Banks (Nationalization) Act, 1974

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THE BANKS (NATIONALIZATION) ACT, 1974 
 
CONTENTS 
SECTIONS: 
1.  Short title, extent and Commencement. 
2.  Act to override other laws. 
3.  Definitions. 
4.  Punishment for contravention of section 3, etc. 
5  Transfer and vesting of ownership, etc. of banks. 
5A.  Sales of shares. 
5B.  Section 5A to have effect notwithstanding any other law, etc. 
6.  Compensation for transfer of ownership of shares in a bank. 
6A. Registration of certain shares. 
7.  Assessment of Compensation. 
8.  Removal of previous management. 
9.  Dissolution of the Pakistan Banking Council. 
10.  Transfer and using of Funds. 
11.  General provisions pertaining to management of banks. 
11A.  Provisions pertaining to management of banks to apply to certain financial institutions 
12.  Fidelity and Secrecy. 
13.  Provisions regarding staff. 
14.  Certain claims for compensation barred. 
15.  Schemes for reorganization of banks, etc. 
16.  Removal of doubts. 
17. Disposal of profits. 
18.  Indemnity. 

 
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19.  Bar of jurisdiction. 
20.  Power to make rules. 
21.  Adaptation of laws. 
22.  Penalty. 
23.  Removal of difficulties. 
24.  Repealed. 
THE SCHEDULE. 
 
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THE BANKS (NATIONALIZATION) ACT, 1974. 
 
1ACT NO. XIX OF 1974 
[4th March, 1974] 
 
An Act to provide for the nationalization of banking business in Pakistan. 
 
WHEREAS it is expedient in the public interest to provide for the nationalization of 
banking business in Pakistan; 
 
It is hereby enacted as follows: 
 
1. Short title, extent and commencement.— (1) This Act may be called the Banks 
(Nationalization) Act, 1974. 
 
(2) It extends to the whole of Pakistan. 
 
(3) It shall come into force at once and shall be deemed to have taken effect on the 
1st day of January, 1974. 
 
2. Act to override other laws. This Act shall have effect notwithstanding anything 
contained in any other law for the time being in force or in any agreement, contract, award, 
memorandum or articles of association or other instrument. 
 
3. Definitions. In this Act, unless there is anything repugnant in the subject or 
context,— 
 
(1) “bank” means— 
 
(a)  a company registered under the Companies Act, 1913 (VII of 1913.) and 
transacting, in or outside Pakistan, the business of banking as 
defined in clause (b) of section 5 of the Banking Companies Ordinance, 
1962 (LVII of 1962.) in respect of which no proceedings under Part III 
or Part IV of the said O rdinance have been taken or are pending 
immediately before the commencing day; and 
 
(b)  a banking company incorporated by or under any l aw within the 
legislative competence of parliament, including the  State Bank, the 
National Bank of Pakistan, the Industrial Development Bank of Pakistan 
and t he Agricultural D evelopment Bank of  Pakistan, but does not  
include— 
 
(i)  a bank which is an enemy firm within the meaning of the 
Defence of Pakistan Rules, or 
(ii)  a banking company incorporated outside Pakistan and transacting 
banking business in Pakistan, or 
 
 
 
 
1For Statement of Objects and Reasons, see Gaz. of P., 1974, Ext., Pt. III, P. 79. 
 
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(iii)  a cooperative bank registered under the Coop erative Societies 
Act, 1925 (VII of 1925.)  or any other law for the time being in 
force relating to cooperative societies, not b eing a  cooperative 
bank which is a scheduled bank, or 
 
(iv)  a Government Savings Bank to which the Government Savings 
Bank Act, 1873 (V of 1873.) applies, or 
 
(v)  a corporation or company owned or controlled by a Province and 
carrying on banking business only within that Province 1[,or] 
 
2[(vi)  a corporation or company established in Pakistan in pursuance of 
an agreement between the Government of Pakistan and a foreign 
Government or institution  for transacting banking business in or  
outside Pakistan;] 
 
