person whose right, title or interest in the property is or will be transferred, assigned, limited or extinguished under the terms of the document or on the basis of the mutation in the record of rights, as the case may be, furnishes an affidavit to the registering officer or the revenue officer, as the case may be, to the effect that he does not owe any loan, whether due immediately or on a future date, to a co-operative society or a cooperative bank; or

( b ) where such person owes a loan to a co-operative society or a co-operative bank, whether due immediately or on a future date, it is certified by the Registrar where the loan owed by such person exceeds rupees five hundred thousand, and by the Assistant Registrar where the loan owed by such person does not exceed rupees five hundred thousand, that either satisfactory arrangements have been made for the repayment of the loan or that the loan has been secured in accordance with the provisions of section 7.

Where an application is made to the Registrar or an Assistant Registrar, as the case may be, for issuing a certificate under the provisions of sub-section (1), he shall not refuse to issue the certificate unless he has first given the applicant an opportunity of being heard and adducing evidence to show that either satisfactory arrangements have been made for the repayment of the loan owed by the applicant or that the loan has been secured in accordance with the provisions of section 7.

An order made by the Registrar or an Assistant Registrar under sub-section (2) refusing to issue a certificate, shall be final and not open to question in any manner.

Restrictions on alienations: Sec 8-B

Where any person owing a loan, whether due immediately or on a future date, to a co-operative society or a co-operative bank has, on or after the twenty-seventh day of April, 1966, alienated any immovable property, by sale, exchange, gift, mortgage or will, otherwise than by or under an order or decree of a Civil, Revenue or Criminal Court, which alienation is fraudulent with intent to defeat the claim of a co-operative society or a co-operative bank, such alienation shall not operate to transfer any right, title or interest in the property of the debtor, unless— a.

The loan due from the debtor has been repaid; or b.

It is certified by the Registrar, where the loan exceeds rupees [five hundred thousand], and by the Assistant Registrar, where the loan does not exceed rupees [five hundred thousand], that either satisfactory arrangements have been made for the repayment of the loan or that the loan has been secured in accordance with the provisions of section 7.

An alienation of immovable property shall be deemed to be fraudulent with intent to defeat the claim of a co-operative society or a co-operative bank for the purposes of sub-section (1), if the

Registrar, after giving the person by whom the alienation has been made, and the person or persons in whose favor the alienation has been made an opportunity of being heard, issues a declaration to the effect that the alienation is fraudulent with intent to defeat the claim of a co-operative society or a co-operative bank.

Any party aggrieved by a decision made by the Registrar under sub-section (2) may prefer an appeal to Government against such decision, and the order made by Government, on such appeal after giving an opportunity of being heard to the appellant shall be final and shall not be open to question in any manner.

passed

Power of Registrar when making inquiry: Sec 9

The Registrar or the Assistant Registrar, as the case may be, shall, for the purpose of making any inquiry under this Ordinance, have the same powers as are vested in a Civil Court under the Code of

Civil Procedure, 1908 (Act V of 1908), when trying a suit, in respect of the following matters, namely:-

(a)Summoning and enforcing the attendance of any person and examining him on oath;



(b) Requiring the discovery or production of any document;

(c) Requisitioning any public record from any Court or office;

(d) Issuing commissions for the examination of witnesses;

(e)Appointing guardians or next friends of persons who are minors or of unsound mind;

(g) Adding legal representatives of deceased borrowers or sureties;

(h) Substituting the names of rightful parties, including the beneficiaries of benami loans;

Consolidation of cases;

(i) Any other matter which may be prescribed by rules made under section 12; and

( j )Enforcing any order made by him under the provisions of this Ordinance or the rules framed there under.

Penalty: Sec 10

Whoever contravenes any of the provisions of this Ordinance or the rules made there under shall be punishable with imprisonment for a term which may extend to seven years, or with fine, which, in the case of default in the repayment of a loan, shall not be less than one-fourth of the amount of the loan outstanding against him, or with both.

