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.
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It has, therefore,
been decided as follows.
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No new deposit
mobilization scheme based on incentives, whether
in cash or kind, shall be launched.
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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.
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The advertisements
relating to such schemes appearing in the print
or electronic media shall stop within seven days
of the issue of the circular.
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All public
advertisements selecting deposits from the general
public shall henceforth expressly indicate the annualized
rate of expected return on their deposits.
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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.
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