Author: Mrs. Anjum Shahnawaz

SBP announces interest rates for affordable housing loans

KARACHI: State Bank of Pakistan (SBP) on Monday announced interest rates for loan obtained under Naya Pakistan Housing scheme.

The maximum size of loan shall be Rs5 million and the loan shall be available for the maximum limit at 7 percent for first five years and at 9 percent for remaining five years. The bank prices shall be KIBOR + 4 percent.

The SBP said that in line with its vision of providing affordable housing to the masses, Government of Pakistan will be providing a markup subsidy facility for the construction and purchase of new houses.

This facility will allow all individuals, who will be constructing or buying a new house for the first time, to avail bank’s financing at subsidized and affordable markup rates.

This facility will be provided with the administrative support of State Bank of Pakistan as executing partner with Government of Pakistan and Naya Pakistan Housing and Development Authority (NAPHDA).

The government has allocated Rs33 billion for payment of markup subsidy for financing over a period of 10 years and has assured continuity of the facility.

For this purpose, State Bank and Government of Pakistan have signed a memorandum of understanding.

The markup subsidy facility will be available through all banks and is divided in three tiers:

Financing under Tier I is available for purchase of houses/apartments/flats of upto 5 marla or 125 sq. yards, with maximum covered area of 850 sq. feet and maximum price of Rs. 3.5 million, under NAPHDA projects. Maximum financing under this Tier is Rs. 2.7 million with maximum tenor of up to 20 years. Banks will charge maximum markup rate of KIBOR plus 250 basis points.

However, GOP will provide markup subsidy to reduce borrowers’ rate to 5 percent for first five years and 7 percent for next five years.

KIBOR is the Karachi Interbank Offer Rate that is determined in the interbank market on a daily basis and is used as a benchmark for most of the retail lending by banks.

These rates are published on the website of State Bank of Pakistan on a daily basis.

Financing under Tier II is also for houses/apartments/flats upto 5 marla or 125 sq. yards with maximum covered area of 850 sq. feet and maximum price of Rs 3.5 million.

Maximum financing under this Tier is Rs 3 million with maximum tenor of up to 20 years. This Tier facilitates construction or purchase of housing units by individuals and households who have not applied or qualified for NAPHDA projects.

Banks will charge maximum markup rate of KIBOR plus 400 basis points. However, subsidized rate for the borrowers for first 10 years under Tier 2 is the same as that of Tier I.

The Tier III of the facility promotes affordable housing for middle-income families. This Tier allows subsidized financing for construction or purchase of houses/apartments/flats of more than 5 marla (125 sq. yards) and upto 10 marla (250 sq. yards) with maximum covered area from 850 sq. feet to 1,100 sq. feet and maximum price of Rs 6 million.

Maximum financing under this Tier is Rs. 5 million with maximum tenor of up to 20 years. Banks will charge maximum markup rate of KIBOR plus 400 basis points. However, GOP will provide markup subsidy to reduce borrowers’ rate to 7 percent for first five years and 9 percent for next five years.

It is expected that introduction of the facility with supply of fresh housing units through concerted efforts of NAPHDA and other stakeholders will help transform Government’s vision into reality.

The SBP issued following rates and criteria through a circular:

Markup Subsidy for Housing Finance

1. Housing plays an important role in economic development by contributing in GDP growth, employment generation and social wellbeing. Further, more than 40 industries and 70 percent of unskilled labor are linked with housing and construction sector.

2. In order to provide formal financial services at affordable rates, Government of Pakistan is providing Markup Subsidy for Housing Finance. The key features of the facility approved by the Government are given below:

