The State Bank of Pakistan on Tuesday directed all banks and development finance institutions (DFIs) to record exact reason, instead of giving ambiguous reasons such as ''refer to drawer'' etc, when they return cheques unpaid. The SBP circular said that it has been observed that some banks give ambiguous reasons like ''refer to drawer'' when a cheque is returned unpaid by them for insufficient balance or for any other reason. As a result, the beneficiary of the cheque is not in a position to take action against the issuer of the cheque under the provision of relevant laws.
Similarly, banks, while responding to cheques ''stop payment'' written instructions from their customers, issue disclaimers for indemnifying themselves against breach of these instructions, which negates the very purpose of the ''stop payment'' instructions.
To discontinue these practices banks and DFI have been advised to give a specific and clear reason for dishonouring cheques and discontinue issuing of disclaimer for indemnifying themselves against any breach of stop payment instructions from their customers.
Banks/DFIs have also been advised to comply with these instructions ''meticulously''. SBP, during the course of regular inspections, would particularly check the compliance of these instructions as a part of its customer interest protection responsibilities. Non-compliance, thereof, will attract penal provisions under Banking Companies Ordinance, 1962, the circular said.