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Category: Money & Banking

Money and banking drive economic activity by facilitating transactions, savings, and investments. Banks manage financial resources, offer credit, and regulate money supply, ensuring stability and growth in Pakistan’s financial sector.

  • Dollar retreats for 6th straight day; falls to Rs181.58

    Dollar retreats for 6th straight day; falls to Rs181.58

    KARACHI: The US dollar retreated against Pakistan Rupee (PKR) for the sixth straight day on Friday since the central bank aggressively increased the key policy rate on April 07, 2022.

    The exchange rate ended at Rs181.58 to the dollar on Friday as compared with previous day’s closing of Rs181.69 in the interbank foreign exchange market.

    READ MORE: Rupee up 13 paisas to continue recovery against dollar

    The local currency has made sharp recovery against the dollar since the significant raise was announced in the policy rate on April 07, 2022.

    The State Bank of Pakistan (SBP) announced an unprecedented increase in policy rate by 250 basis points to 12.25 per cent. The massive rise in interest rate surprised the market and trade and industry are in state of shock. The massive hike in policy rate also resulted in a sudden decline in demand for dollar.

    This is the reason behind five consecutive gain in rupee value during past five trading sessions.

    READ MORE: Rupee continues recovery to dollar for 4th straight day

    The rupee hit all-time low of Rs188.18 to the dollar on April 07, 2022. Since then the rupee recovered Rs6.60 against the dollar during past six straight trading sessions.

    The SBP noted that the recent developments necessitated a strong and proactive policy response.

    Accordingly, the Monetary Policy Committee (MPC) decided at its emergency meeting today, to raise the policy rate by 250 basis points to 12.25 percent.

    READ MORE: Rupee makes recovery to dollar for third straight day

    This increases forward-looking real interest rates (defined as the policy rate less expected inflation) to mildly positive territory. The MPC was of the view that this action would help to safeguard external and price stability.

    The MPC also noted that SBP is in the process of taking further actions to reduce pressures on inflation and the current account, namely an increase in the interest rate on the export refinance scheme (EFS) and widening the set of import items subject to cash margin requirements. These items are mostly finished goods including luxury items and exclude raw materials.

    The announcement of these measures is expected soon and will complement the action taken by the MPC on interest rates.

    READ MORE: Rupee recovers sharply; dollar eases to Rs182.93

  • Banks approve Rs180 bn for low-cost housing loans

    Banks approve Rs180 bn for low-cost housing loans

    KARACHI: Banks have approved Rs180 billion as loan for low cost housing, the State Bank of Pakistan (SBP) said on Thursday.

    The SBP said building upon current momentum, banks have shown strong progress in approving and disbursing the financing under Mera Pakistan Mera Ghar Scheme against the manifold increase in applications by borrowers to avail housing finance.

    READ MORE: Banks approve housing loans worth Rs7.4 billion in event

    Up to April 11, 2022, banks received applications for housing finance amounting to Rs409 billion, which was merely Rs57 billion a year ago, reflecting an increase of more than 7 times. Out of these, banks have approved applications amounting to Rs180 billion and disbursed Rs66 billion against the approved applications.

    This shows an increase in approvals of applications of more than 11 times as, a year ago, in April 2021, the banks had approved only Rs16 billion.

    READ MORE: Financing for Mera Pakistan Mera Ghar gains momentum

    Similar trends can also be observed in the overall financing to the housing and construction sector by banks. Banks almost doubled their housing and construction finance portfolio to Rs404 billion as of March 31, 2022 from Rs204 billion a year earlier. In increasing their housing and construction finance, banks have also achieved, almost 100 per cent, the first quarter target of Rs405 billion for 2022.

    To improve provision of financing for the housing and construction sector to increase adequate housing in the country and boost construction sector activities, State Bank of Pakistan (SBP) with the support of Government of Pakistan has taken several measures since July 2020. In October 2020, the Government of Pakistan augmented these efforts by introducing the Government Markup Subsidy Scheme, now commonly known as Mera Pakistan Mera Ghar (MPMG) Scheme. Available in both conventional and Islamic mode, this scheme enables banks to provide financing for the construction and purchase of houses at very low financing rates for low to middle income segments of the population.

    READ MORE: State Bank amends regulations for housing loans

    Key initiatives taken under MPMG scheme included allowing acceptance of third party guarantee during the construction period, waiver of Debt Burden Ratio (DBR) in case of informal income and the introduction of standard facility offer letter by the banks. SBP also advised banks to develop and deploy income estimation models for borrowers with informal sources of income. In addition to gauge readiness, knowledge and appropriateness of behavior of banking staff towards customers, regular mystery shopping of banking branches were also conducted by State Bank all over the country.

