ISLAMABAD, April 14: Seven major banks and the Pakistan Banking Association (PBA) have been fined a total of Rs205 million by the Competition Commission of Pakistan (CCP) for operating ‘like a cartel’ to fleece depositors.

Dawn learnt on Monday that the CCP considered imposing the penalty of 15 per cent of the annual turnover of the banks but then took ‘a lenient view’.

It imposed a fine of Rs30 million on the PBA and Rs25 million on each of the guilty seven banks, including the National Bank, Habib Bank, United Bank, Muslim Commercial Bank and Allied Bank. The names of two other banks could not be obtained.

A few months ago, the banks had advertised a joint ‘Enhanced Saving Account Scheme’ under which an account holder with Rs20,000 was offered four per cent interest. But whenever the balance went down to Rs5,000, the depositor stood to lose Rs50 per month. The commission decided to take up the matter and issued notices to the banks and their association. It has prepared a short public order against the banks which would be announced on Tuesday.

An inquiry committee headed by CCP Senior Member, Cartel and Merger, Abdul Ghaffar has completed investigation against 42 banks allegedly involved in offering less profit to depositors and charging undue fees.

Earlier, the banks were found guilty of promoting cartelisation.

Sources said senior executives of the 42 banks in Karachi and Islamabad were given two opportunities to explain their position but they failed to satisfy the committee.

When the State Bank was informed about the alleged role of the banks, it was annoyed with the commission’s observations and reportedly asked the CCP to stop the inquiry, the sources said.

According to a report of the International Monetary Fund, banks in Pakistan and Colombia were on top in the world in terms of earning huge profits.

Under the competition law, executives of the banks can also be penalised.

In other countries, forming a cartel is a criminal offence, while it is considered a civil offence in Pakistan.

It is also said that there is a lacuna in the competition law which needs to be removed so that anybody found guilty of promoting cartelisation could be removed from the directorship of a company.