The Senate Standing Committee on Finance has approved Securities and Exchange Commission of Pakistan (Amendment) Bill, 2016; Credit Bureau (Amendment) Bill 2016 and Financial Institutions (Recovery of Finances Amendment) Bill 2016. Secretary Finance Dr Waqar Masood has stated that financial institutions would provide information to credit bureaus and the State Bank of Pakistan (SBP) would supervise credit bureau as it has been supervising the banking sector.
He said the details of dispute resolution are given in the summary and as far as the committee is concerned, its composition would be done when the rules would be finalised. The committee also took up granting of powers by the government to the FBR''s Intelligence & Investigation (I&I) Inland Revenues (IR) for investigating under Anti Money Laundering (AML) amended law. The Finance Ministry''s legal consultant Muneeb Zia told the committee that the government issued notification for granting powers to the FBR''s relevant agency for investing fiscal clauses recently introduced in the law with the approval of the Parliament. He said that this notification which was issued on June 9, 2016 had nothing to do with the Finance Bill 2016-17.
Zafar Iqbal, Deputy Director FBR''s I&1, IR said that the government granted powers to investigate frauds related to federal excise duty and sales tax as customs related clauses were already made part of AML. The Chairman of the committee Saleem Mandviwalla asked the SBP to ensure clearance from them before moving against anyone on charges of money laundering.
The committee also took up recovery of finances amendment bill again as the panel had cleared it in last meeting because one petition was filed against it. Secretary Finance Dr Waqar Masood assured the committee that the government took care of all aspects by placing the foolproof mechanism to protect interest of all stakeholders including borrowers before selling of mortgaged moveable and immovable assets thus Supreme Court would not strike it down. The committee again cleared the bill by inserting his viewpoint to put it on the record that it may land into litigation after approval of the parliament.
Details of the Credit Bureau (Amendment) Bill 2016 disclosed that Credit Bureaus Act, 2015 was enacted on August 19, 2015 to provide a comprehensive legal and regulatory framework for incorporation and functioning of private Credit Bureaus in Pakistan. Under the Act Credit Bureaus are responsible for collecting credit information relating to debtors of banks, financial institutions, non-banking financial institutions, non-financial companies and other lenders or authorities and maintain data of such information and for provision of such information on request for specified purposes with a view to facilitating efficient distribution of credit.
Section 15(4) of the said Act reads as under: "Any credit information report issued by a Credit Bureau shall be verified by the State Bank of Pakistan (SBP) and no credit information report shall be valid unless verified by the SBP.", it added. The said sub-section was proposed to be added in the Bill by the Senate and SBP pointed out that the above mentioned sub section of the Act is neither possible nor feasible for SBP and that central bank cannot implement/verify each and every report issued by the private Credit Bureaus. The insertion of this sub section in the Act has made it purposeless for the financial system and SBP. SBP requested to omit sub section 4 of section 15 and amend the schedule Summary of Rights to achieve the desired objectives.
In order to provide an effective remedy for functioning of the Credit Bureaus, SBP''s proposals to omit sub section 4 of section 15 and amendment in Schedule Summary of Rights was acceded to and the matter was referred to Prime Minister. As the Parliament was not in session, therefore, it was promulgated as an Ordinance, the Credit Bureaus (Amendment) Ordinance, 2016, on April 6, 2016. The Bill has been passed by the National Assembly on May 11, 2016 and referred to Senate on May 19, 2016.
The SECP officials informed the committee here on Tuesday that the financial and administrative independence of the SECP needs to further strengthen and provide necessary statutory powers to the Commission to regulate enhance mandate given to it from time to time. At present the SECP has ineffective enforcement powers due to lack of sufficient powers to call for information, lack of process for prosecution of cases, recovery of penalty, delay in decision of court cases, ex parte stays and inadequate investigation powers.
Furthermore SECP, Act 1997 has no statutory provision to seek international cooperation and extend assistance to a foreign regulatory authority in investigation and inquiries. Independent Audit Oversight framework is also needed to ensure quality of audit of public interest companies. Effective mechanism of Self-Regulatory Organisations (SRO) is essential to ensure compliance of regulatory regime of the regulated sectors. In order to introduce transparency there no effective provision to enable disclosure of information in public interest. Statutory powers are also required to assess potential and emerging systemic risks in the capital market. Overview of major amendments in the Bill revealed independence of the Commission, Acting Chairman, Power to make Committees, task force etc & increase in number of members of Policy Board.