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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.

  • Meezan Bank leads Rs1 bn finance for solar project

    Meezan Bank leads Rs1 bn finance for solar project

    KARACHI: Meezan Bank, Pakistan’s leading Islamic bank and Burj Solar Energy Private Limited (BSEPL) are pleased to announce the financial close of Rs1 billion syndicated Islamic finance facility for BSEPL’s portfolio of renewable distributed power generation in Pakistan.

    The first tranche of PKR 580 million will be used to finance the construction of 7 MW solar power plant for Power Cement Limited on Karachi Hyderabad Motorway. Meezan Bank led the transaction as the Mandated Lead Arranger and Pakistan Kuwait Investment Company (Private) Limited participated as the Co-Arranger. The transaction structure is based on State Bank of Pakistan’s Islamic Financing Facility for Renewable Energy (IFRE) and a commercial facility.

    READ MORE: Meezan Bank, SNGPL sign deal for digital bill collection

    The solar power plant will be rented to Power Cement Limited under a twenty-year equipment rental agreement and the solar energy generated will be used by the company’s cement plant in Nooriabad. It will generate 220 GWh solar units for twenty years and in addition to reducing cost of electricity, will offset 112,000 tons of CO2 GHG emissions. The project is expected to start generation in July, 2022.Legal counsel for the financiers were Mohsin Tayebaly & Co. while Kabraji & Talibuddin Advocates and Legal Counsels acted as BSEPL’s legal counsel. Orient Energy Systems (Private) Limited is the turnkey EPC contractor for the project.

    READ MORE: Meezan Bank provides bill discounting facility for Huawei

    Ariful Islam, Deputy CEO, Meezan Bank, while commenting on theoccasion said, “Meezan Bank is committed to actively support and pursue green energy initiatives. Meezan has played a key role the financing of several renewable energy projects aggregating to 380 MW, as Lead or Co-lead manager and also participated in the debt syndications of two large hydro-electric projects being set-up by the Government of Pakistan – Neelum Jhelum and Dasu.

    “Burj Energy is an excellent initiative that will facilitate distributed affordable solar initiatives corporates, small and medium enterprises as well as the individual consumers.”

    He said the Meezan has also implemented a number of green initiatives by installing solar at 59 branches and 140Kw solar at its Head Office. Its new regional office building in Islamabad is also being designed to be Platinum Lead certified.

    READ MORE: Meezan Bank lends Rs1 billion under youth scheme

    Saad Zaman, Chairman of BSEPL and Burj Energy International Management Limited UAE, said, “I am very pleased that we have successfully reached the financial close of the 7 MW solar farm for Power Cement Limited. This is one more success for our company and a significant moment for development of hybrid renewable energy projects in Pakistan. This successful financial close reflects the ongoing interest and trust of leading financial institutions in the Pakistani renewables’ market and Burj Group.”

    READ MORE: Meezan Bank announces 26% growth in annual profit

    Kashif Habib Chief Executive Officer Power Cement Limited, said: ‘Our future is dependent on green, sustainable and renewable source of energy. By installing this 7 MW solar farm, we are taking the first step towards our hybrid solar& wind energy project. We shall keep playing our part in making our production process more environment-friendly and positively impactful for the eco-system we live in. It is high time that we look towards other viable energy options that are clean and green.

  • Rupee recovers sharply; dollar eases to Rs182.93

    Rupee recovers sharply; dollar eases to Rs182.93

    KARACHI: The Pakistan Rupee (PKR) made a massive gain of Rs5.25 to the dollar during past two trading sessions due to sharp increase in key policy rate by 2.5 per cent.

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  • Rupee rebounds sharply on massive interest rate hike

    Rupee rebounds sharply on massive interest rate hike

    KARACHI: The Pak Rupee (PKR) on Friday made a single day record recovery of Rs3.50 against dollar following the sharp increase in key policy rate announced a day earlier.

    The rupee ended Rs184.68 to the dollar from last day’s closing of Rs188.18, which is the highest closing of dollar, in the interbank foreign exchange market. The latest recovery in the local unit also broke the dollar gaining spree of 17 days.

    READ MORE: PKR witnesses record single day fall to dollar

    Currency analysts said that the rupee rebounded after the State Bank of Pakistan (SBP) announced a sharp raise of 250 basis points in key policy rate.

    The central bank increased the policy rate to 12.25 per cent from 9.75 per cent for next two months.

