Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • Foreign exchange reserves increase to $15.249 billion

    Foreign exchange reserves increase to $15.249 billion

    KARACHI: The total liquid foreign exchange reserves of the country increased by $990 million to $15.249 billion by week ended July 12, 2019 as compared with $14.259 billion a week ago, State Bank of Pakistan (SBP) said on Thursday.

    The official reserves of the SBP increased by $918 million to $8 billion during the week under review as compared with $7.083 billion in the preceding week. The central bank said that the official reserves were increased due to inflows of $991.4 million from International Monetary Fund (IMF) as first tranche of $6 billion extended fund facility for Pakistan.

    The reserves held by commercial banks also increased by $73 million to $7.248 billion by week under review as compared with $7.175 billion in the preceding week.

  • SBP designates three systemically important banks for 2019

    SBP designates three systemically important banks for 2019

    KARACHI: State Bank of Pakistan (SBP) has designated three Domestic Systemically Important Banks (D-SIBs) for the year 2019, a statement said on Thursday.

    The State Bank announced the designation of D-SIBs for the year 2019 under the Framework for Domestic Systemically Important Banks (D-SIBs) that was introduced in April 2018.

    The framework introduced by State Bank is consistent with the international standards and practices and takes into account the local dynamics.

    It specifies the methodology for the identification and designation of D-SIBs, enhanced regulatory and supervisory requirements, and implementation guidelines.

    These enhanced requirements aim to further strengthen the resilience of the Systemically Important banks against shocks and augment their risk management capacities, the SBP said.

    The identification of D-SIBs involves two-step process. In the first step, sample banks are identified each year based on the quantitative and qualitative criteria. In the second step, D-SIBs are designated from among the sample banks on the basis of institutions’ systemic score in terms of their size, interconnectedness, substitutability, and complexity.

    In line with D-SIBs framework, State Bank has carried out the annual assessment on the basis of financials of end December 2018. As per this assessment, three banks viz. Habib Bank Ltd., National Bank of Pakistan, and United Bank Ltd. have been designated as D-SIBs for the year 2019. These banks will be subject to enhanced supervisory requirements and following Higher capital surcharge in the form of additional common equity tier-1 capital (CET-1) with effect from March 31, 2020:

    BUCKETName of InstitutionAdditional CET-1 Requirement for Bucket
    DEmpty3.5%
    CNational Bank of Pakistan and Habib Bank Ltd.2.0%
    BEmpty1.5%
    AUnited Bank Ltd (UBL).1.0%

    Besides, branches of Global-Systemically Important Banks (G-SIBs) operating in Pakistan will hold additional CET1 capital against their risk-weighted assets in Pakistan at the rate as applicable on the respective principal G-SIB.

  • Stock market erodes by 672 points on massive selling

    Stock market erodes by 672 points on massive selling

    KARACHI: The stock market eroded by 672 points on Thursday following significant selling pressure during the day.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 32,310 points as against 32,982 points, showing a decline of 672 points.

    Analysts at Arif Habib Limited said that the market stayed positive for a brief while earlier today and went +32 points, but after that selling pressure ensued causing a slide of 758 points and ending the session at -672 points.

    The index breached recent intra-day low of 32,350 points today and closed at a low of 32,310 points.

    Selling was observed across the board, and initially started with significant volumes in HBL. Banking sector led the volumes table with 15.7 million shares followed by Technology (11 million) and Cement (10 million).

    Scrip wise activity showed TRG ranking top with 8.5 million shares, followed by KEL (7.3 million) and HBL (4.6 million).

    Major declines were observed in OMCs, which saw significant declines in price, trading at and / or close to lower circuits.

    Sectors contributing to the performance include Banks (-115 points), E&P (-101 points), Fertilizer (-100 points), O&GMCs (-58 points), Cement (-46 points).

    Volumes declined further from 112 million shares to 86 million shares (-22 percent DoD). Average traded value however, increased by 0.9 percent DoD to reach US 23.4 million as against US$ 23.2 million.

    Stocks that contributed significantly to the volumes include TRG, KEL, HBL, LOTCHEM and MLCF, which formed 33 percent of total volumes.

    Stocks that contributed positively include MARI (+1 points), POL (+0 points), SHFA (+0 points), HGFA (+0 points) and ATLH (+0 points). Stocks that contributed negatively include ENGRO (-71 points), PPL (-64 points), HBL (-52 points), OGDC (-38 points) and HUBC (-24 points).

