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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.

  • Banks may accept container detention, demurrage charges

    Banks may accept container detention, demurrage charges

    KARACHI: The State Bank of Pakistan (SBP) has issued draft amendment to Foreign Exchange Manual under which banks may be allowed to accept container detention charges and demurrage charges in order to facilitate trade in payments.

    The SBP issued the draft amendments and invite stakeholders’ comments before finalizing the foreign exchange manual.

    According to the draft amendments made to 14 chapter:

    4A –Remittances of Container Detention Charges by Foreign Shipping Companies

    i. Authorized Dealers may accept container detention charges (CDC) directly from the customers of shipping companies/ agents (having valid shipping/agency license as stated under Para 1 (iv) ibid and valid agency agreement) in a separate PKR account opened for this purpose only. No other deposits whatsoever shall be made in such accounts by ADs.

    ii. Authorized Dealers may allow monthly remittance of CDC (net of disbursements, refunds, and income tax paid/payable) of up to USD 50,000/- on Form-M to foreign principals of those foreign shipping companies/agents which are collected in the above mentioned accounts on submission of application along with the following documents: –

    a. Applicable Tariff Rate Sheet;

    b. Summary of Detention Charges along with copy of invoices

    c. F.P Shipment & Breakdown of Disbursement

    d. Copiesy of Tax payment Rreceipt, agency agreement, valid customs shipping agent license.

    e. Auditors’ certificate from QCR rated audit firm confirming payment of income tax, genuineness of transactions and no duplication of payments (only for remittance beyond foreign exchange equivalent to PKR 1 Million or equivalent/-)

    f. Any CDC invoice involving detention charges above 100 days will require valid justification along with documentary evidence.

    g. An undertaking to repatriate back to Pakistan, the amount found by the State Bank, on post-facto checking, to have been remitted in excess of the entitlement.

    h. In case of Transit Trade, PRC evidencing receipt of equivalent PKR from the final destination country.

    Applications for monthly remittances beyond USD 50,000/- shall be forwarded to FEOD as per prescribed format along with relevant documents for approval.

    4B – Remittances of Demurrage Charges

    Authorized Dealers may allow monthly remittance of demurrage charges (net of allowed lay time and other deductions-if any, and income tax paid/payable) upto USD 50,0000 on Form-M to the Owner/Operator/Commercial Operator of vessels/ships/tankers on submission of application along with the following documents: –

    a. Valid charter party agreement (if applicable),

    b. Copy of the Invoice/ debit note

    c. Lay time calculation time sheet verified from third party

    d. Port statement of fact

    e. Copy of B/L, GD, Bill of Entry.

    f. Proceeds Realization Certificate (PRC) for port disbursement charges

    g. F.P Shipment & Breakdown of Disbursement

    h. An undertaking to repatriate back to Pakistan, the amount found by the State Bank, on post-facto checking, to have been remitted in excess of the entitlement.

    Applications for remittances beyond USD 50,000/- shall be forwarded to FEOD as per prescribed format along with relevant documents for approval.

    4C – Remittances of Surplus Port Disbursement Funds by Foreign Shipping Companies

    Authorized Dealer may allow remittance of surplus amount of port disbursement funds held by local offices of shipping companies/ agents back to their principals on Form-M, subject to valid Agency agreement/authorization letter and shipping license, after the payment of port dues/charges and duly reported on the F.P. Statement upon submission of application along with the following documents: –

    a. Customs & Port Charges Clearance with invoices

    b. Proceed Realization Certificate in Original

    c. Copy of Swift Message

    d. Copy of Schedule J/O-3

    e. F.P Shipment & Breakdown of Disbursement

    4D – Disbursement of Cash to Master of Ship arriving at Pakistani Ports

    Authorized Dealer may disburse cash to master of ship arriving in Pakistan out of remittance received by them from owner of the ship/ shipping lined abroad on submission of application along with the following documents: –

    a. Copy of Passport of the Master of the Vessel

    b. Copy of Crew List containing their names, passport numbers, country etc.

    c. Proceed Realization Certificate in Original

    d. Copy of Swift Message for amount realized

    Authorized Dealers will retain all the documents mentioned in Para 4 and its subparagraphs along with Form ‘M’ submitted by foreign shipping companies/ agents. The original Form ‘M’ shall be submitted as usual through schedule E-4 while reporting the transaction in the monthly Foreign Exchange Returns

    Any irregularity detected and advised by the State Bank shall be rectified by the concerned shipping company/agent within ninety days or the amount under objection will be repatriated or adjusted from subsequent remittance, as applicable.