Procedure: Sec 11

(1) No Court shall take cognizance of any offence under this Ordinance except on a complaint in writing made by the Registrar or an Assistant Registrar, or by a person duly authorized by the

Registrar or Assistant Registrar.

(2)Notwithstanding anything to the contrary contained in the Code of Criminal Procedure, 1898, the provisions of Chapter XX of the said Code shall apply to the trial of cases under this Ordinance.]

Power to make rules: Sec 12

Government may, by notification in the official Gazette, make rules, to carry out the purposes of this

Ordinance.

Bar of Jurisdiction: Sec 13

No Court or other authority shall have jurisdiction—

(a).

To entertain or adjudicate upon any matter which [Government, the Registrar] or the Assistant

Registrar is empowered by or under this Ordinance or the rules framed there under to dispose of or determine; or

(b).

To question the legality or validity of anything done under this Ordinance or the rules framed there under by [Government, the Registrar] or Assistant Registrar.

No Court or other authority shall be competent to grant an injunction or other order in relation to any proceedings before the Registrar or the Assistant Registrar, or anything done or to be done by or at the instance of the Registrar or the Assistant Registrar under this Ordinance or the rules framed there under.

From the above, we understand that provision of law is a very important aspect of the cooperative banking but at the same time recovery of the loan disbursed is equally important. The above statutory provisions provide a legal framework for recovery granted by cooperative banks.

Establishment of Federal Bank for Co-Operative and regulation of Co-Operative Banking

Act, 1977

This Act may be called the establishment of the Federal Bank for Co-Operative and regulation of

Co-operative Banking Act, 1977. It extends to the whole of Pakistan and also applies to the business of the Bank transacted outside Pakistan and to persons conducting such business. It shall come into force at once and shall be deemed to have taken effect on the 9 th day of October, 1976.




Definition:

“ Approved securities” means securities in which a trustee may invest money under clause (a), clause (b), clause (bb), clause (c) or clause (d) of section 20 of the Trusts Act, 1882, and such other securities as the Federal Government may, by notification in the official Gazette, declare to be approved securities for purposes of this Act;

“Bank” means the Federal Bank for Co-operatives established under section 5;

“ Board” means the Board of Directors constituted under section 9;

“Chairman” means the Chairman of the Board;

“ Co-operative bank” means a banking society as defined in the Explanation to the sub-section (2) of section 7 of the Co-operative Societies Act, 1925, other than a provincial Co-operative Bank;

“Co-operative society” means a society registered in Pakistan under any law for the time being in force relating to registration of co-operative societies and a “primary co-operative society” means such a society of which no other society is a member;

“Borrower” means a person who has obtained a loan from the Bank of a Provincial Co-operative

Bank and includes a surety or an indemnifier, but does not include the Federal Government or a

Provincial Government.

“Demand Liabilities” means liabilities which are to be met on demand and “time liabilities” means liabilities which are not demand liabilities;

“Director” means a Director for the time being of the Board;

"District Judge” in respect of areas where a District Judge does not have unlimited pecuniary jurisdiction in original civil suits, a high Court exercising original civil jurisdiction;

“Family members” in relation to a person means his spouse, dependent lineal ascendants and descendants and dependent brothers and sisters;

“Loans , advances and credit” includes finance as defined in the Banking Tribunals Ordinance,

1984, and all cognate expressions shall be construed accordingly:

“Managing Director” means Managing Director of the Bank and includes any person for the time being discharging the functions of the Managing Director”

“Multi-unit co-operative society” means a co-operative society to which the multi-Unit Cooperative Societies Act, 1942 applies

“Prescribed” means prescribed by rules;

“Provincial Co-operative Bank ” means a co-operative society the primary object of which is to make loans to the co-operative societies which are its members and which is notified, for the purposes of this Act, to the Bank by the Provincial Government of the Province within which the co-operative society is registered or, until a co-operative society is so notified, any one of the following namely:

The Baluchistan Provincial Co-operative Bank Ltd

The Frontier Provincial Co-operative Bank Ltd

The Punjab Provincial Co-operative Bank Ltd

The Sindh Provincial Co-operative Bank Ltd

“Regulation” means a regulation made under this Act;