Particulars	Markup Subsidy Program
Eligibility Criteria	All men/women holding CNIC First time home owner One individual can have subsidized house loan facility under this scheme only once Only for construction and first purchase of newly constructed affordable housing units
Size of Housing Unit	Size of the loan is segregated into three tiers, as under: Tier 1 (T1) – Housing Units/apartments of up to 125 square yards (upto 5 Marla) with covered area of up to 850 square feet. (NAPHDA) Tier 2 (T2) – Housing Units/apartments of up to 125 square yards (5 Marla) with covered area of up to 850 square feet. Tier 3 (T3) – Housing Units of more than 125 square yards up to 250 square yards (10 Marla) or apartments with covered area from more than 850 square feet to 1,100 square feet.
Maximum Price of Housing Units	Maximum Price (Market Value) of a single housing unit at the time of approval of financing, as under: Tier 1 (T1) – Rs 3.5 million Tier 2 (T2) – Rs 3.5 million Tier 3 (T3) – Rs. 6.0 million
Maximum Loan size	Maximum size of the loan of a single housing unit, as under: Tier 1 (T1) – Rs 2.7 million Tier 2 (T2) – Rs 3.0 million Tier 3 (T3) – Rs. 5.0 million
Loan type	Long term housing finance loans
Loan Tenor	10/15/20 years, depending upon choice of customers.
Security Requirements	As per banks’ credit policy and prudential regulations for housing finance, the housing unit financed will be mortgaged in favor of financing bank.
Allocation in Budget	Finance Division shall give authority to SBP to debit GOP account on quarterly basis for the subsidy payment to banks. Payment will be made to the banks on submission of quarterly-consolidated subsidy statement as per format prescribed by State Bank of Pakistan.
Pricing	Pricing for Housing Loans: Tier-1: 5% for first 5 years & 7% for next 5 years at KIBOR+250 BPS Tier-2: 5% for first 5 years & 7% for next 5 years at KIBOR+400 BPS (Spread may vary) Tier-3: 7% for first 5 years & 9% for next 5 years For loan tenors exceeding 10 years, market rate will be applicable for the period exceeding 10 years.
Executing Agency	All commercial banks including Islamic banks and House Building Finance Company Limited (HBFCL)
Application Form	A standardized Application Form both in English and Urdu will require minimum essential information with simple format. The processing time will not exceed 30 days after submission of all documents by the borrower and the same will be clearly stated in the application form.
Standardized Procedures	Banks to have standardized loan documents and risk acceptance criteria.
Monitoring	SBP will publish consolidated information about the loans extended under this program for information of the public on quarterly basis on its website.
Geographical distribution	Geographical distribution

3. Banks can also avail risk coverage against the housing finance under the scheme from Pakistan Mortgage Refinance Company (PMRC) at mutually agreeable terms and conditions.

4. The banks are advised to ensure successful implementation of this facility through dissemination of necessary instructions to branches/ regions and capacity building of field staff, development/alignment of financing products and marketing campaigns, etc.

October 12, 2020

Car sales increase by 8 percent in first quarter

KARACHI: The sales of locally manufactured cars have registered an 8 percent increase in the first quarter (July – September) 2020/2021 in Year on Year (YoY) basis due to restoration of economic activities after lifting of coronavirus lockdown.

According to statistics released by Pakistan Automobile Manufacturers Association (PAMA) on Monday the car sales went up to 37,017 units during the first quarter of the current fiscal year as compared with 34,308 units in the corresponding quarters of the last fiscal year.

According to analysis by Topline Securities, the car sales have posted an increase of 18 percent YoY in September 2020 to 13,882 units. Indus Motor (INDU) and Honda Car (HCAR) registered sales increase of 106 percent YoY and 87 percent YoY, respectively.

However, Pak Suzuki Motor Company (PSMC) sales declined by 20 percent YoY due to drop in Alto’s sales by 37 percent YoY (last year Alto saw high numbers due to its recent launch).

Car sales also increased by 19 percent MoM in September 2020. The increase was driven by INDU’s increase of 32 percent MoM as Yaris sales picked up 42 percent MoM. HCAR sales also improved by 20 percent MoM as BRV sales increased by 50 percent MoM.

New entrants into Pak Auto space continue to perform well with Hyundai Nishat selling 316 units (+187 percent MoM) in September 2020, while Kia Lucky Motors (KLM, non-member of PAMA) sold around 1,500 units

KLM is also planning to shift to double-shift production from January 2021 to meet high customer demand.