    Authorized Dealers shall also ensure proper due diligence of the above mentioned remittances from AML/CFT and foreign exchange risk perspective through Compliance or Risk Management Department including but not limited to particulars of remitter/ beneficiary and shall determine the ultimate beneficial ownership/ relationship between entities.

  • SBP issues five-year strategic plan for growth of Islamic banking

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

    KARACHI: State Bank of Pakistan (SBP) on Monday issued third five-year Strategic Plan for the Islamic Banking Industry.

    The strategic plan has set headline targets for Islamic banking industry to be achieved by 2025. These include: (i) 30 percent share in both assets and deposits of overall banking industry, (ii) 35 percent share in branch network of overall banking industry, and (iii) 10 percent and 8 percent share of SMEs and Agriculture financing respectively, in private sector financing of Islamic banking industry.

    In order to steer the growth of Islamic banking on sound footings, SBP has been providing proactive guidance through issuance of Strategic Plans for the Islamic banking industry; so far, two five-year Strategic Plans have been issued.

    This third Strategic Plan for Islamic banking industry (2021-25) aims to set a strategic direction for the industry to strengthen the existing progressive momentum and lead the industry to the next level of growth. The plan has been developed in close coordination and consultation with all key relevant stakeholders.

    The strategic plan envisages achieving the aforementioned specified targets by focusing on six strategic pillars namely: (i) strengthening legal landscape, (ii) enhancing conduciveness of regulatory framework, (iii) reinforcing comprehensive Shariah governance framework, (iv) improving liquidity management framework, (v) expanding outreach & market development, and (vi) bolstering human capital & raising awareness.

    The Islamic banking industry has widened its footprint in banking system of the country. Currently, 22 Islamic banking institutions (5 full-fledged Islamic banks and 17 conventional banks having standalone Islamic banking branches) are offering Shariah compliant products and services through a network of 3,456 branches and 1,638 Islamic banking windows (dedicated counters at conventional branches) spread across 124 districts of the country. In terms of share, the Islamic banking industry has acquired a market share of 17 percent and 18.3 percent in assets and deposits of overall banking industry, respectively by end December 2020.

    State Bank aims at making Islamic banking one third of the overall banking industry by 2025. Keeping in view the potential towards ensuring broad based economic growth and development, Islamic banking has remained a top priority area for the SBP. The plan provides a consensus based agenda and strategy to make Islamic banking an efficient and practical solution for consumers. It also contains an extensive focus on improving the public perception of Islamic banking as a distinct and viable system capable of catering to the varied financial services needs of various segments of the society that would significantly contribute to increasing overall financial inclusion in Pakistan.

    The plan also emphasizes that Islamic banking institutions must develop  innovative products based on distinctive Shariah characteristics to cater to underserved sectors particularly SMEs and Agriculture, which are critical for growth of the country’s economy.

    The Islamic banking industry is expected to fully capitalize on the potential of Islamic finance to attain the shared vision of a vibrant and sustainable Islamic banking sector in Pakistan.

  • Rupee ends down by 11 paisas on rising import bill

    Rupee ends down by 11 paisas on rising import bill

    KARACHI: The Pak Rupee fell by 11 paisas against the dollar on Monday owing to rise in trade deficit and demand from corporate buyers.

    The rupee ended Rs153.66 to the dollar from last Friday’s closing of Rs153.55 in the interbank foreign exchange market.

    Currency experts said that the market was under pressure due to significant rise in import bill during the month of March 2021.

    The import bill has recorded an unprecedented growth of 70 percent in March 2021 as compared with the same month of the last year, according to data released by Pakistan Bureau of Statistics (PBS).

    The country spent $5.63 billion on the imports during March 2021 as compared with $3.31 billion in the same month of the last year.

    The experts said that due to quarter ending on March 31, 2021 the corporate buyers were also seen active in purchasing dollars for repatriating profit and dividends to their parent companies abroad.

  • SBP revises instructions for financing wheat procurement

    SBP revises instructions for financing wheat procurement

    KARACHI: The State Bank of Pakistan (SBP) has issued notification to revise instructions regarding bank financing for wheat procurement by the private sector.