    READ MORE: Dollar tops PKR 186.13 at interbank closing

    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: Dollar continues record spree against PKR; hits 185.23

    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.

  • SBP raises mark-up rate for export financing scheme

    SBP raises mark-up rate for export financing scheme

    KARACHI: The State Bank of Pakistan (SBP) on Thursday increased mark-up rate for refinancing under Export Financing Scheme (EFS).

    The SBP increased the rate of mark-up for export financing scheme following sharp jump in key policy rate by 250 basis points to 12.25 per cent.

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

    “It has been decided to increase the markup rate for financing under Export Finance Scheme (EFS) by 2.5 per cent in line with the increase in policy rate announced in the MPC meeting today (April 07, 2022),” the SBP said.

    Accordingly, the markup for Export Finance Scheme (both Part I and Part II) will be 5.5 per cent per annum with effect from April 08, 2022 till further instructions.

    Banks’ spread for corporate borrowers and SME borrowers will remain unchanged i.e. 1 per cent & 2 per cent, respectively.

    READ MORE: SBP allows commission payment to foreign brokers

    This revision in rates will not be applicable on financing under Rupee-based discounting facility of EFS, the SBP added.

    Earlier in the day, the Monetary Policy Committee (MPC) of the SBP in its emergent meeting decided to raise the key policy rate to 12.25 per cent from 9.75 per cent.

    The MPC noted that the latest developments necessitated a strong and proactive policy response. “Accordingly, the MPC decided at its emergency meeting today, to raise the policy rate by 250 basis points to 12.25 percent.”

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

    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.

    READ MORE: SBP receives 20 applications for digital bank licenses

  • SBP issues list to impose 100% cash margin on import

    SBP issues list to impose 100% cash margin on import

    KARACHI: The State Bank of Pakistan (SBP) on Thursday issued a list of 177 items for imposing 100 per cash margin on import with immediate effect.

    In this regard, it has been decided that banks, with immediate effect, shall obtain 100 percent cash margin on the import of items as listed in the enclosed Annexure-A. The cash margins on these specific items will remain in place till December 31, 2022, the central bank said in a circular.

    READ MORE: SBP imposes 100% cash margin on imported items

    The cash margins deposited by importers on all items shall be non-remunerative.

    The SBP further said that to ensure effective monitoring, banks are required to submit details of cash margins, applicable on all items, collected from importers on monthly basis, as per format at Annexure-B.

    Data for ongoing month should be reported to Statistics & Data Ware House Department latest by the 10th of the following month.

    Further, monthly data for the period September 2020 to March 2022 is required to be submitted on the same format latest by June 30, 2022.

  • SBP allows commission payment to foreign brokers

    SBP allows commission payment to foreign brokers

    KARACHI: The State Bank of Pakistan (SBP) on Thursday allowed payment of commission to international broker dealers (IBD) in order facilitate foreign portfolio investment.

    In this regard the central bank issued a circular. The SBP said that it had been decided to allow general permission to banks or Authorized Dealers (ADs) for remitting the share of commission to such IBD by Local Broker Dealers (LBD).

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

    To allow the general permission the SBP inserted a new para to Chapter 14 of Foreign Exchange Manual.

    According to new para, Authorized Dealers (ADs) may allow remittance of due share of commission by Local Broker Dealer (LBD) to International Broker Dealers (IBD) against all those settled trades of securities, which have been initiated by IBD for direct execution through LBD, on behalf of their non-resident investors (SCRA holders), subject to compliance of following terms and conditions:

    The LBD shall be a Securities Broker in terms of Securities Brokers (Licensing and Operations) Regulations of Securities and Exchange Commission of Pakistan (SECP).

    READ MORE: SBP receives 20 applications for digital bank licenses

    IBD shall be a foreign entity engaged in the brokerage business that has entered in to an agreement with LBD for sharing of brokerage commission arising from buying/ selling of securities in Pakistan on behalf of non-resident clients of IBD.

    The LBD shall submit an application for remittance duly signed by CFO along with an undertaking that amount requested has not been remitted abroad from Pakistan earlier and duly filled Form-M.

    The LBD shall provide a copy of valid underlying contract. The contract shall include name of IBD, applicable rate of commission, periodicity of payment etc.

