Dispute over Sonali Bank's holdings in Pubali Bank not resolved in 41 years

The dispute over the Sonali Bank PLC's holdings in the Pubali Bank could not be resolved in the last 41 years and now the Financial Institutions Division (FID) has sought the Finance Division's intervention to find out an amicable solution, officials said.
In 1959 the National Bank of Pakistan, now renamed as Sonali Bank PLC, bought 38,335 shares of then Eastern Mercantile Bank Limited, which was later nationalised in 1972 and renamed as Pubali Bank Ltd in 1983.
During 1968, 1969, and 1970 the Eastern Mercantile Bank Limited issued 10:1 bonus shares, raising the total holdings by the National Bank of Pakistan to 51,022. The face value of each share was Tk 10, thus National Bank of Pakistan's investment in the Eastern Mercantile Bank Limited's shares stood at Tk 510,220.
On September 10, 1975 the Ministry of Finance forwarded a copy of the law ministry's opinion in this connection to the Sonali Bank. The law ministry stated that "…Pubali Bank is bound to issue fresh share certificates of equal amount in favour of Sonali Bank."
Following that, the Sonali Bank sent a number of letters to the Pubali Bank, demanding issuance of duplicate certificates against the shares. At one stage of exchange of letters, the Pubali Bank issued the duplicate certificates in favour of Sonali Bank as per its demand.
The Eastern Mercantile Bank Limited, renamed as Pubali Bank, was later handed over to the private sector. The Sonali Bank in September, 1984 in a letter to the Pubali Bank asked about adjustment of Eastern Mercantile Bank Limited's shares it holds.
In response, the Pubali Bank said:
"So far as right and interest of the share holders in the nationalised Eastern Mercantile Bank Limited is concerned, the liability was taken up by the government, under the Article 8.0 of the President's Order No. 26 of 1972."
"The said statutory liability has not been passed on to Pubali Bank Ltd by any statute, bringing about any amendment to Article 8 of the President's Order No. 26 of 1972," it mentioned.
Since then, officials said, scores of meetings were held at the ministry of finance to resolve the dispute between the Sonali Bank and Pubali Bank.
The decisions in the meetings came in favour of Sonali Bank. However, the Pubali Bank is yet to make the payment or adjust the Sonali Bank's holdings in Eastern Mercantile Bank Limited.
According to Sonali Bank, it had sent nearly two dozen letters to the Financial Institutions Division (FID) since 2017. However, the FID did not inform what measures it had taken to resolve the issue.
The Sonali Bank in December last year sent a letter to the Pubali Bank, demanding a solution to the dispute. However, the Pubali Bank did not respond.
Later in February last the Sonali Bank sent another letter to the FID, seeking a solution to the dispute with the Pubali Bank.
Sources said last week the FID sought Finance Division's opinion on how to resolve the dispute.
A senior Finance Division official acknowledged receipt of the letter from the FID and said they were scrutinising the matter for an amicable solution.
Contacted, Pubali Bank's Managing Director Mohammad Ali told the FE that Sonali Bank's claim was "baseless" and his bank was not bound to make any payment or make adjustment of the shares.
"Few months back a meeting was held at the FID. We have submitted our papers and made it clear that Sonali's demand is baseless," he told the FE on telephone.
Mr Ali said the liability had not been passed on to Pubali Bank Ltd while its formation rather was taken up by the government.
"We have nothing to do with this matter,' he said.

syful-islam@outlook.com