 
3[(1A) “Board” means Board of Directors constituted under this Act;]  
 
(2) “commencing day” means the 1st day of January, 1974; 
 
4[(3) *  * * * * * * 
(4) *  * * * * * *] 
5[(4A) “loans and advances” means “loans, advances and credit” as defined in the 
Banking Companies Ordinance, 1962 (LVII of 1962.);] 
 
(5) “prescribed” means prescribed by rules made under this Act; 
 
(6) “State Bank” means the State Bank of Pakistan established under the State Bank of 
Pakistan Act, 1956 (XXXIII of 1956); and 
 
(7) oth er w ords and expressions us ed but  not defined in this A ct shall have the s ame 
meaning as in the Banking Companies Ordinance, 1962 (LVII of 1962). 
 
4. Punishment for contravention of section 3, etc. [Exclusive right to establish bank] 
omitted by the Banks (Nationalization) (Amdt.) Act 1997, (XVIII of 1997) s. 3.] 
 
5. Transfer a nd vesting of ownership, etc. of banks.— (1)The own ership, 
management and control of all banks shall stand transferred to, and vest in, the Federal 
Government on the commencing day. 
 
(2) All shares in the capital of a bank held by p ersons other than the Federal 
Government, a Provincial Government, a corporation owned or controlled by the  Federal 
Government or the State Bank shall stand transferred to,  and  vest  in,  the  Federal Government 
on the Commencing day, free of all trusts, liabilities and encumbrances. 
 
1Subs. by the Banks (Nationalization) (Amdt.) Ordinance, 1977 (46 of 1977), s. 2, for full-stop. 
2 New sub-clause (vi) added ibid., 
3 Ins. by the Banks (Nationalization) (Third Amdt.) Act, 1991 (15 of 1991), s. 2 (w.e.f. 30-6-1990). 
4 Sub-sections (3) and (4) omitted by the Banks (Nationalization) (Amdt.) Act 1997, (18 of 1997) s. 2, which was previously  
amended byAct (15 of 1991), s. 2. 
5 Ins. by the Banks (Nationalization) (Amdt.) Ordinance, 1980 (59 of 1980), s. 2. 
 
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1[(2A) If any bank issues any additional share capital after the commencing day, 
then, without prejudice to the provisions of sub-section (1), a  Provincial Government, a 
corporation owned or controlled by the Federal Government and the State Bank may contribute 
to the share capital so issued.] 
 
(3) The vesting of any shares in the Federal Government under sub-section (2) shall not 
effect the rights inter se of a shareholder and any other person who may have an interest in such 
shares and such other person shall be entitled to enforce his interest against the compensation 
awarded to the shareholder under section 6. 
 
(4)  The  safety  of  all  deposits  in  banks  shall  stand  guaranteed  by  the  Federal 
Government. 
 
(5) The provisions of this Act and the vesting of the shares of the banks in the 
Federal Government thereunder shall not in any way affect the status of the banks as bodies 
corporate under the Companies Act, 1913 (VII of 1913). 
 
2[(6) The Federal Government or a corporation owned or controlled by the Federal 
Government may, from time to time, sell all or any of its shares in the capital of a bank, 
other than the State Bank, to such persons, and on  such terms and conditions, as it may 
determine] 3[;and] 
 
3[(a)  where 4[upto forty-nine] of the shares in the capital of a bank are so sold, 
the application of the provisions of this Act, other than this sub-section, 
to such bank shall stand suspended for such period, and on such terms, as 
the Federal Gov ernment m ay, by notification in the  official G azette, 
specify; and 
 
(b)  where not  less than fifty-one p er cent of the s hares are so  sold, the 
provisions of this Act shall cease to apply to such bank.]. 
 
