Section 23: Restriction on the nature of subsidiary companies

23. Restriction on the nature of subsidiary companies.--(1) A banking company shall not form any subsidiary company except a subsidiary company formed 3[with the prior written approval of the State Bank] for one or more of the following purposes, namely:-- (a) the undertaking and executing of trusts, 4[(aa) the carrying on of banking business strictly in conformity with the Injunctions of Islam as laid down in the Holy Quran and Sunnah;] (b) the undertaking of the administration of estates as executor, trustee or otherwise, 5[(bb) the carrying on of business of modaraba under the provisions of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance 1980 (XXXI of 1980).] (c) the providing of safe deposit vaults; 3[(Ca) the carrying on of business as a microfinance bank under the provisions of the Microfinance Institutions Ordinance, 2001 (LV of 2001);] (d) 3[* * *] the carrying on of the business of banking exclusively outside Pakistan; 6[*] 7[(dd) the conduct of any from of business permitted by section 7; 3[*]] 3[(ddd) for carrying on business, exclusively for development Causes, as may be approved by the State Bank; or] (e) such other purposes as are incidental to the business of banking. (2) Save as provided in sub-section (1), no banking company shall hold shares in any company whether as pledgee, mortgagee or absolute owner, of an amount exceeding thirty percent of the paid-up share capital of that company or thirty per cent of its own paid-up share capital and reserves, whichever is less: Provided that any banking company which is on the date of commencement of this Ordinance holding any shares in contravention of the provisions of this sub-section shall not be liable to any penalty therefore if it reports the matter without delay, to the State Bank and if it brings its holding of shares into conformity with the said provision within such period, not exceeding two years, as the State Bank may think fit to allow. (3) Save as provided in sub-section (1) and notwithstanding anything contained in sub- section (2), a banking company shall not, after the expiry of one year from the date of commencement of this Ordinance hold shares, whether as pledgee, mortgagee or absolute owner, in any company in the management of which any managing director or manager of the banking company is in any manner concerned or interested.

Effective date: 1962-06-07

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