The State Bank yesterday put a six-month moratorium on KASB Bank, allowing only small depositors to withdraw their money.
The bank has been in trouble for more than a year as it failed to meet SBP’s criterion for capital adequacy ratio (ADR). However, the banking circle believes that the bank came under attack of a banking tycoon who wants to buy majority shares in the bank.
“In order to protect the interest of depositors and other stakeholders and due to financial health and other circumstances of KASB Bank Limited, (“the bank”), the federal government, on the application of the State Bank, has placed KASB Bank Ltd under moratorium for a period of six months effective Nov 14, 2014,” said the State Bank in a statement issued for the media.
Consequently, the payment of certain debts and obligations from the bank would be suspended while it would continue to receive all payments or recoveries due to the bank, said the SBP.
“The federal government has directed the State Bank to consider reconstruction or amalgamation of the bank as per the provisions of the Banking Companies Ordinance, 1962 within six months,” said the SBP.
“Payment to the depositors of the bank having account balance of up to Rs300,000 on the date of placing of the bank under moratorium will not be affected,” said the SBP.
In this manner, more than 92.33 per cent of total account holders will be able to operate their accounts, said the SBP. “The account holders with balance of more than Rs300,000 as of effective date, however, would be able to withdraw up to the above permitted threshold only.”
