KARACHI (October 05 2003): The State Bank on Saturday issued warning to the banks involved in issuing Term Deposit Receipts (TDRs) without complying with the requirements of Prudential Regulations.
In a circular, the State Bank said; “This practice is tantamount to bypassing the instructions issued on the subject.”
Instances have been noted where some of the banks are issuing TDRs, or similar instruments, without complying with the requirement of 'Know Your Customer (KYC)', said the circular.
“In order to discourage this practice, banks and development financial institutions are advised to fully comply with the requirements of Prudential Regulation No XI, while issuing the TDRs or similar instruments,” said the circular.
If the TDRs or similar instruments are issued in the name of a third party, due diligence must be conducted as per aforesaid regulation, it added.
“Non-compliance of above instructions will attract penal provision under the Banking Companies Ordinance, 1962,” said the circular.