  • Rupee falls by 21 paisas against dollar

    Rupee falls by 21 paisas against dollar

    KARACHI: The Pak Rupee fell 21 paisas against dollar on Thursday due to higher demand for import and corporate payments.

    The rupee ended at Rs160.03 to the dollar from previous day’s closing of Rs159.82 in interbank foreign exchange market.

    The foreign currency market was initiated in the range of Rs159.95 and Rs160.05. The market recorded day high of Rs160.10 and low of Rs159.95 and closed at Rs160.03 to the dollar.

    Currency experts said that the local unit was under pressure due to scheduled repayment for foreign debt and payments for import and corporate.

    The exchange rate in open market also witnessed deterioration in rupee value. The buying and selling of dollar recorded at Rs159.80/Rs160.30 from previous day’s closing of Rs159.30/Rs160.30 in cash ready market.

  • Tax collection from salary income declines by 44 percent: State Bank

    Tax collection from salary income declines by 44 percent: State Bank

    KARACHI: Tax collection from salary income declined by 44 percent due to changes in income tax rates for all income slabs, according to a report issued by State Bank of Pakistan (SBP).

    The SBP said that during first nine-months of fiscal year 2018/2019 the tax collection on salaries remained much lower than in the same months of preceding year.

    The Federal Board of Revenue (FBR) collected Rs53.5 billion as tax from salary income during July – March of Fiscal year 2018/2019 as compared with collection of Rs95.2 billion in the same period of the preceding fiscal year.

    “Tax collection on salaries also remained much lower than last year. In absolute terms, tax on salaries declined by Rs 41.7 billion during the review period, mainly due to changes in income tax rates for all income slabs,” the SBP said.

    Direct taxes having a share of 37 percent in overall FBR tax collection recorded a decline of 0.8 percent during Jul-Mar FY19 in contrast to a rise of 12.2 percent during the same period last year.

    Measures like the suspension of tax on mobile top-ups; reduction in come tax rates on salaries; reduction in the withholding tax rate on dividends; and spending under the PSDP explain the decline in direct taxes.

    Within direct taxes, major hit emerged from withholding taxes (largest contributor in direct taxes), which recorded a contraction of 8.7 percent during Jul-Mar FY19 against a rise of 16.1 percent during the same period last year.

    One-half of the decline in total withholding taxes is in the category of telephone/mobiles. Collection from telephone was only Rs 5.3 billion during Jul-Mar FY19 compared to a collection of Rs 38.0 billion during the same period last year.

    This lower collection from telephone/mobile phones was not surprising amid suspension of taxes on mobile phone top-up by the Supreme Court.

    Receipts from contracts were also lower compared to last year largely owing to a cut in the PSDP. Voluntary payments increased by Rs 34.3 billion during Jul-Mar FY19.

  • Oversight Board revokes registration of audit firm

    Oversight Board revokes registration of audit firm

    KARACHI: The Audit Oversight Board (AOB) has revoked the registration of an audit firm and thereby stopped it from carrying out audit of public interest companies, a statement said on Wednesday.

    “In line with its regular monitoring plan, AOB initiated an inspection of records to assess the audit quality of the firm, Mudassar Ehtisham & Co., in March 2019.”

    The firm requested that inspection be delayed by three months. The firm’s request was declined because inspection was of past audit records that should have been readily available.

    Later, the firm did not let AOB inspectors conduct the inspection on the scheduled date when they visited the office of the firm in Lahore.

    Accordingly, AOB served a show cause notice on the firm and provided an opportunity to explain its position in writing and also provided an opportunity of being heard.

    In the third hearing on 30 April 2019, the firm informed AOB that it is willing to get its records inspected. However, when AOB inspection team visited the office of the firm on 6 May 2019, it still did not provide complete information and the information that it provided carried instances of falsification.

    AOB provided further opportunities to the firm to explain itself, however, the firm did not submit any written explanation, nor did it attend the opportunity of being heard.

    Not providing required information to the regulator and falsification of the provided information are grave violations. At that stage, AOB informed the firm that under the circumstances, it shall have no option but to bring the matter to its logical end through an appropriate order.

