Audit report blames State Bank of Pakistan on a number of irregularities
The Auditor General of Pakistan (AGP) has
uncovered financial irregularities exceeding Rs. 243 billion
in the State Bank of Pakistan (SBP), raising concerns over the central bank’s
governance and regulatory oversight. The findings, detailed in the 2022–23 audit
report, highlight mismanagement, regulatory lapses, and
instances of embezzlement.
Loan defaults and mismanagement
According to the report, government-owned banks
issued loans worth Rs. 59 billion that went into default, with little
accountability for those responsible. The AGP noted that SBP failed on multiple
occasions to safeguard public funds and protect consumer interests.
Losses from commemorative notes
A significant loss was linked to the printing
of Rs. 75
commemorative currency notes issued for Independence Day and
SBP’s anniversary. While 72 million notes worth Rs. 9.15 billion
were printed, weak public acceptance led to a direct loss of Rs. 1.96 billion.
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Questionable appointments and policy failures
The audit flagged the appointment of an Australian dual
national as Deputy Governor, in violation of SBP’s regulations.
The officer received an annual salary of Rs. 120 million, which the AGP
deemed unlawful.
The report also cited the sale of securities
below purchase price, which caused a Rs. 105 billion loss, and noted that
parking funds with foreign managers led to a further Rs. 26 billion
shortfall instead of profits.
Burden on borrowers and other violations
Small borrowers faced heavy costs as they were
charged 13%
interest rates, creating an additional Rs. 12 billion
burden. Other violations included:
·
Rs. 5 billion irregular loan to a private bank
·
Rs. 2.59 billion in unauthorized financing to various
institutions
·
Rs. 3.81 billion in housing loans to SBP staff without
clearance of earlier dues
Embezzlement and fake degrees
The report also revealed embezzlement of Rs. 63.5 million
in medical stock by SBP officers, with no inquiry initiated even after 16
months. Additionally, eight senior officers at SBP’s Lahore office were flagged
for holding dubious or unverified degrees.
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Oversight concerns
The audit’s findings paint a troubling picture
of weak
oversight, mismanagement, and regulatory shortcomings at
Pakistan’s central bank, raising questions about its ability to act as an
effective guardian of the country’s financial system.
Source: Bloom Pakistan