5[5A. Sale of shares. —(1) Notwithstanding anything contained in this Act or any other 
law for the time being in force, the Federal Government or a corporation owned or controlled 
by the Federal Government may, from time to time sell all or any of its shares in the capital of 
a b ank and transfer m anagement and control of a b ank other th an the State Bank, to su ch 
persons, and on such terms and conditions, as the Federal Government may determine; and 
 
(a)  where 4[upto forty -nine] of the shares in the capital of a bank are so 
sold, the application of the provisions of this A ct, other than this sub-
section, in cluding p rovisions relating to  ownership of shares and 
management and control of banks, to such bank shall stand suspended for 
such period, and on such terms, including terms guaranteeing the security 
of deposits and terms relating to sound management of the bank, as the 
Federal Government may, by notification in the official Gazette, specify; 
and 
 
 
1 Ins. by the Banks (Nationalization) (Amdt.) Ordinance, 1981 (45 of 1981), s. 2. 
2 Added by the Finance Act, 1990 (7 of 1990) s. 14. 
3 Subs. and added by the Banks (Nationalization) (Second Amdt.) Act, 1991 (4 of 1991), s. 2. 
4Subs. by Act No IV of 2007, s. 11. 
5 Ins. by the Banks (Nationalization) (Third Amdt.) Act, 1991 (15 of 1991), s. 3, (w.e.f. 30.06.1990). 
 
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(b)  where not less than fifty-one percent of the shares are so sold, the 
provisions of this Act shall cease to apply to such bank. 
 
(2) The Federal Government shall have, and be deemed always to have had, the 
power to determine and lay down the terms and conditions subject to which shares in the capital 
of a bank are to be sold and its management and control is to be transferred to any person under 
sub-section (1). 
 
(3) The power referred to in sub-section (1) may be exercised by the Federal 
Government at any time either before or after a decision is taken by the Federal Government to 
sell the sh ares and transfer the management of a bank as aforementioned, and the Federal 
Government shall be competent to vary, modify, review or annul any or all of the terms and 
conditions referred to in sub-section (2) at any time it deems fit to do so in the public 
interest, until the sale of the shares and transfer of management and control are completed, and 
such variation, modification, review or annulment shall not be called in question in any Court, 
or before any authority, on any ground whatsoever. 
 
5B. Section 5A to have effect notwithstanding any other law, etc. The provisions of 
section 5A shall have effect notwithstanding anything contained in this Act or any other law for 
the time being in force, any agreement of contract, or any judgment of any Court.] 
 
6. Compensation for transfer of ownership of shares in a bank.—(1) Every 
person  who  stands  registered  as  the  holder  of  any  sh are  of  a  bank  the  ownership, 
management and control of which stands transferred to the Federal Government by virtue of 
section 5 shall be entitled to receive from the Federal Government by way of compensation per 
share an amount determined in accordance with the provisions of section 7 in the form of bonds 
of the Federal Government, repayable at par at any time within a period of fifteen years in 
accordance with a redemption programme formulated by the Federal Government and bearing 
interest at the rate of one per cent above the bank rate notified by the State Bank from time to 
time: 
 
Provided that, in formulating the redemption programme, the Federal Government may 
make provision for preferential redemption of the bonds of such class of persons who are of 
meagre means such as orphans, widows and pensioners, and the amount of compensation 
payable to whom  does not exceed such m aximum amount, as the  Federal Gov ernment may 
deem fit: 
 
Provided further that, where the amount so determined is not an exact multiple of 
one hundred rupees, the amount in excess of the nearest lower multiple of one hundred 
rupees shall be paid in cash. 
 
(2) The bonds shall be negotiable and eligible as security for advances. 
 
1[6A. Registration of certain shares. —(1) Any person who holds any share of a bank 
the ownership, management and control of which stands transferred to the Federal Government 
by virtue of section 5 which was bought by him on a recognised Stock Exchange in Pakistan 
before the first day of January, 1974, but was not registered in his name in the books of the 
company by that day may make an application for registration to such bank. 
 
 
1
Ins. by the Banks (Nationalization) (Amdt.) Ordinance, 1978 (17 of 1978), s. 2. 
 
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(2) An  application under sub-section (1) sh all be made within  such time and in such 
manner, and shall be accompanied by such documentary evidence, as may be prescribed. 
 