    READ MORE: Crypto platform appoints Pakistan country manager

    The LBD shall provide the detail of deals, against which commission is being remitted. The detail shall include name of the foreign investor & UIN, IBD Name & No., Custodian/Settlement Bank Name & No., trade (sale/purchase), name and quantity of security, price, commission earned, applicable Taxes and Net share of commission due for remittance, etc. The details should be verified by CFO of the LBD and counter verified by National Clearing Company Pakistan Limited (NCCPL) and Settlement Bank/AD with respective authorized Signatures and Stamp.

    The amount of commission (net of applicable taxes) to be remitted, shall not exceed the amount determined as per rate prescribed by Pakistan Stock Exchange (PSX) or the rate agreed in the agreement, whichever is lower.

    READ MORE: SBP issues bank timing during Ramadan 2022

  • SBP increases policy rate sharply by 250bps to 12.25%

    SBP increases policy rate sharply by 250bps to 12.25%

    KARACHI: The State Bank of Pakistan (SBP) in an unscheduled meeting held on Thursday announced a sharp increase in key policy rate by 250 basis points to 12.25 per cent from 9.75 per cent for next two months.

    The Monetary Policy Committee (MPC) is scheduled to be held on April 19, 2022. However, due to latest development in yield of treasure bills resulted in emergent meeting of the MPC.

    READ MORE: Policy rate may rise as T-Bill yields increase sharply

    The SBP in a statement said that the MPC noted that the above developments necessitated a strong and proactive policy response. Accordingly, the MPC decided at its emergency meeting today, to raise the policy rate by 250 basis points to 12.25 percent.

    At its last meeting on 8th March 2022, the Monetary Policy Committee (MPC) noted in its statement the significant uncertainty around the outlook for international commodity prices and global financial conditions, which had been exacerbated by the Russia-Ukraine conflict. Given the unfolding situation, the MPC had highlighted that it “was prepared to meet earlier than the next scheduled MPC meeting in late April, if necessary, to take any needed timely and calibrated action to safeguard external and price stability.”

    READ MORE: State Bank enhances frequency of MP reviews to eight

    Since the last MPC meeting, the outlook for inflation has deteriorated and risks to external stability have risen. Externally, futures markets suggest that global commodity prices, including oil, are likely to remain elevated for longer and the Federal Reserve is likely to increase interest rates more quickly than previously anticipated, likely leading to a sharper tightening of global financial conditions. On the domestic front, the inflation out-turn in March surprised on the upside, with core inflation in both urban and rural areas also rising significantly.

    While timely demand-moderating measures and strong exports and remittances saw the February current account deficit shrink to $0.5 billion, its lowest level this fiscal year, heightened domestic political uncertainty contributed to a 5 percent depreciation in the rupee and a sharp rise in domestic secondary market yields as well as Pakistan’s Eurobond yields and CDS spreads since the last MPC meeting.

    READ MORE: Key policy rate goes up to 9.75%; SBP raises 250bps in less than month

    In addition, there has been a decline in the SBP’s foreign exchange reserves largely due to debt repayments and government payments pertaining to settlement of an arbitration award related to a mining project. Some of this decline in reserves is expected to be reversed as official creditors renew their loans.

    As a result of these developments, average inflation forecasts have been revised upwards to slightly above 11 percent in FY22 before moderating in FY23. The current account deficit is still expected to be around 4 percent of GDP in FY22. While the non-oil current account balance has continued to improve, the overall current account remains dependent on global commodity prices.

    READ MORE: SBP decides to keep policy rate unchanged at 9.75%

    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 today.

    Importantly, the MPC highlighted that Pakistan’s external financing needs in FY22 are fully met from identified sources. Looking ahead, the MPC noted that today’s decisive actions, together with a reduction in domestic political uncertainty and prudent fiscal policies, should help ensure that Pakistan’s robust economic recovery from Covid-19 remains sustainable.

  • PKR witnesses record single day fall to dollar

    PKR witnesses record single day fall to dollar

    KARACHI: The Pakistan Rupee (PKR) on Thursday witnessed a historic single day fall of Rs2.05 as dollar reached to another record high of Rs188.18 at interbank foreign exchange market.

    Currency experts said that the foreign exchange market was remained volatile during the day owing to scheduled repayment of government external debt and political uncertainty after dissolution of national assembly.

    READ MORE: Dollar tops PKR 186.13 at interbank closing

    The rupee ended Rs188.18 to the dollar as compared with previous day’s closing of Rs186.13 in the interbank foreign exchange market.

