Section 27: Licensing of banking companies

27. Licensing of banking companies.-- 1[(1) No individual or association or body of individuals, not being a company, shall carry on banking business in Pakistan and, save as hereinafter provided, no company shall carry on banking business in Pakistan unless it holds a licence issued in that behalf by the State Bank; and any such licence may be issued subject to such conditions as the State Bank may think fit to impose.] (2) Every banking company in existence on the commencement of this Ordinance, before the expiry of six months from such commencement, and every other company before commencing banking business in Pakistan, shall apply in writing to the State Bank for a licence under this section: Provided that nothing in sub-section (1) shall be deemed to prohibit a banking company in existence on the commencement of this Ordinance from carrying on banking business until it is granted a licence in pursuance of this section or is by notice in writing informed by the State Bank that a licence cannot be granted to it: Provided further that the State Bank shall not give a notice as aforesaid to a banking company in existence on the commencement of this Ordinance before the expiry of the period of two years in the case of banking companies incorporated in Pakistan and of six months in the case of banking companies incorporated outside Pakistan 2[* * *]. (3) Before granting any licence under this section, the State Bank may require to be satisfied by an inspection of the books of the company or otherwise that all or any of the following conditions are fulfilled, namely:-- (a) that the company is or will be in a position to pay its present or future depositors in full as their claims accrue; (b) that the affairs of the company are not being or are not likely to be conducted in a manner detrimental to the interests of its present or future depositors; (c) that, in the case of a company incorporated outside Pakistan, the Government or law of the country in which it is incorporated provides the same facilities to banking companies registered in Pakistan as the Government or law of Pakistan grants to banking companies incorporated outside Pakistan and that the company complies with all the provisions of this Ordinance applicable to banking companies incorporated outside Pakistan. (4) The State Bank may cancel a licence granted to a banking company under this section,-- (i) if the company ceases to carry on banking business in Pakistan; or (ii) if the company at any time fails to comply with any of the conditions imposed upon it under sub-section (1); or (iii) if at any time, any of the conditions referred to in sub-section (3) ceases to be fulfilled 1[; or] 1[(iv) if the banking company is engaged in or is being used for criminal activities; or (v) if the banking company has destroyed or concealed, or moved outside of Pakistan all or part of its assets, the administration, operation and books or records without the explicit approval of the State Bank; or (vi) if the banking company has created material hindrance, delay or obstruction for the State Bank in performance of its supervisory functions:] 1[Provided that before cancelling a license,__ (i) under clause (ii) or clause (iii) of this sub-section on the ground that the banking company has failed to comply with or has failed or ceased to fulfil any of the conditions referred to therein; or (ii) under clause (iv), clause (v) or clause (vi) of this sub-section, the State Bank, unless it is of opinion that the delay will be prejudicial to the interest of the company's depositors or the public, shall provide an opportunity of being heard to the banking company or, as the case may be, shall grant to the company on such terms as it may specify, an opportunity of taking the necessary steps for complying with or fulfilling such condition.] (5) Any banking company aggrieved by the decision of the State Bank cancelling a licence under this section may, within thirty days from the date on which such decision is communicated to it, 2[apply for review to the 1[*] Board of 1[Directors of] the State Bank]. 2[(6) The decision of the State Bank subject to the result of review under sub-section (5), if any, shall be final.]

Effective date: 1962-06-07

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