Circulars/Notifications - Banking Supervision Department  
 BPRD Circular No. 29
July 13, 1999  

All Banks/NBFIs.

Dear Sirs,

DEPOSIT MOBILIZATION SCHEMES

 

Banks and financial institutions were allowed vide BPRD Circular No. 18 of 1998 to introduce viable now products and deposit schemas, which meet the Sharia injunctions and ensure a reasonable return to the depositors. The allowance for new products was granted keeping in view, interalia, the need of the banks to meet increasing pressure on their liquidity. In the process, some of the banks introduced ‘lottery’ or ‘inami’ schemes under different names. There have been public comments on these schemes from several points of view. Accordingly, these schemes were reviewed by the State Bank with Chief of Executives of banks in a meeting held on 10th July, 199 and it was unanimously decided to wind down these scheme in an orderly manner.

  1. It has, therefore, been decided as follows.

    1. No new deposit mobilization scheme based on incentives, whether in cash or kind, shall be launched.

    2. The existing deposit schemes based on incentives, whether in cash or in kind, shall be phased out completely latest by December 31, 1999. Banks having such schemes would give to the State Bank a time-bound notion plan for their termination, latest by December 31, 1999.

    3. The advertisements relating to such schemes appearing in the print or electronic media shall stop within seven days of the issue of the circular.

    4. All public advertisements selecting deposits from the general public shall henceforth expressly indicate the annualized rate of expected return on their deposits.

    5. Banks and Non-Bank Financial Institutions will be free to develop and expand their deposit mobilization efforts based on explicitly stated expected rates of return and provision of additional and more efficient financial services to the depositors.

            Please acknowledge receipt.


Yours faithfully,
(Mansur-ur-Rehman Khan)
Director

       
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