    The current progress under MPMG is also attributed to banks’ improved preparedness for handling housing finance that includes alignment of banks’ strategic focus, continued improvements in their systems and procedures, training and capacity building of staff, extensive marketing and leverage of technology to reach out to customers. These improvements have helped banks in better handling of financing requests of potential customers. The huge influx of applications and subsequent approvals of financing by banks under the Scheme indicates that current momentum of disbursements under MPMG will continue in the coming months as well.

    housing finance
    STATE BANK OF PAKISTAN

    SBP also advised housing and construction finance targets to banks on July 15, 2020. Banks were required to increase their housing and construction finance portfolio to 5 percent of their domestic private sector advances by the end of 2021. As a result, banks’ financing to housing and construction sector increased to Rs367 billion as of December 31, 2021 from Rs148 billion as of June 30, 2020. For 2022, banks have been advised to increase their housing and construction portfolio to 7 percent of their domestic private sector advances i.e. up to Rs560 billion.

  • Rupee up 13 paisas to continue recovery against dollar

    Rupee up 13 paisas to continue recovery against dollar

    KARACHI: The Pakistan Rupee (PKR) strengthened by 13 paisas against the dollar on Thursday to continued its recovery against the greenback for fifth straight day.

    The rupee ended Rs181.69 paisas to the dollar from previous day’s closing of Rs181.82 in the interbank foreign exchange market.

    READ MORE: Rupee continues recovery to dollar for 4th straight day

    The local currency has made sharp recovery against the dollar since the significant raise was announced in the policy rate on April 07, 2022.

    The State Bank of Pakistan (SBP) announced an unprecedented increase in policy rate by 250 basis points to 12.25 per cent. The massive rise in interest rate surprised the market and trade and industry are in state of shock. The massive hike in policy rate also resulted in a sudden decline in demand for dollar.

    READ MORE: Rupee makes recovery to dollar for third straight day

    This is the reason behind five consecutive gain in rupee value during past five trading sessions.

    The rupee hit all-time low of Rs188.18 to the dollar on April 07, 2022. Since then the rupee recovered Rs6.49 against the dollar during past five straight trading sessions.

    The SBP noted that the recent developments necessitated a strong and proactive policy response.

    Accordingly, the Monetary Policy Committee (MPC) decided at its emergency meeting today, to raise the policy rate by 250 basis points to 12.25 percent.

    READ MORE: Rupee recovers sharply; dollar eases to Rs182.93

    This increases forward-looking real interest rates (defined as the policy rate less expected inflation) to mildly positive territory. The MPC was of the view that this action would help to safeguard external and price stability.

    The MPC also noted that SBP is in the process of taking further actions to reduce pressures on inflation and the current account, namely an increase in the interest rate on the export refinance scheme (EFS) and widening the set of import items subject to cash margin requirements. These items are mostly finished goods including luxury items and exclude raw materials.

    The announcement of these measures is expected soon and will complement the action taken by the MPC on interest rates.

    READ MORE: Rupee rebounds sharply on massive interest rate hike

  • Faysal Bank, TPL to offer women Takaful coverage

    Faysal Bank, TPL to offer women Takaful coverage

    KARACHI: Faysal Bank Limited & TPL Life Insurance (Window Takaful Operations) have signed an agreement to take a step towards further strengthening their existing partnership and introduced a Women specific Takaful coverage proposition for Faysal Islami Amal Women’s Account holders which is best in class across the industry.

    READ MORE: SBP issues list of banks operating in Pakistan

    Under this plan, women will get coverage for major critical illnesses, and the benefit of income continuation, along with unlimited online health consultation access via TPL Life’s mobile app and attractive discounts on lifestyle items. The agreement was signed by Yousaf Hussain, President and CEO Faysal Bank and Ali Jameel, Group CEO TPL Corp.

    READ MORE: Habib Bank tops in customers complaints list

    Yousaf Hussain – President & CEO, Faysal Bank said: “Faysal Bank is a progressive Islamic Bank which focuses on empowerment and financial inclusion of women. The Amal account is another step towards offering best in class services and financial solutions to our female customers. We look forward to further enhancing our collaboration with TPL Life to develop customer centric value propositions.”

    Ali Jameel – Group CEO, TPL Corp stated: “We are pleased to further expand and strengthen our partnership with Faysal Bank, who shares the same vision as ours to empower Pakistani women and recognize their importance and invaluable contribution to the society.

    “In line with this vision, TPL has always been at the forefront to offer women centric value propositions through its various platforms. I wish both the teams the best!”

