Karachi, February 26, 2024 – United Bank Limited (UBL) is optimistic about a favorable outcome regarding the penalty of Rs 4.09 billion imposed by the State Bank of Pakistan (SBP), as disclosed in its annual financial statement for the calendar year 2023.
The penalty, amounting to Rs 4.09 billion, was imposed by the Foreign Exchange (FE) Adjudication Court of the State Bank of Pakistan. It is related to alleged contraventions of foreign exchange regulations concerning the issuance and certification of E-Forms by the bank to certain customers (exporters). These customers reportedly failed to submit the required export documents, leading to the non-repatriation of foreign exchange on account of export proceeds.
UBL asserts that it fulfilled its obligations in accordance with the law and has taken legal action by filing a civil suit in the High Court of Sindh challenging the imposition of the penalty. The High Court, in response, has granted a stay on any actions being taken against the bank in this matter.
The bank’s management, guided by legal counsel, expresses confidence that the bank’s stance will prevail, and it will not incur any losses in this regard.
In addition to the SBP penalty, UBL is also dealing with a show-cause notice from the Punjab Revenue Authority. The notice pertains to UBL Fund Managers Limited, requiring them to pay sales tax under the Punjab Sales Tax on Service Act 2012 on management fees earned in Punjab from May 22, 2013. The company filed a petition on July 8, 2015, in the High Court of Sindh, and a positive outcome is anticipated from this petition as well.
The challenges posed by regulatory penalties and notices are part of the complex landscape of banking operations. UBL’s proactive approach, including legal actions and seeking resolutions through appropriate channels, demonstrates its commitment to compliance and protecting its interests.
As the legal proceedings unfold, stakeholders, including investors and industry observers, will be keenly monitoring the developments. The banking sector’s resilience in navigating regulatory challenges and its ability to secure favorable outcomes contribute to the overall stability and confidence in the financial system. UBL’s efforts to address these issues head-on reflect its dedication to upholding legal standards and preserving shareholder value in the face of regulatory uncertainties.
