Author: Mrs. Anjum Shahnawaz

SBP directs banks to prepare depositor-wise database

KARACHI: The State Bank of Pakistan (SBP) on Thursday directed banks to prepared a comprehensive depositor-wise database/ Management Information System.

A key element of the information system is its capacity to calculate, on any given date, total liability of a bank towards each of its depositors including any interest/ profit accrued on such deposits and generate a report referred as “Single Depositor View (SDV)”.

This would enable Deposit Protection Corporation (DPC) of the central bank to assess the amounts payable to protected depositors and making payout in case of a bank’s failure.

In order to achieve banking industry-wide standardization of SDV report, a standard format of the report has been developed by the DPC.

Furthermore, with a view to facilitate banks in understanding the fields of report and reporting requirements, a document titled “Explanatory Notes on Single Depositor View (SDV) Data” has also been prepared.

The explanatory notes provide explanation of various terms used for SDV data compilation together with clarity on classification of depositors, and balance calculations for protected depositors.

Considering the distinct nature of SDV concept, the banks have been accorded the extension in deadline for the development of information system/ database, as referred in para 10 of DPC Circular No. 01 of 2019, until January 31, 2020.

In this regard, banks are advised to provide a progress report on development of their information system by December 31, 2019.

Going forward, DPC shall assess the system’s readiness and efficacy through SBP-inspection teams or by its designated staff for the purpose.

The member banks are also required to submit first such report of the position of depositors, as per formats as of December 31, 2019 by February 15, 2020 and then onwards on quarterly basis.

DPC had issued Circular No. 01 of 2019 dated March 15, 2019 on ‘Information System for Protected Depositors of Member Banks’ where all member banks were required to appropriately install or update their systems including software(s)/ database(s) for maintaining a comprehensive depositor-wise database. Such a database is required to identify, on any given date, all accounts of any single depositor and calculate the total liability of a bank towards that depositor (including any interest/ profit accrued till the given date) referred as “Single Depositor View (SDV)”.

The SBP said that at present, multiple core banking systems are available across banks with each bank relying on a specific system having its own data structure and alignment of different information fields.

Therefore, it is felt necessary that instructions on development of aforesaid Information System should be supplemented with a standardized format having specific arrangement of data fields for compliance by banks to assess total liability of a bank towards a single depositor.

In absence of such a format and prescribed data fields, there is a possibility that the banks would end up producing SDV data on different non-comparable formats.

Hence, DPC has decided to issue a Standardized Report Format (SRF) to enable banks to compile SDV data as per requirements of reimbursement.

The SRF contains 44 data fields relevant to information on eligible depositors of a bank and available at Annexure A. All banks are required to follow the taxonomy of SRF to maintain consistency in SDV data reporting across banks.

The document also explains various terms used in SDV data compilation along with classification guidelines, reporting timelines, medium of reporting and examples on balance calculations.

December 5, 2019
Pakistan’s foreign exchange reserves increase by $416 million to $15.993 billion

KARACHI: The liquid foreign exchange reserves of Pakistan increased by $416 million to $15.993 billion by week ended November 29, 2019, State Bank of Pakistan (SBP) said on Thursday.

The foreign exchange reserves of the country were at $15.577 billion a week ago.

The reserves held by the central bank grew by $431 million to $9.113 billion as compared with $8.682 billion a week ago.

The central bank said that during this fiscal year SBP reserves have increased by $1.8 billion.

The FX swaps / forward liabilities have reduced by $1.95 billion between June-October 2019.

Increase in the liquid SBP reserves and the reduction of the swaps / forward liabilities reflects the build-up of FX buffers, the SBP said.

The reserves held by commercial banks, however, reduced by $15 million to $6.88 billion by week ended November 29, 2019 as compared with $6.895 billion a week ago.

December 5, 2019
Stock market gains 371 points on improved rating of top banks

KARACHI: The stock market gained 371 points on Thursday owing to improved rating of top five banks of Pakistan.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 40,641 points as against 40,271 points showing an increase of 371 points.

Analysts at Arif Habib Limited said that following up the country ratings, Moody’s improved the rating for 5 Pakistan Banks as well, which caused the price gains in banking sector stocks in general, besides buying activity in cyclicals.

News of increase in cement dispatches over the 5 month period also gave confidence to investors to invest in Cement as well as Steel sector.

The benchmark KSE100 index recorded highest traded value for CY2019 so far with US$ 129.6 million. Traded volumes also crossed 500 million mark again with majority in Cement sector (111.6 million), followed by Banks (51.4 million) and Power (36.6 million).

Among scrips, UNITY registered volumes of 35.2 million shares followed by FCCL (34 million) and MLCF (20.5 million).

Sectors contributing to the performance include Banks (+105 points), E&P (+80 points), O&GMCs (+55 points), Cement (+54 points) and Fertilizer (+29 points).

Volumes increased significantly from 393.2 million shares to 507.5 million shares (+29.1 percent DoD). Average traded value also increased by 36 percent to reach US$ 129.6 million as against US$ 95.4 million.

Stocks that contributed significantly to the volumes include UNITY, FCCL, MLCF, KEL and TRG, which formed 25 percent of total volumes.