“Scheduled Bank” has the same meaning as in State Bank of Pakistan Act, 1956

“State Bank” means the State Bank of the Pakistan established under the State Bank of Pakistan

Act, 1956

Establishment of the Bank: Sec 5

As soon as may be after the coming into force of this Act, the Federal Government shall take steps to establish, in accordance with the provisions of this Act, a Bank to be called “ The Federal Bank for co-operatives” to carry out the purposes of this Act,

The Bank shall be a body corporate having perpetual succession and a common seal, with powers to acquire, own, hold and dispose of any property, and shall by the name assigned to it by sub-section

(1) sue and be sued. The Bank shall be deemed to be a banking company for the purposes of the



State Bank of Pakistan Act, 1956, the banking Companies Ordinance, 1962 and any other law for the time being in force relating to banking companies, excepting the Banks (Nationalization) Act, 1974

Share Capital: Sec 6

The initial share capital of the Bank shall be twenty crors of rupees divided into tow thousand fully paid up shares of the nominal value of one hundred thousand rupees each shall be fully subscribed by the Federal Government, the provincial Governments and the State Bank of Pakistan in the following manner:---

(a) Federal Government

(b) State Bank

(c) Government of the Punjab

(d) Government of Sindh

(e) Government of N.W.F.P

(f) Government of Baluchistan

Rs 2.00 crores

Rs 15.00 crores

Rs 1.00 crores

Rs 1.00 crores.

Rs 0.50 crores

Rs 0.50 crores

The share capital may be increased from time to time by a resolution of the Board with the approval of the Federal Government and the capital so increased shall be fully subscribed by the Federal

Government, the provincial Governments and the State Bank of Pakistan.

Direction and superintendence: Sec 8

The general direction and superintendence of the affairs and business of the bank shall vest in a

Board of Directors constituted in accordance with section 9, which may exercise all such powers and do all such acts and things as may be exercised or done by the Bank, subject to the provisions of this Act.

Board: Sec 9

The Board shall consist of:

The Chairman;

All the directors for the time being of the Central board of Directors of the State Bank;

The Managing Director;

Two directors to be nominated by the Federal Government, of whom one shall be officer of ministry of GOP and other a non-official; and

The Board shall consist of: e. Two directors from each Province to be nominated by the Federal Government on the recommendation of each Provincial Government, of whom on shall be a non-official.

The Governor for the time being of the State Bank shall be the Chairman of the Board.

Unless the Federal Government otherwise directs in any case, a non-official Director referred to in clause (d) or clause (e) of sub-section 1 shall hold office for a period of three years and shall, subject toe the provision of this Act be eligible for re-appointment.

Managing Director (Sec 10) – shall be appointed by the federal government. Shall be whole time chief executive.

Disqualifications of Managing Director and Directors (Sec 11)– legislators, insolvent, minor, of unsound mind, govt. servant, not citizen.

Indemnity of Directors (Sec 14)– if acted in good faith.

Business and Functions: Sec 17

The Bank shall be the principal financing institution for meeting the credit needs of provincial Cooperative Banks and multi-unit co-operative societies.

The bank may carry on, transact or do the several kinds of business and acts hereinafter specified namely:--



Accept money on deposit;

Borrow funds from the Federal Government, financial institutions

Raise funds for the purpose of the Bank’s operation through issue and sale of bonds -- -- debentures;

Obtain or raise funds on the basis of participation in profit and loss, mark-up and mark---down in price, hire-purchase, rent sharing , licensing etc

Make secured loans and advances to provincial Co-operative Bank , multi-unit co-operative societies and, subject to the regulations framed for the purpose, to the officers and staff of the Bank;

Draw, accept, discount, buy or sell or rediscount bills of exchange or promissory notes bearing two or more good signatures, one of which shall be that of scheduled bank of a provincial Co-operative

Bank;

Issue guarantees and give indemnities in relation to its business;

Subscribe to the debentures (Participation term certificates, term finance certificates etc) repayable within a period not exceeding 10 years

Deliver , receive, collect and remit any securities

Purchase or otherwise acquire in the normal course of its banking business any

Moveable or immovable property , residential or commercial etc

Open accounts or enter into any agency arrangement with any bank or financial institution in or outside Pakistan.