    “Shareholders and lenders rely on audited financial statements of companies for their financial decisions and they trust the external auditor’s opinion that the financial statements prepared by the management present a true and fair view of the company’s financials,” said Usman Hayat, CEO, AOB.

    AOB is the independent audit regulator in Pakistan established by the parliament in 2016 to protect the public interest by overseeing the quality of audit of financial statements of public interest companies.

    There are more than 1000 public interest companies in Pakistan which include all listed companies and non-listed public sector companies. Out of over 550 audit firms in Pakistan, 121 have a satisfactory quality rating and 101 are currently registered with AOB. Only the audit firms registered with AOB can audit the financial statements of a public interest company.

  • SBP sells treasury bills worth Rs2,212 billion in auction

    SBP sells treasury bills worth Rs2,212 billion in auction

    KARACHI: State Bank of Pakistan (SBP) has raised Rs2,212 billion for budget financing in an auction of market treasury bills.

    The SBP on Thursday conducted auction of 3-, 6 and 12-month Market Treasury Bills (MTBs).

    The SBP received bids of Rs2,238 billion at face value of Rs2,326 billion in all three maturities.

    The central bank accepted bids at Rs2,212 billion at face value of Rs2,297 billion.

    The banks are seen more interested in lending in short-term government papers as they offered Rs1,991 billion in three-month MTB at face value of Rs2,054 billion.

    The SBP accepted the bids in three-month papers at realized amount of Rs1,978 billion at face value of Rs2,040 billion. The cut-off yield in three-month papers increased to 13.7499 percent as compared with previous auction of Rs12.7422 percent.

    The SBP also accepted bids at face value amounting Rs144.21 billion and Rs112.72 billion in 6-month and 12-month treasury bills respectively. The cut-off yield in these two instruments recorded at 13.95 percent and 14.1 percent, respectively.

    Banking experts said that the financial institutions were more aggressive in lending their money in government papers considering safe investment and high returns.

    The recent policy rate hike also attracted the commercial banks to enhance their exposures in government papers.

    The experts said that the reason to raise huge amount from private banks was government decision for not borrowing any more from the central bank.

  • ECC bans export of wheat to control domestic prices

    ECC bans export of wheat to control domestic prices

    ISLAMABAD: Economic Coordination Committee of the Cabinet (ECC) on Wednesday decided to impose ban on export of wheat and related products in order to control prices in the local market.

    Adviser to Prime Minister on Finance and Revenue, Dr. Abdul Hafeez Shaikh, chaired the meeting of the ECC.

    A report on the wheat situation in the country was presented in the ECC by Ministry of National Food Security and Research.

    It was briefed during the meeting that adequate stocks of wheat are available in the country to cater for the needs of the population.

    It was also highlighted that the procured quantity of wheat during this year is 33% less than the procured quantities of wheat during the corresponding periods of last year.

    “The recent hike in prices of wheat and wheat flour is also a point of concern. The ECC decided to impose a ban on export of wheat/wheat flour and also asked that a meeting of National Price Monitoring Committee may be convened to suggest measures to control the price hike trend of ‘Roti’ and other wheat products in the local market with the cooperation of the provincial governments,” said a statement.

    The ECC also approved National Fertilizer Marketing Limited (NFML) to fix the Dealer Transfer Price (DTP) of 50 kg imported Urea Bag at Rs.1800 which is Rs.166 less than the prevailing average market price of Sona Urea i.e. Rs.1966 per 50 kg bag.

    The difference in Urea import price and approved dealer transfer price for NFML dealers has been estimated at Rs.937.92 million; NFML has also been directed to ensure enforcement of this price through coordination with provincial governments.

    The ECC allowed PIA Corporation Limited to make a re-appropriation in its already approved budget of Rs.24 billion for the upgradation of in-flight entertainment (IFE) system of its fleet for 8 Boeing-777 aircrafts. The project will cost Rs.700 million.

    It was also briefed during the meeting that the measures will improve the occupancy of the airline to 80 per cent from the current level of 70 per cent.

    The ECC endorsed the decision of the Governing Council of Pakistan Bureau of Statistics to change the base of price statistics from 2007-08 to 2015-16.

    The new base 2015-16 of price statistics has the following features:

    Inclusion of rural market.

    Introduction of population weight based on recent Population Censes 2017.

    Computation of indices based on Weighted Geometric Mean.