    During the signing ceremony, Yousaf Hussain and Muhammed Ali Jameel were accompanied by their companies’ senior officials.

  • SBP enhances transaction limits for Asaan accounts

    SBP enhances transaction limits for Asaan accounts

    KARACHI: The State Bank of Pakistan (SBP) on Wednesday enhanced transaction limits for Assan accounts to further expand outreach of low risk accounts.

    As per the new limits for Assan Account, total debit per month shall be Rs 1 million and total credit balance limit has also been increased to Rs1 million.

    Previously this limit was Rs500,000

    The SBP while referring to BPRD Circular No. 11 of 2015 and BPRD Circular Letter No. 32 of 2017 regarding the captioned subject, wherein accounts namely Asaan Account and Asaan Remittance Account were introduced to extend benefits of financial services to unbanked/ under-banked segments of population.

    READ MORE: SBP issues list to impose 100% cash margin on import

    The transaction limits for Asaan Remittance Account are:

    •             Maximum Credit Balance Limit:          Rs. 3,000,000

    •             Cash withdrawal Limit:                      Rs. 500,000 per day

    •             Fund Transfer Limit:                          Rs. 500,000 per day to any other account

    •             Local Credit allowed:                         Rs. 1,000,000 per month

    •             No commercial remittance allowed

    Following guidelines issued through Circular No. 32 of 2017

    READ MORE: SBP raises mark-up rate for export financing scheme

    Asaan Remittance Account

    State Bank of Pakistan (SBP) has been actively pursuing the goal of financial inclusion in the country by expanding the outreach of banking services to all segments of society especially to the unbanked or under banked population. The strategy helps to increase documentation of economy, create saving habits among the masses for returns/profits on their savings and generates opportunities to access credit and insurance facilities through the formal financial sector.

    With the view to promote use of bank accounts by home remittance recipients (beneficiaries), SBP has decided that banks may open ‘Asaan Remittance Account’ of prospective beneficiaries of home remittances on the pattern of Asaan Account introduced by SBP vide BPRD Circular No. 11 dated June 22, 2015. This will facilitate opening of bank accounts by low risk customers to receive home remittances through proper accounts instead of resorting to traditional cash over the counter transactions.

    In this regard, due diligence and other controls specified for Asaan Account shall also be applicable for Asaan Remittance Account. However, following additional features shall apply while opening and maintaining these accounts:

    READ MORE: SBP allows commission payment to foreign brokers

    Account Opening Form: In addition to the requirements specified under Asaan Account Guidelines, account opening form should have IBAN of the Asaan Remittance Account and names of prospective remitter(s) stating relationship with the account holder as well.

    Limited mandate: This account shall be fed through Home Remittances from abroad only and no local credit shall be allowed in the account. Further, no commercial remittances shall be deposited in the account.

    Transaction Limits/Turnover: There will be (i) maximum credit balance limit of Rs. 2,000,000 (ii) cash withdrawal limit of Rs. 50,000 per day and (iii) fund transfer limit from Asaan Remittance Account to any other account of Rs. 50,000 per day.

    Banks/MFBs should launch awareness campaign to sensitize general public about the benefits of this product i.e. security, issuance of Proceeds Realization Certificate (PRC), timely credit and complaint resolution. Banks/MFBs may also coordinate with overseas employment promoters to reach potential remittance niche for opening of these accounts for self and family members.

    READ MORE: SBP increases policy rate sharply by 250bps to 12.25%

    The SBP issued following guidelines on June 22 2015:

    State Bank of Pakistan (SBP) has been actively promoting financial inclusion in the country by expanding outreach of banking services to all segments of the society through conventional and innovative channels. However, despite SBP’s efforts, a large portion of population still remains excluded from financial services. In order to enhance the financial inclusion in Pakistan, SBP has formulated a National Financial Inclusion Strategy (NFIS) wherein a target of 50% growth in bank accounts by adult population by the year 2020 has been set out.

    2.         To facilitate the banking industry to achieve the aforesaid objective, SBP has decided to simplify account opening requirements/procedures and introduce a new account category namely “Asaan Account” for low risk customers. Accordingly, the comprehensive Guidelines with simplified account opening procedures have been developed. The simplified approach for opening of these accounts by banks is designed to extend benefits of financial services to common people especially unbanked/under banked segments of population.

    3. The banks may convert existing Basic Banking Accounts (BBAs) to Asaan Accounts provided prior consent of customers is obtained and Terms and Conditions of Asaan Account are conveyed to them. However, banks shall not recover any charges for conversion of BBAs to these accounts. Further, in case the Asaan Account holder requires financial services for higher than the specified transaction limits, the Asaan Account may be converted to regular account subject to completion of Customer Due Diligence as per ‘AML/CFT Regulations’ and ‘Guidelines on Risk Based Approach’ for Banks/DFIs and other applicable requirements.