(3) The bank to which an application is made may on being satisfied after such scrutiny 
or verification by such authority as may be prescribed, that the applicant is the holder of 
the share, register him as such; and a person so registered shall be entitled to receive the 
compensation provided for in sub-section (1) of section 6.] 
 
7. Assessment of compensation. The amount of the compensation shall be the amount 
equal to the break-up value of the share as determined by an auditor appointed by the Federal 
Government from the balance sheet of the bank as on the 31st December, 1973, according to the 
principles laid down in rule 8 of the Wealth Tax Rules, 1963; 
 
Provided that in case of a share of the State Bank the amount of the compensation shall 
be the  average  of  the  closing  quotations  during  six  working  days  immediately preceding 
the commencing day on the Karachi Stock Exchange: 
 
Provided  further that,  in  respect  of  any share  obtained  at  par  from  the Federal 
Government by any directors of the Central Board of Directors of the State Bank or a 
member of the Local Board of that Bank under the provisions of sub-section (3) of section 13 
of the State Bank of Pakistan Act, 1956 (XXXIII of 1956) the amount of compensation shall 
be calculated at the rate of one hundred rupees per share. 
 
8. Removal of previous management.—(1) Every person holding office in any 
bank as chairman, director or chief executive by whatever name called, other than a person who  
holds  such  office  by  virtue  of  his  appointment  or  nomination  by  the  Federal Government 
or the State Bank, shall stand removed from his office on the commencing day and this removal 
shall not entitle him to any compensation and no such claim shall be entertained by any court, 
tribunal or other authority. 
 
(2) The vacation of his office by a  chairman, director or chief executive under sub- 
section (1) or otherwise shall not in any way absolve him of his liability, if any, under any law, 
contract or otherwise howsoever subsisting immediately before the commencing day or the day 
on which he ceases to hold such office. 
 
(3) A chairman, director or chief executive by w hatever name called ceasing to hold 
office under any of the aforesaid provisions shall entrust or cause to be entrusted to the 
person succeeding him in that office, intact and in as good order as they existed on the day 
immediately preceding the commencing day all properties, all books of accounts and other 
records and documents belonging to or in the custody or control or pertaining to the affairs, of 
the bank. 
 
(4) Central Boards of the banks mentioned in the Schedule, and all local bodies, area 
boards, managing committees, executive committees and similar other bodies for the 
management of any b ank shall stand dissolved, and all members of such bodies shall stand 
removed from office on the commencing day. 
 
 
 
 
 
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1[(5) *              * * * * * *] 
  
2[9. Dissolution of the Pakistan Banking Council.—(1) The Pakistan Banking 
Council (hereinafter referred to as the Council) shall stand dissolved forthwith. 
 
(2) All assets, properties and rights of the Council shall stand transferred to and vest in, 
and all liabilities and other encumbrances of the Council shall stand transferred to and become 
the liabilities and encumbrances of, the State Bank. 
 
(3) Employees of the Council, including its members, — 
 
(a)  who are on deputation or secondment from any pu blic sector financial 
institution sh all revert to, and continue to be employed by, their parent 
institutions  on  t erms  and conditions  governing  their  employment  in  
their parent institutions ; and 
 
(b)  who do not fall in clause (a) shall become employees of the State Bank 
on terms and conditions governing their employment with the Council. 
 
(4) Every contract or instrument to which the Council is a party shall continue to be in 
force and effective as if the State Bank had been a party thereto instead of the Council. 
 
(5) Any legal proceedings or, as the case may be, any application pending before any 
authority by or against the Council may be continued by or against the State Bank. 
 
(6) Where under any statute or statutory instrument, the Chairman or a member of 
the Council is nominated for a specified assignment or task, the vacancy caused by t he 
operation of this section shall be filled by a person nominated by the State Bank.] 
 
3[10. Transfer and using of funds. All sums standing to the credit of the Council in the 
fund constituted heretofore shall stand transferred to, and vest in, the State Bank.] 
 