Invest its funds in Government Securities and other approved securities and if so directed by the

Board and with the approval of the Federal Government, in the share capital of:

A Provincial Co-operative Bank (so that the amount so invested is not less than) twenty-five percent of the fresh capital contributed by the Provincial Government

A multi-unit co-operative society up to an amount not exceeding 25% of its paid-up capital

Sell and realize property, movable or immovable, patents, designs, trade marks, which may in any way come into the ownership, possession or control of the Bank in the satisfaction or part satisfaction of any of its claims.

Assist Provincial Co-operative Banks in preparing their seasonal and developmental loaning programs and conduct appraisal and undertake feasibility study of projects covered by such loaning programs

Encourage the development of special co-operative projects.

Establish independent subsidiaries.

Organize training in co-operative banking for the employees of the Provincial Co-operative banks and other co-operative societies

Ensure proper utilization of loans obtained from the bank

Carry out research on problems of rural credit

Lend money in the inter-bank call money market

Issue letters of credit

Appoint attorney and agents;

Maintain and operate the provident fund and other funds created for the benefit if its employees

Perform such functions and exercise such powers as may be entrusted to or conferred upon it by or under any law; and

Generally do all such matters and things as may be necessary, incidental to or consequential upon exercise of its powers or the discharge of its duties or functions under this Act or any other law.

Power to borrow or obtain finance (Sec 19)— the bank made for the purpose of its business borrow or obtain funds.

Power to call for payment before agreed period (Sec 21)— the bank may by notice may require any borrower to which it has granted any loan to repay the same in full forth with.



Power to inspect (Sec 25)— the bank may at any time under directions of the State Bank of

Pakistan shall inspect any provincial cooperative bank or multi-unit cooperative society including its branches and offices and its books, accounts and documents.

Power to prohibit acceptance of deposits (Sec 26)— the State Bank on recommendations of the bank may prohibit or restrict the acceptance of deposits by provincial cooperative bank or multi-unit cooperative society. However no such order shall be passed without prior approval in writing on the federal government.

Maintenance of liquid assets (Sec 29)— every provincial cooperative bank shall be required to maintain the prescribed liquid assets

Power to remove Directors, other managerial persons from office and to supersede Board of

Directors, of Provincial Co-operative Bank (Sc30)— the bank shall have same powers as are conferred on the State Bank, in this regard.

Power of the Bank to call for statements and return, etc., and to publish information (Sec 31)

Duty of the officers and servants to maintain secrecy (Sec 32)

Liquidation of the Bank ( Sec 41)— No provisions of law relating to the winding up of the companies or banks shall apply to the bank and the bank shall not be wound up but by the order of federal government on the recommendation of State Bank.

Federal Bank for Co-Operative and Regulation of Co-Operative Banking (Account) Rules

These rules may be called the Federal Bank for Co-Operatives and Regulation of Cooperative Banking (Account) Rules, 1977

Preparation of statements of accounts:

Immediately after the close of each financial year, the bank shall prepare a balance sheet and the statement of profit and loss, as nearly as may be, in the form set out in the Second Schedule to the

Banking Companies Ordinance, 1962, for examination of the auditors and provided under section 37 of the Establishment of the Federal Bank for Co-operative and Regulation of Co-operative Banking

Act, 1977

The audited balance sheet and the statement of profit and loss shall be submitted to the Board for approval not later than the fifteenth of September each year.

The balance sheet and the statement of profit and loss as approved by the Board, shall be signed by the at least two Directors nominated by the Board for this purpose and the Managing Directors.

Within three months of the close of each financial year, the Board shall submit a copy of each of the approved balance sheet, the statement of profit and loss account and the report of the auditors to the Ministry of Finance, Government of Pakistan, for publication in the official Gazette.


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