Section 41A: Power of the State Bank to remove directors or other managerial persons from office

1[41A. Power of the State Bank to remove directors or other managerial persons from office.-- (1) where the State Bank is satisfied that-- (a) the association of any chairman or director or chief executive (by whatever name called) or other officer of a banking company, not being lower in rank than a branch manager, is or is likely to be detrimental to the interests of the banking company or its depositors or otherwise undesirable; or (b) in the public interest; or (c) to prevent the affairs of a banking company being conducted in a manner detrimental to the interest of its depositors or in a manner prejudicial to the interests of the banking company; or (d) to secure the proper management of any banking company; it is necessary so to do, the State Bank may, for reasons to be recorded in writing, by order, remove 2[suspend or debar] from office, with effect from such date as may be specified in the order, any chairman or director or chief executive (by whatever name called) or other officer of the banking company. (2) No order under sub-section (1) shall be made unless the chairman or director or chief executive or other officer has been given a reasonable opportunity of making a representation to the State Bank against the proposed order: Provided that if, in the opinion of the State Bank, any delay would be detrimental to the public interest or the interests of the banking company or its depositors, the State Bank may, at the time of giving the opportunity aforesaid or at any time thereafter and pending the consideration of the representation aforesaid, if any, by order direct that-- (i) the chairman or, as the case may be director or chief executive or other officer shall not, with effect from the date of the order,-- (a) act as such chairman or director or chief executive or other officer of the banking company; or (b) in any way, whether directly or indirectly, be concerned with, or take part in the management of the banking company; (ii) and any person authorised by the State Bank in this behalf shall act as such chairman or director or chief executive of the banking company. (3) Where any order under sub-section (1) is made in respect of a chairman or director or chief executive or other officer of a banking company, he shall cease to be a chairman or, as the case may be, a director or chief executive or other officer of the banking company and shall not in any way, whether directly or indirectly, be concerned with, or take part in, the management of the banking company or any other banking company for such period not exceeding three years as may be specified in the order 1[or for such extended period as may be specified by the Governor, State Bank of Pakistan]. (4) Any person appointed as chairman or director or chief executive under sub-section (2) shall-- (a) hold office during the pleasure of the State Bank subject to such conditions as may be specified in the order of his appointment and, subject thereto, for such period, not exceeding three 1[years] as the State Bank may specify 2[or for such extended period as may be specified by the Governor, State Bank of Pakistan]; and (b) not incur any obligation or liability for anything which is done or intended to be done in his capacity as such chairman or director or chief executive. (5) No person removed from office under sub-section (1) shall be entitled to claim any compensation for the loss or termination of office.

Effective date: 1962-06-07

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