4[11. General provisions pertaining to management of banks.—(1) Subject to 
sub-section (2), a bank shall have a Board consisting of— 
 
(a)  a President, who shall be its Chief Executive; and 
 
5[(b)  not less than five and not more than seven other members including one 
or mo re directors whose election by the  private shareholders, removal 
and other m atters shall be governed by the Companies Ordinance, 
1984 (XLVII of 1984).] 
 
(2) The Federal Government may, if it deems necessary, appoint a Chairman of the 
Board in respect of a bank. 
 
 
 
1Sub-section (5) omitted by the Banks (Nationalization) (Amdt.) Act, 1997, (18 of 1997), s. 4. 
2 Subs. by the Banks (Nationalization) (Amdt.) Act, 1997, (18 of 1997), s. 5, for section 9, which was previously amended by 
various enactments. 
3 Subs. ibid. s. 6, for section 10. 
4 Subs. by the Banks (Nationalization) (Amdt.) Act, 1997, (18 of 1997), s. 7, for section 11, which was previously amended by 
various enactments. 
5Subs. by Act, 2016 (41 of 2016), s. 2. 
 
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(3) The Chairman, the President, and other members of the Board 1[representing the 
Federal Government’s direct and indirect shareholding].___ 
 
 (a)  shall be appointed by the Federal Government, in consultation with the 
State Bank, for a term of three years, on such terms and conditions as 
may be  fixed by the  General Meeting of the bank: provided that the 
Chairman and the President shall be appointed from amongst professional 
bankers whose names are included in a panel of bankers qualified to be 
the Ch airman or the President, which panel shall be d etermined, 
maintained and varied, from time to time, by the State Bank ; 
 
(b)  may be removed for misconduct or physical and mental incapacity 
before the expiry of the three years term by the Federal Government in 
consultation with the State Bank; 
 
(c)  shall stand removed if he becomes ineligible on any of the grounds 
specified in sub-section (12); and 
 
1[(d)  may be re-appointed for second and final term by the Federal 
Government, in consultation with the State Bank of Pakistan,  for a    
further  period of three years .] 
 
(4) The general direction and superintendence of the affairs and business of a bank, and 
overall policy making in respect of its operations, shall vest in its Board. 
 
(5) The Board shall determine— 
 
(i)  the credit policies of the banks ; 
 
(ii)  evaluation criteria for the performance of the employees of the bank 
other than the President; 
 
(iii)   personnel  policies  of  the  b ank,  including  appointment  and  removal  
of officers and employees ; 
 
(iv)  guidelines for entering into any compromise with borrowers and other 
customers of the bank ; and 
 
(v)  any other policy matter. 
 
(6) The Chief Executive and other officers of the bank shall act in accordance with 
the policies, criteria and guidelines determined by the Board. 
 
(7) The Board shall appoint committees from amongst the executives of the bank, 
and determine the powers, functions and duties of such committees. 
 
(8) Where the Federal Government has appointed a Chairman, he shall preside over the  
meetings  of  t he  Board,  and  in  case  a  Chairman  has  not  been  appointed,  then  the 
President shall preside ov er the m eetings of Board. In the absence of the Ch airman or the 
President, as the case may be, the directors may elect one of the member to preside over the 
meetings. 
 
 
1Added and Subs. by Act, 2016 (41 of 2016), s. 2.  
 
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(9) The  President, subject to the control and directions of the  Board, shall exercise 
powers of management of the affairs of the bank. 
 
(10)  All  selections,  promotions  and  transfer  of  employee  of  b anks  except  the 
President and decisions as to their remuneration and benefits shall be made by the President in 
accordance with the evaluation criteria and personnel policies determined by the Board. 
 
(11) The  Board, the President and other officers shall exercise their powers and 
discharge their duties in accordance with  sound banking principles and prudent banking 
practices and shall ensure compliance with regulations and directions that may be issued by the 
State Bank from time to time. 
 