    4.         To achieve the targets set out in NFIS, banks shall develop quarterly & yearly plans to open Asaan Accounts and submit quarterly reports to SBP as per the attached Annexure ‘A’ within seven days of close of each quarter. The first quarterly report as of September 30, 2015 should be submitted to this Department by October 07, 2015. The banks shall also launch public awareness/media campaigns to sensitize general public about the benefits of banking services and features of Asaan Account as per the Guidelines.

    5. The Guidelines for the Asaan Accounts are attached for compliance in letter and spirit which shall take immediate effect. Banks shall upgrade their systems, controls and procedures in accordance with these Guidelines to incorporate the requirements of Asaan Account latest by July 31, 2015.

  • SBP issues bank timings as per six-day working week

    SBP issues bank timings as per six-day working week

    KARACHI: The State Bank of Pakistan (SBP) on Wednesday issued new banking timings after federal government’s announcement of six days working in a week.

    The SBP in a statement said that as per decision of the Federal Government the State Bank of Pakistan (SBP) will observe six days working week with the following office hours during the month of Ramadan-ul-Mubarak, which shall also be followed by all banks, Development Finance Institutions and Microfinance Banks:

    READ MORE: SBP issues bank timing during Ramadan 2022

    Monday to Thursday and Saturday from 8:00 am to 3:00 pm with prayer break from 1:00 pm to 1:30 pm whereas on Fridays office hours will be from 8.00 am to 1:00 pm without break.

    Banks / Microfinance banks are further advised to observe the following minimum business (banking) hours for public dealing:

    Monday to Thursday and Saturday from 8:00 am to 1:00 pm without prayer break whereas on Fridays office hours will be from 8.00 am to 12:00 pm without break.

  • Rupee continues recovery to dollar for 4th straight day

    Rupee continues recovery to dollar for 4th straight day

    KARACHI: The Pakistan Rupee (PKR) continued to make recovery for the fourth straight day against the dollar on Wednesday since sharp enhancement in policy rate to 12.25 per cent.

    The rupee ended Rs181.82 to the dollar from previous day’s closing of Rs182.02 in the interbank foreign exchange market.

    READ MORE: Rupee makes recovery to dollar for third straight day

    The rupee fell to all-time low at Rs188.18 to the dollar on April 07, 2022. On the same day the State Bank of Pakistan (SBP) announced a massive raise in interest rate by 250 basis points to 12.25 per cent from 9.75 per cent.

    Prior to the policy rate increase the dollar was unabated for over a two week and rupee fell continuously.

    READ MORE: Rupee recovers sharply; dollar eases to Rs182.93

    The rupee recovered around Rs6.36 against the dollar since the increase in the policy rate. The local currency recorded all-time low of Rs188.18 to the dollar on April 07, 2022.

    The SBP noted that the recent developments necessitated a strong and proactive policy response.

    Accordingly, the Monetary Policy Committee (MPC) decided at its emergency meeting today, to raise the policy rate by 250 basis points to 12.25 percent.

    READ MORE: Rupee rebounds sharply on massive interest rate hike

    This increases forward-looking real interest rates (defined as the policy rate less expected inflation) to mildly positive territory. The MPC was of the view that this action would help to safeguard external and price stability.

    The MPC also noted that SBP is in the process of taking further actions to reduce pressures on inflation and the current account, namely an increase in the interest rate on the export refinance scheme (EFS) and widening the set of import items subject to cash margin requirements. These items are mostly finished goods including luxury items and exclude raw materials.

    The announcement of these measures is expected soon and will complement the action taken by the MPC on interest rates.

    READ MORE: PKR witnesses record single day fall to dollar

  • Banking Mohtasib provides relief worth Rs225 million

    Banking Mohtasib provides relief worth Rs225 million

    KARACHI: The Banking Mohtasib Pakistan has provided monetary relief amounting to Rs 225 million to the banking customers by disposing of 6,563 complaints against commercial banks during the first quarter (January to March, 2022) of the current calendar year.

    READ MORE: President Alvi directs bank to refund unfair recovery

    According to a statement issued on Tuesday the Banking Mohtasib has received 8,845 new complaints, including 4,614 from Prime Minister’s Portal from 1st January to 31st March, 2022.

    With a view to protecting the people from fraudulent activities which are rampant now a days, the Banking Mohtasib Pakistan, Muhammad Kamran Shehzad has emphasized upon the banking customers not to disclose their personal and financial credentials to any third person.

