The State Bank of Pakistan (SBP) on Thursday directed all banks to ensure that advertisements in print and electronic media soliciting deposits from the general public explicitly indicates the annualised rate of expected return, and nothing is left open to interpretations.
In its directive, the SBP said that it has noted with concern that some banks/DFIs are publicising their deposits mobilisation schemes without disclosing the correct and complete terms and conditions with regard to the rate of return on such deposits.
The tendency is to use ambiguous terms like "conditions apply", etc, in advertisements. As a result of this practice, the SBP is receiving a number of complaints against the banks/DFIs from aggrieved depositors.
The SBP directive said that failure of the banks/DFIs to observe instructions issued by the SBP "in letter and spirit has been viewed seriously".
The SBP said that all banks/DFIs are directed to ensure that all advertisements in media (print and electronic or in any other form) soliciting deposits from the general public should explicitly indicate the annualised rate of expected return.
The words "condition apply" or other similar wordings should not be used.
The schemes on which profit is paid on monthly/quarterly/half yearly or any other regular interval, the expected rate of profit to be paid on such intervals should be clearly indicated in the account opening form or advertising material in bold letters.
The SBP said that in case of existing accountholders the correct position on these lines, if not conveyed earlier, might now be done immediately.
It has also been asked from all the banks/DFIs to regularise the position in terms of these instructions immediately and report compliance to the SBP latest by September 30.
"Any violation of the instructions shall invoke penal provisions under Banking Companies Ordinance 1962."
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