(12) No person shall be eligible for appointment as the Chairman, the President, or a 
member of the Board if— 
 
(a)  he is or has at any t ime been adjudged insolvent or has suspended 
payment or has compounded with his creditors ; or 
 
(b)  he is a minor or is found a lunatic or of unsound mind ; or 
 
(c)  he is not citizen of Pakistan ; or 
 
(d)  he was at any time  in the service of the Federal Government or a 
corporation controlled by any such Government or in the service of a 
bank and was dismissed ; or 
 
(e)  he is a person against whom any action has been taken or any 
proceedings are p ending under section 412 of the Companies 
Ordinance, 1984, (XLVII of 1984) or section 83 of the Banking 
Companies Ordinance, 1962 (LVII of 1962) ; or 
 
(f)  he is, or has been, convicted for tax evasion under any law for the time 
being in force ; or 
 
(g)  he is a member of the Senate, National Assembly, any Provincial 
Assembly or an elected Member of a local council constituted under any 
law relating to local councils ; or 
 
(h)  he is holding an office in a political party. ] 
 
1[11A. Provisions pertaining to management of banks to apply to certain financial 
institutions. Notwithstanding anything to the contrary contained in any other law for the time 
being in force, or in any agreement, contract, award, memorandum and article of associations or 
any other instruments, the provision of section 11 shall apply to— 
 
2[(i)* * *  * * * * 
(ii)* * * * * * *] 
 
 
 
1New section 11A ins. by the Banks (Nationalization) (Amdt.) Act, 1997 (18 of 1997), s. 8. 
2 Clauses (i and ii) omitted by Act, 2011 (24 of 2011), s. 2. 
 
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4[(iii) *  * * * * * * *] 
 
 
1[(iv)*  * * * * * * *] 
4[(v) *  * * * * * * * 
 
(vi) *  * * * * * * *] 
(vii)  First Women Bank Limited, and 
2[(viii)  Agricultural Development Bank of Pakistan (ADBP). 
 
(ix)  Industrial Development Bank of Pakistan (IDBP).] 
 
Such other financial institutions as the Federal Government may, by notification in the official 
gazette, specify.] 
 
12. Fidelity and secrecy.—(l) The Chairman and members of the Council, every bank, 
3[the President, members of the Board, and members of the  Executive Committee] and chief 
executive, by wh atever name called, shall observe, except as otherwise required by l aw, the 
practices and usages customary among b ankers and, in particular, shall not divulge any 
information relating to the affairs of its constituents except in circumstances in which it is, in 
accordance with law or practice and usages customary among bankers, necessary or appropriate 
for a bank to divulge such information. 
 
(2) The Chairman and members of the Council, 3[the President, members of the Board,  
and  members  of  the  executive  committee]  of  every  bank,  every  administrator, auditor, 
adviser, officer or oth er employee of the Coun cil or a b ank shall, before entering upon  his  
office,  make  a  declaration  of  fidelity  and  secrecy  in  such  form  as  may  be prescribed. 
 
Explanation.—In the case of any such person employed in connection with the affairs 
of a bank as is not required by any provision of this Act to vacate any office held by him, the 
requirements of this sub-section shall be deemed to be satisfied if such person has already filed 
with the bank a declaration more or less to the effect of the prescribed form. 
 
3[(3) Notwithstanding anything contained in sub-sections (1) and (2), every b alance 
sheet and profit and loss account prepared by a bank under any law for the time being in 
force shall include a statement in the form and manner specified by the State Bank of written 
off loans or any other financial relief of five hundred thousand rupees or above allowed to a 
person. 
 
 
1 Clauses (iv), omitted by Act, 2011 (24 of 2011), s. 2. 
2 Added by Notification. No. F. 1 (3)/Inv-II/81-91, dt. 13-1-2001, Pt.- III Ext. Ibd- P. 11. 
3 Subs. and added by the Banks (Nationalization (Third Amdt.) Act, 1991 (15 of 1991), s. 6, (w.e.f 30.06.1990). 
4 Clauses (iii, v and vi), omitted by Act (IX of 2020), s.2.
 
