State Bank of Pakistan provided the following brief guidelines to Banks and DFIs for acceptance of pledge of clients’ securities inline with the provision of the standardized Sub-Account Opening Form (SAOF) introduced by SECP:
Banks and DFIs must ensure that beneficiary of the facility against shares has necessary mandate to pledge the shares as security for availaing financial facility from the Bank / DFI.
Banks/ DFIs must obtain necessary authorization from the owner of the shares in favour of the pledgee to pledge their shares.
In this regard, Banks and DFIs were informed that effective June 15, 2009, Participants / Brokers are required to open and maintain Sub-Accounts as per the new SAOF introduced by SECP. They were also informed to bring into comformity those Sub-Accounts that were opened prior to the above mentioned date. The circular further clarified that Participants / Brokers are authorized to handle only those book-entry securities of their respective Sub-Account Holders that are exclusively specified in the SAOF. In all other cases, Participants would require specific authority by the Sub-Account Holders for transfer, pledge, and withdrawal of book entry securities.