    Introduction of consumption quintiles instead of income quintiles.

    Introduction of consumer weighted approach to compute gas prices for combined income group.

    Introduction of GST, other taxes Fuel Price Adjustment to compute electricity tariffs using consumer weighted approach.

    It was also decided that for the purpose of comparative analysis, the old series of 2007-08 will continue to be published for another year along with the new series of 2015-16.

    On the summary moved by Ministry of Commerce and Textile, it was decided that the scrap slag, ash and residues containing metals, arsenic or their compounds (containing mainly Aluminum under PCT 2620.4000) may be moved from Appendix-A (Banned Items) to Appendix-B (Restricted Items) of the Import Policy Order, 2016.

    However, in order to forestall the chances of import of hazardous waste, the import may be subject to the following conditions:

    (i) Importable only by industrial consumer having recycling facilities, subject to NOC from Ministry of Climate Change and duly certified by provincial Environmental Protection Agency (Federal EPA, in case of Islamabad Capital Territory).

    (ii) Provision of a pre-shipment Inspection Certificate and consent of Focal Point of Basel Convention from the country of export to the effect that the waste/scrap is non-hazardous as defined in the Basel Convention.

    (iii) The imported consignments of the registered recycling plants shall be cleared from seaport only.

    The ECC also considered and approved the notification of Minimum Indicative Prices (MIP) of tobacco for year 2019-20.

    As per section 8 of the Pakistan Tobacco Board Ordinance 1968, the MIP for different grades of various types of tobacco are to be notified by the Federal Government.

    The following prices were suggested for notification: S.No. TYPES OF TOBACCO MINIMUM INDICATIVE PRICE PER KG FOR 2019-20 CROP 1. FCV Tobacco (Plain) Rs.190.63 2. FCV Tobacco (Sub-Mountainous) Rs.218.77 3. WP Tobacco Rs.82.85 4. Burley Tobacco Rs.150.54 5. DAC Tobacco Rs.94.76.

    The ECC also allowed that new PCT codes, as created in the Pakistan Customs Tariff through the Finance Act, 2019, may also be incorporated in SRO 693(I)/2006 dated 01.07.2006 so that levy of additional customs duty collected on those parts of Sport Utility Vehicles (SUVs) of engine capacities 1001cc to 1500cc and 1501cc to 1800cc which have been localized, may be appropriately accounted for under separate PCT codes.

    The report on National Poverty Graduation Programme of US $ 82.60 million was also submitted for compliance of the ECC by the Secretary, Economic Affairs Division.

    Among others, the meeting was attended by Minister for National Food Security & Research, Sahibzada Muhammad Mehboob Sultan; Minister for Planning, Development& Reform, Makhdoom Khusro Bukhtiar, Minister for Privatization, Muhammadmian Soomro, Minister for Railways, Sheikh Rashid Ahmed, Adviser to PM on Commerce, Textile, Industry & Production and Investment, Abdul Razak Dawood; Adviser on Institutional Reforms and Austerity, Dr. Ishrat Hussain; SAPM on Petroleum, Nadeem Babar; Governor State Bank of Pakistan, Reza Baqir and Chairman, Board of Investment, Zubair Gilani.

  • Huwaei to set up regional headquarters in Pakistan

    Huwaei to set up regional headquarters in Pakistan

    ISLAMABAD: Huwaei Group has announced to set up its regional headquarters in Pakistan and also announced to invest around $100 million this year in the country.

    Vice President of Huwaei Group, Mark Xueman, who along-with a delegation called on Federal Minister for Planning, Development & Reform Makhdum Khusro Bakhtyar in Islamabad on Wednesday.

    Vice President of Huawei said that Pakistan is a strategic market for Pakistan and said that the company will invest around $100 million in the country this year.

    He apprised that Huawei will also set up a regional headquarters in Islamabad at a cost of $55 million that will create job opportunities for young engineers in Pakistan.

    He further informed that Huawei will also invest $15 million more in its Technical support Centre in Pakistan and it will also hire more work force for the same taking the number of its staff from 600 to 800 this year.

    He stated that Huawei is eager to initiate more projects in Pakistan on grant funding from Chinese government.

    Federal Minister Makhdum Khusro Bakhtyar appreciated Huawei’s continued engagement in Pakistan and said that the leading technological company can support in developing and upgrading IT sector of Pakistan.

