Finance Minister Ishaq Dar has directed State Bank of Pakistan (SBP), Federal Board of Revenue (FBR) and Securities and Exchange Commission of Pakistan (SECP) to prepare a comprehensive plan and legislation to plug in loopholes to stop illegal foreign outflows in future from Pakistan and ensure that all lawful businesses must be regulated properly.
He was addressing the cheque distribution ceremony to the deposit-holders of the defunct Innovative Investment Bank Limited (IIBL) at the SECP head office, here on Sunday.
Dar said that the joint government and opposition's parliamentary committee will announced the terms of reference (ToRs) of the proposed judicial commission to probe into Panama Papers leak would be announced within one to two days. He stated that recovery of written off loans should be part of the ToRs. He said that the return of depositors money through recovery of IIBL's written off loans indicates that the written off loans can be recovered.
Finance Minister invited the political opponents to sit with the government for working out a charter of economy to ensure sustainable development and economic growth.
In the cheque distribution ceremony, Finance Minister Senator Ishaq Dar handed over cheques to the depositors of up to Rs10 million of the IIBL, which amounts to about Rs1.1 billion.
In this way, 92 individual depositors out of the total 109 (84 percent) and 26 charitable institutions/trust out of a total of 44 (59 percent) would stand fully repaid. In addition, 17 individuals and 18 trusts and charitable institutions have been partially paid.
On a petition by the SECP, the Lahore High Court ordered the winding up of IIBL in May 2013 because of serious financial irregularities and violations by the bank's administration. Khawaja Waheed Raza and Amar Sana were the official liquidators of the IIBL, appointed by the court. The liquidators under the supervision of the SECP have already paid an amount of approximately Rs75 million to the individual depositors, and trusts and charitable institutions.
Innovative Investment Bank Limited, formerly Crescent Standard Investment Bank Limited, was inspected by the Commission in 2005. The inspection revealed that serious financial irregularities and violations of the regulatory framework had taken place. As a result, the Commission was constrained to pass an order against the directors, management and auditors of the bank. Therefore, in the interest of public, the Commission removed the CEO, suspended its Board of Directors and appointed an administrator. The matter is currently sub judice with the Lahore High Court.
During this period, 2005 to 2010, the commission made a number of efforts to revive the bank. Finally, in 2010, after realising that the revival is not an option, the Commission moved for winding up of the bank and a petition was filed in the Lahore High Court.
The LHC ordered the winding-up of IIBL in May 2013 and appointed the Joint Official Liquidators, namely Khawaja Waheed Raza and Amar Sana. From 2013 to 2015, with the approval of the LHC, the Joint Official Liquidators managed to pay approximately Rs 75 million to the individual depositors, and trusts and charitable institutions.
The LHC has now authorised payments of upto Rs 10 million to all the depositors of the bank which amounts to approximately Rs 1.1 billion.
Addressing the participants, Ishaq Dar highly appreciated the official liquidators, the SECP team and said the court decision and its successful implementation was a strong signal to rebuild investors' confidence in state institutions. He appreciated liquidators' initiative of recovery of written off loans and stated that this should be done nation-wide. He stated that those who had good financial standing and benefited from loan write offs must pay this back to nation.
Dar was of the view that to bring transparency and rebuild investors' confidence, they would have to strengthen institutions. "The investors should have the confidence that the state institutions would come to their rescue, if they would be cheated in market," he added.
Dar said that with the joint efforts of all stakeholders Pakistan was now an economically stable country.
He said that with economic stability, no one can stop Pakistan's inclusion in the MSCI Emerging Market Index and hoped that in its upcoming assessment of MSCI Emerging Market Index, Pakistan will be included in the emerging market index, which will boost country's image, build investors' confidence and increase foreign investments. It will be a milestone achievement and another feather to the SECP's cap.
The finance minister said that Pakistan's economic indicators were continuously improving and showing economic stability. According to the minister, in last three years the cumulative growth in tax collection was 56 percent, the fiscal deficit will close on 4.3 percent of GDP on June 30, which was 8.8 in 2013 whereas the SBP possess highest ever foreign reserves of$16.5 billion.
The SECP has achieved the position and integrity, which he had envisioned in 1999 at the time of its establishment, he added. However, the regulatory body still needs to go long way to ensure complete transparency and confidence in Pakistani markets, he added. He said that he has appointed a competent team in the SECP without considering their political affiliations and now critics accept that his selection of Zafar Hijazi as the SECP Chairman and other commissioner was correct and the team was performing very well.
He said that the most of the laws related to market and corporate sector had been revamped and that the Draft Companies Bill 2016 will be introduced in the Parliament in the next session following the upcoming budget session.
SECP Chairman Zafar Hijazi said that system of corporate burials needs to be strengthened in Pakistan.
He said that the SECP was making efforts and introducing reforms to further systemise the companies' winding up and liquidation procedure. He also announced that in view of provisions in proposed Companies Bill, SECP would maintain the panel of authorised liquidators to ensure transparency and their remuneration will also be fixed to ensure efficiency. At present, 37 companies were in the process of winding up, he disclosed.
Chairman SECP said that the SECP had revamped all relevant laws in shortest possible time, adding that the SECP would finalise the most important law Draft Companies Bill 2016 by the end of May.
He hoped that Pakistan will be included in the emerging market's index in upcoming assessment by Morgan Stanley Capital International (MSCI) on June 15.