Banking Inspection Department

by modi Thu Dec 05, 2013 3:31 pm

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by **winnersgroup** Sat Feb 22, 2014 3:46 pm

Banking Inspection Department
Frequently Asked Questions (FAQs
)
Q1.
What is the mission of BID?
Ans.
The Mission of BID is to strive for soundness and stability of the financial
system to safeguard interest of stakeholders through proactive inspections, compatible
with best international practices in keeping with the changing global environment in the
financial sector.
Q2.
What is the function of Banking Inspection Department of SBP?
Ans.
The main function of BID is to conduct regular and special onsite inspection of
Commercial Banks, DFIs, Micro Finance Institutions (MFIs) (SMEs) and
Exchange Companies.
Q3.
What is the approach and purpose of inspection?
Ans.
The approach of inspection is risk based through which various types of risks to
which an institution is exposed to, are identified and measured. Corrective actions are
suggested by BID to ensure bank’s safety and soundness.
Furthermore, compliance with rules / regulations / guidelines issued by SBP from time to
time and other relevant laws is also ensured.
Q4.
What is frequency of BID’s inspection?
Ans.
Inspections are conducted according to a plan, usually on annual basis,
depending upon the risk in a bank.
Q5.
What is the difference between regular and special inspection?
Ans.
Regular inspection is a full scope inspection conducted as per schedule mentioned
above. However, special purpose inspection is conducted to look into a specific area

whenever need arises. Special inspection is also conducted to entertain complaints

received from different quarters.
Q6.
Which areas are covered during inspection?
Ans.
During full scope inspection overall operations of the institution are covered.
Particular emphasis is given on review of advance & investment portfolio, management
competency, capital adequacy, earnings, liquidity and adequacy
of internal controls.
Q7.
What is ultimate usage of inspection reports?
Ans.
Inspection report is submitted to the bank’s board of directors to take actions for the

removal of irregularities pointed out in the inspection report. A copy of report is also

submitted to the enforcement division of SBP who advices
institutions to furnish time bound action plan in order to address the issues and to rectify
the irregularities pointed out in inspection report.

by **winnersgroup** Sat Feb 22, 2014 3:47 pm

Q8.
What other kind of reports are prepared by BID?
Ans.
A quarterly report is generated to report the shortcomings and violations on
the part of the banking company’s management to the Federal Government as per section
40A to BCO, 1962. A report on write-off of loans, mark-up and other dues or financial
relief through rescheduling and restructuring and subsidized loans provided by the
banking companies, is also prepared on annual basis under section 25AA of BCO, 1962
and submitted to Federal Government.