Section 29: Maintenance of liquid assets

29. Maintenance of liquid assets.--(1) Every banking company shall maintain in Pakistan in cash, gold or unencumbered approved securities valued at a price not exceeding the current market price, an amount which shall not at the close of business on any day be less than twenty per cent of the total of its time and demand liabilities in Pakistan 1[:] 1[Provided that the requirements of sub-section (1) as to the maintenance in Pakistan of cash, gold or unencumbered approved securities may from time to time, by notification in the official Gazette, be varied by the 2[Federal Government] 3[:]] 3[Provided further that the State Bank may, from time to time, specify the types of assets mentioned in this sub-section which shall not be eligible for the maintenance of liquid assets.] Explanation.--For the purposes of this section, "unencumbered approved securities" of a banking company shall include its approved securities lodged with another institution for an advance or any other credit arrangement to the extent to which such securities have not been drawn against or availed of. (2) In computing the amount provided for in sub-section (1), any deposit required under 4[sub-section (2)] of section 13 to be made with the State Bank by a banking company incorporated outside Pakistan and any balances maintained in Pakistan by a banking company in current account with the State Bank or its agent or both, 5[or in profit and loss sharing term deposit account with the State Bank] including in the case of a scheduled bank the balance required to be so maintained under sub-section (1) of section 36 of the State Bank of Pakistan Act, 1956 (XXXIII of 1956), shall be deemed to be cash maintained. (3) Every banking company shall, before the close of the month succeeding the month to which the return relates, furnish to the State Bank a monthly return in the prescribed form and manner showing particulars of the company's assets maintained in accordance with this section and its time and demand liabilities in Pakistan at the close of business on each 6[Thursday] during the month, or if any 6[Thursday] is a public holiday under the Negotiable Instruments Act, 1881 (XXVI of 1881), at the close of business on the preceding working day. 7[(4) The cash deposited by a banking company or financial institution under sub-section (1) and by a scheduled bank under the State Bank of Pakistan Act, 1956 (XXXIII of 1956) shall be deemed to be part of the assets of the banking company but shall not be subject to any encumbrance, nor shall it be available for the discharge of any liability of the banking company or financial institution other than the order of liquidation made by the High Court under this Ordinance, nor shall the said cash deposit be available to attachments in execution of any decree or recoverable under order of any authority under any law for the time being in force, except any claim of the State Bank.]

Effective date: 1962-06-07

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