Hyundai Nishat had launched Tucson in the SUV category last month. A strong market response is visible as the number of units have jumped to 215 in September 2020 from 22 last month.

Atlas Honda (ATLH) recorded motorbike sales of 109,002 units in September 2020, up 45 percent YoY. In 1QFY21, sales have increased by 22 percent YoY.

Tractor sales in September 2020 are up 12 percent YoY, while also increased by 49 percent MoM. Millat Tractors (MTL) recorded an increase of 69 percent YoY while Al Ghazi Tractors (AGTL) sales declined by 31 percent YoY, respectively.

The analysts expect demand for cars to grow stronger owing to lower interest rates for auto financing along with pickup in economic activity amidst declining cases of COVID-19.

October 12, 2020
Stock market sheds 589 points on profit booking

KARACHI: The stock market fell by 589 points on Monday as investors opted for profit booking during the day.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 40,210 points as against 40,798 points showing a decline of 589 points.

Analysts at Arif Habib Limited said that the market braced the impact of APG’s (Asia Pacific Group) decision to maintain Pakistan’s position on Enhanced Follow-up List, which was primarily an evaluation based on Pakistan’s performance as of February 2020.

The plenary session is scheduled to be held during October 21-23, 2020.

The index which added another 249 points during the session today, on top of 2230 points since recent low, all of a sudden felt quite heavy to retail investors who considered it best to book profit and close positions.

Among scrips, POWER topped the volumes with 50.4 million shares, followed by HASCOL (41.8 million) and TRG (23.4 million).

Sectors contributing to the performance include E&P (-98 points), Cement (-85 points), Banks (-72 points), O&GMCs (-50 points) and Power (-48 points).

Volumes increased from 358.8 million shares to 377.6 million shares (+5 percent DoD). Average traded value also increased by 8 percent to reach US$ 79 million as against US$ 72.8 million.

Stocks that contributed significantly to the volumes include POWER, HASCOL, TRG, UNITY and JSCL, which formed 41 percent of total volumes.

Stocks that contributed positively to the index include ANL (+5 points), BAHL (+4 points), FCEPL (+4 points), MTL (+4 points) and AGP (+4 points). Stocks that contributed negatively include OGDC (-45 points), HBL (-38 points), HUBC (-38 points), TRG (-35 points) and PPL (-32 points).

October 12, 2020
FBR exempts sales tax on local supply of imported sugar

ISLAMABAD: Federal Board of Revenue (FBR) on Monday exempted 17 percent sales tax on domestic sale of imported sugar.

The FBR issued SRO 1038(I)/2020 to comply with the government decision to allow tax free import of sugar in order to reduce the price of the commodity in the local market.

The Economic Coordination Committee (ECC) allowed the import of 300,000 metric tons of sugar by Trading Corporation of Pakistan (TCP) without imposition of sales tax at the import stage. The FBR issued SRO 751(I)/2020 dated August 20, 2020 to comply with the decision.

FBR sources said that although the commodity was allowed exemption from sales tax on import of sugar but there was an ambiguity that subsequent sale of such sugar remained subject to sales tax on supply to the domestic market.

To remove this ambiguity the FBR now issued the SRO 1038(I)/2020 dated October 12, 2020 and streamline the supply of sugar to the local market.

The FBR sources believed that this would help in reducing the prices in the local market. The price of sugar in the local market had gone up to above Rs100 per kilogram.

On the other hand, industry sources said that the decision to allow sales tax exemption on local supply of imported sugar would be discriminatory against local sugar manufacturers.

The local sugar mills are subject to 17 percent sales tax on a per kilo price fixed by the government.

October 12, 2020
Rupee makes 3 paisas gain amid significant inflows of remittances

KARACHI: The Pak Rupee made a nominal gain of three paisas against dollar on Monday amid significant rise in home remittances as reported by the State Bank of Pakistan (SBP).

The rupee ended Rs163.81 to the dollar from last Friday’s closing of Rs163.84 in interbank foreign exchange market.

Currency dealers said that market players were remained optimistic about the ease in pressure on the local unit. However, the market witnessed demand from importers and corporate buyers as marked was opened after two days weekly holidays.