    On receipt of suspicious calls they should immediately approach the nearest branch of their bank or contact the helpline of the bank, he added.

    READ MORE: President Alvi rejects FBR plea in maladministration cases

  • FSC reserves judgment in Riba free banking case

    FSC reserves judgment in Riba free banking case

    ISLAMABAD: The full bench of Federal Shariat Court has reserved judgment in case of Riba free Islamic banking system in Pakistan, according to a statement issued on Tuesday.

    The full bench of the Court comprising of Justice Muhammad Noor Meskanzai Chief Justice, Justice Dr. Syed Muhammad Anwar and Justice Khadim Hussain M. Shaikh, in exercise of power under Article 203-D of the Constitution of Islamic Republic of Pakistan continued hearing of the Riba case and reserved for judgment.

    READ MORE: Riba case adjourned to April 04

    It is pertinent to mention that Riba case was remanded by Shariath Appellate Bench Supreme Court of Pakistan in 2002.

    The existing bench of the Federal Shariat Court headed by the chief Justice Justice Muhammad Noor Meskanzai took keen and unprecedented interest in this matter.

    During the chairmanship of his lordship of the bench thirty four hearings are conducted.

    READ MORE: Court hearing on Riba-free banking in Pakistan

    Petitioners, their counsels, jurisconsults, Amicus Curiae, Economists, Experts, scholars, chartered accountants, Attorney General, and Advocate Generals advanced their arguments and the Court heard them with patience.

    They also gave suggestions for conversion of the existing banking system into Riba free Islamic Banking system.

    The State Bank of Pakistan (SBP) defines Riba as:

    READ MORE: PMRC, HBL Islamic Banking raise Rs1bn Sukuk

    The word “Riba” means excess, increase or addition, which correctly interpreted according to Shariah terminology, implies any excess compensation without due consideration (consideration does not include time value of money). This definition of Riba is derived from the Quran and is unanimously accepted by all Islamic scholars.

    The meaning of Riba has been clarified in the following verses of Quran (Surah Al Baqarah 2:278-9)

    “O those who believe; fear Allah and give up what still remains of the Riba if you are believers. But if you do not do so, then be warned of war from Allah and His Messenger. If you repent even now, you have the right of the return of your principal; neither will you do wrong nor will you be wronged.”

    READ MORE: SBP issues five-year strategic plan for growth of Islamic banking

    “The origination of term interest dates back to 17th century with the emergence of banking system at global level. Interest means giving and/or taking of any excess amount in exchange of a loan or on debt. Hence, it carries the same meaning/value as that of Riba as defined in the previous question. Further, it is narrated that “the loan that draws interest is Riba”.

    There is consensus among the Muslim scholars of all the fiqhs that interest is Riba in all its forms and manifestations.

  • Rupee makes recovery to dollar for third straight day

    Rupee makes recovery to dollar for third straight day

    KARACHI: The Pakistan Rupee (PKR) made recovery against the dollar for third consecutive day on Tuesday since the massive increase in key policy rate on April 07, 2022.

    The rupee on Tuesday gained 91 paisas to close at Rs182.02 to the dollar from previous day’s closing of Rs182.93 in the interbank foreign exchange market.

    READ MORE: Rupee recovers sharply; dollar eases to Rs182.93

    The State Bank of Pakistan (SBP) on April 07, 2022 issued monetary policy statement to increase the policy rate by 250 basis points to 12.25 per cent from 9.75 per cent. The policy rate was enhanced in an emergent meeting instead of a scheduled meeting.

    The rupee recovered around Rs6.16 against the dollar since the increase in the policy rate. The local currency recorded all-time low of Rs188.18 to the dollar on April 07, 2022.

    READ MORE: Rupee rebounds sharply on massive interest rate hike

    The SBP noted that the recent developments necessitated a strong and proactive policy response.

    Accordingly, the Monetary Policy Committee (MPC) decided at its emergency meeting today, to raise the policy rate by 250 basis points to 12.25 percent.

    This increases forward-looking real interest rates (defined as the policy rate less expected inflation) to mildly positive territory. The MPC was of the view that this action would help to safeguard external and price stability.

    READ MORE: PKR witnesses record single day fall to dollar

    The MPC also noted that SBP is in the process of taking further actions to reduce pressures on inflation and the current account, namely an increase in the interest rate on the export refinance scheme (EFS) and widening the set of import items subject to cash margin requirements. These items are mostly finished goods including luxury items and exclude raw materials.

    The announcement of these measures is expected soon and will complement the action taken by the MPC on interest rates.

    READ MORE: Dollar tops PKR 186.13 at interbank closing