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(4) Notwithstanding anything contained in sub-sections (1) and (2), the State Bank shall 
prepare, and submit to the Federal Government, a special report every year on cases of write off 
of loans, mark-up and other dues, or financial relief through rescheduling and restructuring of 
loans and subsidized loans provided by the nationalized commercial banks, in  which 
established banking practices or authorized procedures have been departed from with a view to 
causing wrongful loss to the bank or conferring wrongful gain on any constituent or such 
departure has caused wrongful loss to the bank or conferred wrongful gain on any 
constituent. If the matters raised in the report relate to public interest, the Federal 
Government may submit  the report, or such part of it as relates to public interest, to the 
Parliament or to the Standing Committee or a House of Parliament dealing with Finance.] 
 
 
13. Provisions regarding staff. —(1) Save as otherwise provided in this Act, all 
officers and other employees of a b ank shall continue in  their respective offices and 
employments on the same terms and conditions, including remuneration and rights as to pension 
and gratuity, as were applicable to them immediately before the commencing day. 
 
(2) Notwithstanding any law or any provision contained in a contract, agreement, letter 
of appointment rules or regulations of a bank, every officer and employee of a bank shall be 
liable to transfer to any of its branches in or outside Pakistan or to any other bank: 
 
Provided that his status and emoluments shall not be adversely affected. 
 
14. C ertain claims for compensation barred. No person i ncluding a chairman, 
director, chief executive by whatever name called, a shareholder, a constituent or an officer or 
employee  of  a  bank  shall  have  any right,  whether  in  contract  or  otherwise,  to  any 
compensation other than that expressly provided for by this  Act, for any loss or damage 
directly or indirectly incurred by reason of the operation of any of the provisions of this Act or 
any rule or order made or direction issued thereunder. 
 
15.   [Schemes   for   reorganisation   of   banks,   etc.]   omitted   by   the   Banks 
(Nationalization) (Amdt.) Act 1997, (XVIII of 1997) s.9. 
 
16. Removal of doubts. For the removal of doubts, it is hereby declared that— 
 
(a)  all assets, rights, po wers, authorities and privileges and all property, 
movable or immovable, cash balances, reserve funds, investments and all 
other rights and interests arising out of such property as were 
immediately before the commencing day in  the ownership, possession, 
power or control of a bank, whether within or outside Pakistan, shall 1[* 
* *] continue to vest in that bank, and all borrowings, liabilities, 
including contingent liabilities, and obligations of  a bank of whatever 
kind subsisting immediately before the commencing d ay sh all, unless 
other provisions as aforesaid are made for their discharge or 
performance, continue to be the borrowings, liabilities and obligations of 
that bank ; 
 
(b)  all contracts, deeds, bonds, agreements, powers of attorney, other than 
those in  favour of a person vacating his office under this Act, grant of 
legal representation and other instruments of whatever kind subsisting or 
having effect immediately before the commencing day to which a bank is 
a party or which are in favour of a bank shall be of as full force and effect 
against or in favour of a bank as t hey were immediately before the 
commencing day; and 
 
 
1The Certain words omitted by the Banks (Nationalization) (Amdt.) Act, 1997 (18 of 1997), s. 10. 
 
Page 13 of 14 
 
(c)  if, on the commencing day, any suit, appeal or other legal proceeding of 
whatever nature which is by or against the bank or to which the bank 
is a party is pending in any court or before a tribunal or other authority, 
the same sh all not abate, be discontinued or be in any way, 
prejudicially affected by any provision of this Act. 
 
