United Bank Limited (UBL), The Bank of Punjab (BoP), JS Bank Limited (JSBL), and Allied Bank Limited (ABL) were all fined by the State Bank of Pakistan (SBP) for breaking banking regulations. During the first quarter of the current fiscal year, which runs from July to September, these four financial institutions were fined a total of Rs83.157 million for breaking the central bank’s rules on foreign exchange, customer due diligence, and general banking operations. Following BoP (Rs21.569 million), JS Bank (Rs18.510 million), and ABL (Rs16.578 million), UBL received the largest fine, totaling Rs26.500 million, according to the details of the significant enforcement action that the SBP posted on its website on Tuesday. The banks were penalized for violating regulations concerning general banking operations, foreign exchange trading, know-your-customer, and customer due diligence. The SBP has advised these banks to bolster their systems and controls in order to avert future regulatory violations, in addition to taking punitive action. The SBP states that the punitive measures are based on violations of regulatory directives and do not address the banks’ overall financial stability. The government began looking into banks last year after learning that they were manipulating currencies to boost their earnings. But neither the report’s conclusions nor the fine or legal action imposed on the banks were made public. The banks’ increased spreads were attributed primarily to their short forex liquidity, their short net open forex positions, and increased currency volatility and uncertainty. In 2022, the nation encountered economic difficulties, but the banking sector persevered, with its assets growing by a robust 19.1%. According to the SBP’s yearly flagship report, the Financial Stability Review for 2022, investments were the primary driver of this expansion while advances slowed. The capital adequacy ratio of the banks was 17.0%, which was significantly higher than the regulatory minimum of 11.5%, indicating that the banks’ solvency was supported by contained delinquencies and increased profitability. The Islamic banking industry saw strong growth in 2022 as well, rising by 29.6%.