The dealers said that the home remittances posted a growth of over 32 percent in the month of September 2020 on Year on Year basis (YoY). Besides, the foreign currency account rules issued by the ministry of finance on Friday evening also sent positive message to the market.

The currency dealers hoped that the rupee would make gain during coming days owing to measures taken by the government and substantial inflows in the shape of remittances and export receipts.

October 12, 2020
Remittances grow 31.2 percent in September: SBP

KARACHI: The inflow of workers’ remittances has registered sharp increase of 31.2 percent after making fourth consecutive month of over $2 billion received in September 2020.

The State Bank of Pakistan (SBP) on Monday said that the remittances increased to $2.3 billion, 31.2 percent higher than the same month last year and 9 percent higher than in August 2020.

Workers’ remittances remained above $2 billion for the fourth consecutive month in September, the central bank said.

On a cumulative basis, remittances rose to a record $ 7.1 billion in first quarter of current fiscal year, 31.1 higher than the same period last year.

The level of remittances in September was slightly higher than SBP’s projections of $2 billion.

Efforts under the Pakistan Remittances Initiative (PRI) and the gradual re-opening of major host destinations such as Middle East, Europe and United States contributed to the sustained increase in workers’ remittances.

Prime Minister Imran Khan earlier in his tweet said: “Despite COVID more good news for our economy. Alhamdulillah, remittances from our hardworking overseas Pakistanis rose to $2.3 billion in September 2020, 31 percent higher than last September and 9 percent higher than August 2020. This marks the fourth consecutive month that remittances have remained above $2 billion.”

October 12, 2020
FBR opens job vacancies; invites applications for BS-01, BS-05

ISLAMABAD: Federal Board of Revenue (FBR) has invited job applications for the post of BS-1 and BS-5 at FBR headquarter.

The FBR said that applications are invited from candidates having requisite education, quota and age to fill the following posts under the federal government:

01. Sepoy (BS-05): 04 vacant posts; age limit is 30 years with general age relaxation of five years

02. Naib Qasid (BS-01): 30 posts; age limit is 30 with general age relaxation of five years.

The FBR said that the quota allocation is on local basis for Islamabad/Rawalpindi.

The application form can be downloaded here.

The FBR instructed to candidates to fill up each column of the form properly, sign in and sent the same along with attested copy of CNIC to:

Mr. Mohsin Ihsan, Secretary (S&M),

Federal Board of Revenue (HQ),

FBR House, Constitution Avenue,

G-5, Islamabad

The FBR said that the form shall be submitted within 15 days from the advertisement (the date of advertisement is October 08, 2020).

The FBR advised that no application would be accepted by hand. Further the candidates have been advised not to attach any other document except an attested copy of CNIC.

Unsigned application form or any column there left blank or those not accompanying attested copy of CNIC shall not be considered.

Domicile holders of only Islamabad and Rawalpindi are eligible to apply for these posts.

A candidate may apply for more than one post by submitting separate application form for each post.

The FBR said that only shortlisted candidates will be called for test/interview.

The candidates already working in public sector department/organization should send their application form(s) through proper channel.

The FBR said that the previous advertisement dated February 28, 2020 issued by the FBR had been cancelled. Therefore, the candidates who have applied against previous advertisement will have to apply afresh.

October 12, 2020
SBP issues FAQs to foreign currency account rules

KARACHI: State Bank of Pakistan (SBP) on Sunday issued Frequently Asked Questions (FAQs) in response to SRO issued by the finance ministry related to foreign currency account rules.
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October 11, 2020

TAX YEAR 2021: FBR updates tax rates for motor vehicles registration, transfers

ISLAMABAD: Federal Board of Revenue (FBR) has updated advance tax rates for registration and transfer of motor vehicles during tax year 2021.

The FBR issued the tax rates as updated up to June 30, 2020 and will remain applicable during July 01, 2020 to June 30, 2021, if not amended.

