The Presidents/ Chief Executives
All Banks/DFIs

Dear Sirs/Madam,

DEPOSIT MOBILIZATION SCHEMES

Please refer to BSD Circular No.29 of 1999 and BPD Circular Letters No. 39 & 46 of 2004 on the captioned subject.

2. It has been noted with concern that some banks/DFIs are publicizing their deposit mobilization schemes without disclosing the correct & complete terms and conditions with regard to the rate of return on such deposits. The tendency is to use ambiguous terms like “conditions apply” etc., in advertisements. As a result of this practice, State Bank is receiving a number of complaints against the banks/DFIs from aggrieved depositors. The failure of the banks/DFIs to observe the instructions issued by SBP in letter and spirit has been viewed seriously.

3. All the banks/DFIs are, therefore, directed to ensure that all advertisements in media (print, electronic or in any other form) soliciting deposit from the general public should explicitly indicate the annualized rate of expected return. The words “conditions apply” or other similar wordings should not be used. The schemes on which profit is paid on monthly/quarterly/half yearly or any other regular interval, the expected rate of profit to be paid on such intervals should be clearly indicated in the account opening form or advertising material in bold letters. In case of existing account holders the correct position on above lines, if not conveyed earlier, may be advised immediately.

4. All the banks/DFIs are advised to regularize the position in terms of the above instructions immediately and report compliance to SBP latest by 30th September, 2005. Any violation of the above instructions shall invoke penal provisions under Banking Companies Ordinance, 1962.

5. All other instructions on the subject shall remain unchanged.