Stocks that contributed positively include PPL (+53 points), HBL (+42 points), PSO (+28 points), POL (+26 points) and NBP (+24 points). Stocks that contributed negatively include GLAXO (-9 points), MARI (-9 points), DAWH (-8 points), MTL (-7 points), and KAPCO (-5 points).

December 5, 2019
Rupee makes gain for third consecutive day against dollar

The Pakistani rupee strengthened against the US dollar for the third consecutive day on Thursday, driven by improved foreign currency inflows in the form of export proceeds and workers’ remittances.
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December 5, 2019
FBR attaches shareholding of Golden Globe Holding in Benami properties case

KARACHI: Federal Board of Revenue (FBR) has attached shareholding of Golden Globe Holding in Thatta Cement in Benami properties case, according to a notice issued on Thursday.

Thatta Cement Company Limited in a notice sent to Pakistan Stock Exchange (PSX) informed that in order issued by deputy commissioner/initiating officer, Inland Revenue Division of FBR (Anti Banmi Zone-III) to M/s. Golden Globe Holding (Pvt) Limited informing them that FBR official had provisionally attached, for the period of 90 days, the shareholding of M/s. Golden Globe Holding (Pvt) Limited in Thatta Cement Company Limited.

Sources in the FBR said that the properties had been attached as per the law defined in Benami Transaction Act, 2017.

They said that initiating office had been authorized to provisionally attach a benami property for a period of 90 days if he thinks that the person in possession.

They further said that the officer had also been authorized to pass an order continuing the provisional attachment of the property with the prior approval of the approving authority, the passing of the order made by the adjudicating authority.

December 5, 2019

Salary persons having income above Rs400,000 require to file return for tax year 2019

KARACHI: Persons driving salary income above Rs400,000 are remained liable to file annual income tax returns for tax year 2019.

Through Finance Act, 2019 the threshold income for salary persons for the purpose of income tax deduction has been increased to Rs600,000. However, this threshold is applicable for the tax year 2020.

The last date for filing income tax returns for tax year 2019 is December 16, 2019, which was extended third time. The actual filing date was due on September 30, 2019.

Following is the table of income for salary persons required to file their income tax returns for tax year 2019:

S. No.	Taxable income	Rate of tax
(1)	(2)	(3)
1.	Where the taxable income does not exceed Rs. 400,000	0%
2.	Where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 800,000	Rs. 1,000
3.	Where the taxable income exceeds Rs. 800,000 but does not exceed Rs. 1,200,000	Rs. 2,000
4.	Where the taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,500,000	5% of the amount exceeding Rs. 1,200,000
5.	Where the taxable income exceeds Rs.2,500,000 but does not exceed Rs. 4,000,000	65,000 + 15% of the amount exceeding Rs. 2,500,000
6.	Where the taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 8,000,000	290,000 + 20% of the amount exceeding Rs. 4,000,000
7.	Where the taxable income exceeds Rs. 8,000,000	1,090,000 + 25% of the amount exceeding Rs. 8,000,000

However, this rate of tax is applicable where head salary exceeds 50 percent of taxable income of a salary person.

The FBR further clarified that where the taxable income exceeds eight hundred thousand rupees the minimum tax payable shall be two thousand rupees.

December 5, 2019

Moody’s assigns stable outlook to top five Pakistani banks

KARACHI: Following the improved outlook of Pakistan economy, Moody’s Investors Service on Thursday affirmed the B3 long-term local currency deposit ratings of five top Pakistani banks and changed the outlook to stable from negative.

The rating agency in a statement said that affected banks include Allied Bank Limited (ABL), Habib Bank Ltd. (HBL), MCB Bank Limited (MCB), National Bank of Pakistan (NBP) and United Bank Ltd. (UBL).

The rating actions follow Moody’s decision on 2 December to affirm the B3 rating for the Government of Pakistan and change the outlook on the sovereign rating to stable from negative.

The banks’ rating actions reflect improvements in the operating environment in Pakistan and in the country’s sovereign credit profile, which affect the banks’ given (1) their high government exposures that link their credit profiles to that of the government; and (2) the expectation that the government’s capacity to support banks in case of need will not deteriorate.

The primary driver of Moody’s decision to change the five Pakistan banks’ outlooks to stable is the extensive interconnectedness between their balance sheets and sovereign credit risk, owing to the banks’ high exposures to government securities.

According to Moody’s estimates as of the latest available information, the five banks’ direct exposure to government credit risk stood at around 10.2x of Tier-1 capital for ABL, 8.1x for HBL, 6.4x for MCB, 9.5x for NBP and 6.8x for UBL.

The high direct exposure to government credit risk, in addition to the primarily Pakistan focus of their operations, links the banks’ credit profile to that of the government. As a result, the improvements in the operating environment and in the sovereign credit profile have eased pressures on banks as well.

The stable outlook assigned to the banks’ local currency deposit ratings also reflects Moody’s expectation that the government’s capacity to support banks in case of need will not deteriorate.