17. Disposal of profits. Subject to the provisions of the law by or under which a 
bank has been established and the provisions of the State Bank Act, 1956 (XXXIII of 1956), 
and the Banking Comp anies Ordinance, 1962 (LVII of 1962), a bank shall not declare any 
dividend on its share capital unless— 
 
(a)  it has drawn up its annual balance sheet and profit and loss account and 
has its accounts audited by an auditor qualified to act as such under the 
Banking Companies Ordinance, 1962 (LVII of 1962); 
 
(b)  it has made adequate provision for bad and doubtful debts, depreciation 
in assets, contributions to st aff and superannuation funds and all other 
contingencies for which provision is necessary under any law or which 
are usually provided for by bankers; and 
 
(c)  a copy of the balance sheet and profit and loss account along with the 
audit report has been supplied to the State Bank and the Federal 
Government and the latter has approved the declaration of such dividend: 
 
Provided that, before according such approval, the Federal Government may, of 
its own motion or on the recommendation of the State Bank, order a second audit 
of the accounts of the bank and appoint such auditor for the purpose as it thinks fit. 
 
1[18. Indemnity. No suit, prosecution, or other legal proceedings shall lie against the 
Federal Government, the State Bank, the President or directors of the Board, of a bank or 
any officer of the Federal Government or the State Bank or a bank for anything in good faith 
done or purporting to  be done under this Act or any rule or order made or direction issued 
thereunder or for any damage caused or likely to be caused by anything done or purporting to 
be done as aforesaid.] 
 
19. Bar of jurisdiction. No provision of this Act or of any rule or order made or 
direction issued thereunder shall be called in question by or before any court or other authority. 
 
20. Power to make rules. The Federal Government may, by notification in the official 
Gazette, make rules2 to provide for all matters for which provision in necessary or expedient for 
the purpose of giving effect to the provisions of this Act. 
 
 
 
1
Subs. by the Banks (Nationalization) (Amdt.) Act, 1997 (18 of 1997), s. 11, for section 18, which was previously subs, by Act 15 of 
1991 s. 7. 
2For the Banks (Nationalization) (Payment of Compensation) Rules, 1974 see S.R.O. No. l284(l)/74, dated 7-10-1974. Gaz. of P., 
1974, Ext., (Islamabad), Pt. II. pp. 1800—1803. 
 
Page 14 of 14 
 
21. Adaptation of laws. Any court, tribunal or authority required or empowered to 
enforce the 1[Companies Ordinance, 1984] or the memorandum or articles of association of a 
bank registered thereunder, or any other law for the time being in force shall construe the said 
Act, memorandum or articles of association or su ch other law with such adaptations as are 
necessary to bring the same into accord with the provisions of this Act. 
 
 
22. Penalty. —(1) Whoever contravenes any of the provisions of this Act or the rules 
made thereunder shall be punishable with imprisonment for a term which may extend to five 
years, or with fine or with both. 
 
 
(2) No person shall be prosecuted under this Act except with the sanction of the 
Federal Government or an officer authorised by it in this behalf. 
 
 
23. Removal of difficulties. If any difficulty arises in giving effect to any provision of  
this  Act  the  Federal  Government  may  m ake  such  order  not  inconsistent  with  the 
provisions of this Act as may appear to it to be necessary for the purpose of removing the 
difficulty. 
 
 
24. [Repeal of Ordinance I of 1974.] Omitted by the Federal Laws (Revision and 
Declaration) Ordinance, 1981 (XXVII of 1981), s. 3 and Sch., II. 
 
_________ 
 
THE SCHEDULE  
[See sections 8 and 9] 
(1)  Australasia Bank Limited. 
 
(2)  Bank of Bahawalpur Limited.  
(3)  Commerce Bank Limited. 
(4)  Habib Bank Limited. 
 
(5)  Lahore Commercial Bank Limited.  
(6)  Muslim Commercial Bank Limited.  
(7)  National Bank of Pakistan. 
(8) 2*               *                      *                      *                      *                      * 
 
(9)  Standard Bank Limited.  
(10)  United Bank Limited.  
(11)  Sarhad Bank Limited.  
(12)  Premier Bank Limited.  
(13)  Pak Bank Limited. 
(14)  Habib Bank (Overseas) Limited. 
 
 
1Subs. by the Finance Act, 1990 (7 of 1990), s. 14. 
2 Entry (8) omitted by the Federal Bank for Cooperatives and Regulation of Cooperative Banking Act, 1977 (9 of 1977), s. 49.