    Secretary Planning Zafar Hasan, PD CPEC Hassan Daud and senior officials of the ministry were also present.

    Makhdum Khusro noted that Huawei has 25 percent share in mobile industry of Pakistan and is also the top taxing paying Chinese company in the country.

    The Minister appreciated Huawei’s engagement with HEC for smart schools project with the latest information and communications technology equipment.

    The Minister underlined on exploring new business models for future projects and joint ventures in Pakistan.

    He said that Huawei can contribute to the Government’s e-governance initiative as well in centralizing data to improve efficiency and productivity. The Minister opined that Huawei can support IT start-up projects in Pakistan to benefit the youth in this important sector.

    The minister assured of the ministry’s all possible cooperation in future joint ventures.

  • SBP issues procedure for opening bank accounts of politically exposed persons

    SBP issues procedure for opening bank accounts of politically exposed persons

    KARACHI: State Bank of Pakistan (SBP) has issued procedure for opening bank accounts of Politically Exposed Persons (PEPs) and instructed banks to facilitate such persons without compromising due diligence process under anti-money laundering (AML) and counter financing of terrorism (CFT).

    The central bank on Wednesday said that in order to ensure fair and equitable treatment of bank’s customers referred to as Politically Exposed Persons (PEPs), it had devised the following Standard Operating Procedures (SOPs) to facilitate and streamline account opening process without compromising due diligence requirements prescribed under AML / CFT regime:

    (i) The bank upon receiving account opening request from PEP shall ensure that the basic requirements like Account Opening Form/Specimen Signature Card and Biometric Verification of the customer are completed on the same day;

    (ii) on the same day, the person shall be guided regarding specific requirements / formalities required for opening of an account. Further, the concerned branch shall report the details of the request made by PEP to the focal person nominated by the bank in line with instructions of BPRD Circular Letter No. 27 of 2015;

    (iii) within two working days of receipt of documents from PEP, the bank shall inform him / her in writing, the deficiencies, if any, in the documents or further clarifications required;

    (iv) once the deficiencies have been removed by PEP and all due diligence requirements have been satisfactorily completed, the account shall be opened by the bank within two working days;

    (v) in case the bank decides to refuse any request for account opening, within two working days, the reasons of refusal shall be conveyed in writing to the applicant in line with the instructions of BPRD Circular Letter No. 14 of 2017;

    (vi) in line with abovementioned Circular, the bank shall maintain separate files of all approved and rejected cases of PEPs. SBP inspection team during inspection of the bank may review the record especially the rejected cases;

    (vii) the bank shall report the following details of rejected cases of PEPs to the Director, Banking Conduct & Consumer Protection Department of SBP on monthly basis within 7 days of the close of every month;

    Details of Banking Services / Facilities Refused to PEPs (Politicians only) during the month:

    Name & Position of PEP (Politicians Only)Type of Banking Service / Facility Requested along with the DateReasons for Refusal along with the Date of Letter
       

    B. Details of Banking Services / Facilities Refused to PEPs (Other than Politicians) during the month:

    Name & Position of PEP (Other than Politicians)Type of Banking Service / Facility Requested along with the DateReasons for Refusal along with the Date of Letter
       

    (viii) Any PEP having grievance / disagreement with bank’s decision may contact the bank’s focal person nominated for the purpose. Banks have already been advised to prominently display the contact details of their and SBP’s focal person for PEP’s at their branches.

    (ix) The focal person shall guide PEP and ensure early resolution of the issue in light of applicable policies, rules & regulations.

    (x) If the grievance of PEP is not resolved within 15 days after registration of his / her complaint with bank’s focal person or if he / she is not satisfied with the conclusion, then he / she may directly contact the focal person appointed by SBP.

    (xi) The bank’s focal person shall maintain a proper MIS for all requests/grievances received from PEPs (allocating unique diary number) in order to monitor its progress at different stages.

    (xii) The focal person shall be responsible to facilitate PEPs and monitor the progress of their request.

    (xiii) The bank shall provide special assistance to PEPs and treat them with respect and due care during the account opening process.

    The SBP advised the banks to immediately disseminate the abovementioned instructions down the line to all of their branches and business locations to ensure compliance of the same in letter and spirit.

    Any non-compliance would be strictly dealt with penal provisions of Banking Companies Ordinance, 1962.