The advance tax on motor vehicles at the time of registration and transfer of registration is governed under Section 231B of Income Tax Ordinance, 2001, which states:

Section 231B. Advance tax on private motor vehicles.—

(1) Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of registration of a motor vehicle, at the rates specified in Division VII of Part IV of the First Schedule:

“Provided that no collection of advance tax under this sub-section shall be made after five years from the date of first registration as specified in clauses (a), (b) and (c) of sub-section (6).”

(1A) Every leasing company or a scheduled bank or a non-banking financial institution or an investment bank or a modaraba or a development finance institution, whether shariah compliant or under conventional mode, at the time of leasing of a motor vehicle to a “person whose name is not appearing in the active taxpayers’ list”, either through ijara or otherwise, shall collect advance tax at the rate of four per cent of the value of the motor vehicle.

(2) Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of transfer of registration or ownership of a private motor vehicle, at the rates specified in Division VII of Part IV of the First Schedule:

Provided that no collection of advance tax under this sub-section shall be made on transfer of vehicle after five year from the date of first registration in Pakistan.

(3) Every manufacturer of a motor “vehicle” shall collect, at the time of sale of a motor car or jeep, advance tax at the rate specified in Division VII of Part IV of the First Schedule from the person to whom such sale is made.

(4) Sub-section (1) shall not apply if a person produces evidence that tax under sub-section (3) in case of a locally manufactured vehicle or tax under section 148 in the case of imported vehicle was collected from the same person in respect of the same vehicle.

(5) The advance tax collected under this section shall be adjustable:

Provided that the provisions of this section shall not be applicable in the case of –

(a) the Federal Government;

(b) a Provincial Government;

(d) a foreign diplomat; or

(e) a diplomatic mission in Pakistan.

“(6) For the purposes of this section the expression “date of first registration” means—

(a) the date of issuance of broad arrow number in case a vehicle is acquired from the Armed Forces of Pakistan;

(b) the date of registration by the Ministry of Foreign Affairs in case the vehicle is acquired from a foreign diplomat or a diplomatic mission in Pakistan;

(c) the last day of the year of manufacture in case of acquisition of an unregistered vehicle from the Federal or a Provincial Government; and

(d) in all other cases the date of first registration by the Excise and Taxation Department.

(7) For the purpose of this section “motor vehicle” includes car, jeep, van, sports utility vehicle, pick-up trucks for private use, caravan automobile, limousine, wagon and any other automobile used for private purpose.”

Explanation.— For the removal of doubt, it is clarified that a motor vehicle does not include a rickshaw, motorcycle-rickshaw and any other motor vehicle having engine capacity upto 200cc.

(1) The rate of tax under sub-sections (1) and (3) of section 231B shall be as set out in the following Table:–

S. No.	Engine capacity	Tax
(1)	(2)	(3)
1.	upto 850cc	Rs. 7,500
2.	851cc to 1000cc	Rs. 15,000
3.	1001cc to 1300cc	Rs. 25,000
4.	1301cc to 1600cc	Rs. 50,000
5.	1601cc to 1800cc	Rs. 75,000
6.	1801cc to 2000cc	Rs. 100,000
7.	2001cc to 2500cc	Rs. 150,000
8.	2501cc to 3000cc	Rs. 200,000
9.	Above 3000cc	Rs. 250,000

(2) The rate of tax under sub-sections (2) of section 231B shall be as follows:–

S. No.	Engine capacity	Tax
(1)	(2)	(3)
1.	upto 850cc	–
2.	851cc to 1000cc	5,000
3.	1001cc to 1300cc	7,500
4.	1301cc to 1600cc	12,500
5.	1601cc to 1800cc	18,750
6.	1801cc to 2000cc	25,000
7.	2001cc to 2500cc	37,500
8.	2501cc to 3000cc	50,000
9.	Above 3000cc	62,500

Provided that the rate of tax to be collected shall be reduced by 10 percent each year from the date of first registration in Pakistan.

October 11, 2020

FOREIGN CURRENCY ACCOUNTS: SBP says new regulations to strengthen forex regime

KARACHI: State Bank of Pakistan (SBP) has said that recently issued regulations related to foreign currency account have been aimed to strengthen the foreign exchange regime in the country.
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October 11, 2020