    The rupee fell non-stop against the dollar for the last 17 trading sessions. The local currency recorded Rs178.51 at interbank closing on March 11, 2022 and since then the dollar’s made gain Rs9.67.

    The local unit recorded a decline of Rs30.64 or 19.45 per cent against the dollar since start of the current fiscal year. The rupee was at Rs157.54 to the dollar on June 30, 2021 and fell to Rs188.18 to the dollar on April 07, 2022.

    READ MORE: Dollar hits PKR 184.35 in intraday trading

    Currency experts attributed the new wave of rupee devaluation to political uncertainty at home and an international conspiracy to regime change in Pakistan.

    Many believe that Pakistan was not able to receive funds from international agencies, which resulted in massive fall in foreign exchange reserves in past few weeks.

    Pakistan’s foreign exchange reserves have depleted by $2.88 billion in a week to $18.554 billion by week ended March 25, 2022, State Bank of Pakistan (SBP) said on Thursday. The foreign exchange reserves of the country were $21.44 billion by week ended March 18, 2022.

    READ MORE: Dollar makes new top at Rs184.09

    This is seventh consecutive week when the country’s foreign exchange reserves have witnessed consistent decline. The liquid foreign exchange reserves of Pakistan have declined by $5.167 billion since February 04, 2022, when the reserves were at $23.721 billion.

    The ballooning current account deficit escalated the dollar value. Pakistan’s current account deficit ballooned to $12 billion during first eight months (July – February) 2021/2022 against a surplus of $994 million in the corresponding months of the last fiscal year.

    Although the current account deficit narrowed to $545 million in February 2022 as compared with the deficit of $2.53 billion in January 2022, scheduled external repayments are still a threat to balance of payment.

    READ MORE: Rupee continues falling spree; dollar at Rs183.48

    The trade deficit widened by 70 per cent to $35.39 billion during first nine months (July – March) 2021/2022 as compared with the deficit of $20.8 billion in the corresponding months of the last fiscal year.

    The exports of the country recorded an increase of 24.67 per cent to $23.3 billion during first nine months of the current fiscal year as compared with $18.7 billion in the same months of the last fiscal year.

    Meanwhile, import bill registered an increase of 48.63 per cent to $58.69 billion during July – March 2021/2022 as compared with $39.49 billion in the corresponding period of the last fiscal year.

  • Policy rate may rise as T-Bill yields increase sharply

    Policy rate may rise as T-Bill yields increase sharply

    KARACHI: The cut-off yield of treasury bills (T-Bills) increased sharply in an auction held on Wednesday indicating an expected rise in policy rate in upcoming monetary policy announcement scheduled for April 19, 2022.

    “In today’s [April 06, 2022] treasury bills auction, cut-off yields increased by 60 – 80 basis points,” according to analysts at Topline Securities.

    READ MORE: SBP receives 20 applications for digital bank licenses

    The government raised Rs645 billion through auction of treasury bills against the target of Rs600 billion and maturity of Rs674 billion, according to results announced by the State Bank of Pakistan (SBP).

    The key policy rate has been kept unchanged at 9.75 per cent in the last Monetary Policy Statement (MPS) on March 08, 2022. However, the cut-off yields of government securities have shown much higher rate against the policy rate.

    READ MORE: State Bank enhances frequency of MP reviews to eight

    The cut-off yields of 3-, 6- and 12-month papers increased by 80 basis points, 75 basis points and 60 basis points, respectively. The yields in three-month treasury bill increased to 12.80 per cent from 11.9999 per cent. Similarly, yields in six-month and 12-month papers have increased to 13.25 per cent from 12.50 per cent and 13.2999 per cent from 12.70 per cent, respectively.

    READ MORE: Key policy rate goes up to 9.75%; SBP raises 250bps in less than month

    The latest auction of treasury bills witnessed aggressive participation from the banks. The SBP received bids worth Rs911 billion against the target of Rs600 billion.

    However, the central bank accepted bids worth Rs645 billion at maturity of Rs674 billion.

    READ MORE: SBP decides to keep policy rate unchanged at 9.75%

  • Dollar tops PKR 186.13 at interbank closing

    Dollar tops PKR 186.13 at interbank closing

    KARACHI: The US dollar ended at Pakistan Rupee (PKR) 186.13, a new historic high of the foreign currency, at closing of interbank foreign exchange market on Wednesday.

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