This is reflected by the stable outlook on Pakistan’s sovereign B3 bond rating which is driven by reduced external vulnerability risks on the back of policy adjustments and currency flexibility, as well as ongoing fiscal reforms that will mitigate risks related to debt sustainability and government liquidity.

The local currency deposit ratings of NBP and HBL incorporate one notch of support uplift from their caa1 baseline credit assessments.

Moody’s decision to affirm the banks’ ratings reflects their stable deposit-based funding structures, high liquidity buffers and good earnings generating capacity, as well as Pakistan’s high growth potential.

These credit strengths balance banks’ modest capital buffers and high asset risks, as well as their high exposure to the government, which links their credit profile to that of the government.

Moody’s does not have any particular environmental, social or governance concern for the banks included in this action, and does not apply any corporate behavior adjustments to them.

December 5, 2019
Import, export of gold prohibited under foreign exchange laws

KARACHI: The import and export of gold are prohibited, except with the general permission, under updated foreign exchange manual issued by State Bank of Pakistan (SBP).
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December 5, 2019
Bearer prize bonds of Rs40,000 worth Rs233 billion documented

KARACHI: People have documented an amount of Rs233 billion invested in bearer prize bonds of Rs40,000 denominations following the government announcement of discontinuation.

According to statistics of Central Directorate of National Savings (CDNS) people have Rs323 billion bearer bonds of Rs40,000 denomination by October 2019, which is around 90 percent of the total invested amount till May 2019.

The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination national prize bonds in initial phase.

The investment in prize bonds of Rs40,000 denominations reached to record level of Rs258.72 billion by May 2019.

However, since announcement the stock of bearer prize bonds was gradually falling and reduced to only Rs26.15 billion by October 2019.

The State Bank of Pakistan (SBP) following the announcement issued procedure for the banks to facilitate general public in exchanging the unregistered prize bonds through three different modes.

The SBP has barred the exchange of bearer prize bonds against cash.

However, it can be redeemed against registered or premium prize bonds or can be converted into national saving schemes or face value (direct transfer to the bank account of bond bolder).

The bearer instruments have been known as parking lot for undocumented economy. Therefore, the government launched registered prize bonds of Rs40,000 denomination in March 2017 which could be purchased against certain requirements including Computerized National Identity Card (CNIC) and valid bank account.

Following the ban on bearer prize bonds and its conversion through option of known documented manner, the investment in premium prize bonds of Rs40,000 denomination jumped up to Rs17 billion by October 2019 as compared with Rs6.17 billion as of May 2019, showing an increase of 175 percent.

According to the SBP the bearer instrument can also be exchanged in savings schemes such as Special Saving Certificates (SSC) or Defence Saving Certificates (DSC).

The total investment into the saving certificates increased to Rs2.4 trillion by October 2019 as compared with Rs2.2 trillion by May 2019.

The government is intended to transform all the bearer prize bonds into to registered securities. In this regard the Central Directorate of National Savings in collaboration with SBP is planning to issue scripless registered prize bonds amongst all denominations with objective to document the economy.

December 5, 2019
FBR extends date up to Dec 15 for online integration of large retail houses

ISLAMABAD: Federal Board of Revenue (FBR) has extended last date up to December 15, 2019 for large retail houses to integrate their systems for online sales reporting to the tax authorities.

In an official memorandum circulated on Wednesday to all chief commissioners of Regional Tax Offices (RTOs) and Large Taxpayers Units (LTUs), saying that the mandatory requirement for Tier-I retailers to integrated their outlets with FBR’s computerized system for real time reporting of sales, the date has been extended up to December 15, 2019.

According to Sales Tax Act, 1990, Tier-1 retailers means,

(a) a retailer operating as a unit of a national or international chain of stores;

(b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;

(c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees six hundred thousand;

(d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers”; and

(e) a retailer, whose shop measures one thousand square feet inarea or more.

According to the statute, in case a Tier-1 retailer does not integrate his retail outlet in the manner as prescribed under sub-section (9A) of section 3, during a tax period or part thereof, the adjustable input tax for whole of that tax period shall be reduced by 15 percent.

The Sales Tax Act further said that Tier-1 retailers shall pay sales tax at the rate as applicable to the goods sold under relevant provisions of this Act or a notification issued there under:

Provided that the customers of a Tier-1 retailer shall be entitled to receive a cash back of up to five percent of the tax involved, from such date in the manner and to the extent, as may be prescribed by the Board:

Provided further that from such date, and in such mode and manner, as prescribed by the Board, all Tier-1 retailers shall integrate their retail outlets with Board’s computerized system for real-time reporting of sales.

The FBR notified rules separately for the integration of retailers with the system.

150ZEA. Application.– The provisions of this Chapter shall apply to supplies of finished fabric and locally manufactured finished articles of textile and textile made-ups and leather and artificial leather, as covered in Table II in Notification No. S.R.O. 1125(I)/2011, dated the 31st December, 2011, under sub-serial (vii) of S. No. 1 and S. No. 3, as are made by the registered persons who are integrated with Board’s online system for the purpose of availing lower rate on supplies as specified in condition (xv) of the said Notification.

December 4, 2019