    The SBP issued circular No. 02 of 2021 for amending the instructions issued on March 19, 2021 for financing wheat procurement by the private sector.

    Following amendments have been notified by the SBP:

    I. For private sector participation in the wheat procurement season 2021, banks are required to strictly fulfill the following minimum conditions for extending financing to eligible borrowers (licensed and functional flour mills duly evidenced by some documentation or licensed wheat traders registered with concerned authority/department);

    a. Fresh financing for procurement of wheat shall start from commencement of wheat procurement season 2021 in respective provinces. Banks will provide financing to eligible borrowers for the procurement of indigenous wheat for the harvest season of 2021 (April 01-June 30, 2021). The financing facility would be extended to the eligible borrowers for procurement of indigenous and imported wheat from July 01, 2021 subject to other conditions mentioned in this circular.

    b. Banks may provide financing facility to functional flour mills for purchase of indigenous wheat from their authorized representative and respective Food Department against supply of wheat by them. Quantum of such loan shall not be more than the value of wheat to be supplied by the respective Food Department or actual purchase from wheat traders, commensurate to the milling capacity of each mill. Banks will also monitor that existing stock of wheat purchased by the concerned functional flour mill, has been grinded and that the by-products of wheat (financed against bank loan) have also been released to the market gradually to repay the loans so obtained.

    c. Banks will ensure that the subject financing will be used only for intended purposes. However, there is no restriction on banks for extending financing to flour mills for purpose other than procurement of wheat. Banks may provide financing to flour mills for general requirements like overhead expenses, however, banks will ensure that such financing is not used for procurement of wheat or to acquire wheat stocks/by-products of wheat.

    d. Financing to private sector for procurement of wheat shall be provided against pledge of fresh wheat stock only and hypothecation / charge of moveable or immovable property would not be acceptable as collateral for such financing. Moreover, banks will ensure that no revaluation of the pledged stock is considered for release of any differential financing amount to the borrowers against stock of wheat already pledged with the banks.

    e. Banks are also allowed to provide financing facilities for wheat procurement by the seed processing plants duly evidenced by the testing certificates issued by the Federal Seed Certification and Registration Department, in line with their lending policies and the capacity/production plans of the seed processing plants ensuring that such stock of wheat will be used for processing purposes.

    f. These loans will be fully settled on or before 31st March 2022, positively.

    g. In order to curb the possibility of hoarding, banks shall:

    i. require client(s) to disclose their storage location and verify the same.

    ii. strictly monitor the wheat stock held by the client vide periodical and random inspections of wheat pledged with the bank as well as the gradual release of wheat stock to generate cash for the purpose of repayment of bank loan. SBP may acquire stock reports from banks to verify their authenticity/genuineness as and when desired.

    iii. be under obligation to immediately recall the advances allowed to the private sector in case of hoarding of wheat.

    iv. ensure that no financing is allowed to client for retirement of loans availed from other banks.

    v. ensure that their clients are in strict compliance with the guidelines of respective government (Federal/Provincial) for release of wheat stock and are not involved in any other activity which may cause speculation of wheat/flour price in market.

    h. The lending shall be in compliance with applicable laws, Prudential Regulations and other instructions of SBP issued from time to time.

    II. Banks will submit a monthly statement in respect of financing to private sector for wheat procurement to this department as per attached format (Annexure-A) within ten working days from the close of the relevant month.

    III. Any violation of the above instructions will attract administrative and/or penal action under the provisions of BCO, 1962 and other relevant laws.

  • Rupee weakens by 25 paisas on import, corporate payments

    Rupee weakens by 25 paisas on import, corporate payments

    KARACHI: The Pak Rupee weakened by 25 paisas against the dollar on Friday owing to demand for import and corporate payments.

    The rupee ended Rs153.55 to the dollar from previous day’s closing of Rs155.30 in the interbank foreign exchange market.

    Currency dealers said that higher demand of the foreign currency for import and corporate payments depreciated the rupee value.

    They said that due to quarter ending corporate buyers were seen active in purchasing the foreign currency for repatriation of profit and dividend to their parent companies abroad.

    Similarly, the higher import bill in March 2021 also put pressure on demand for the dollar.

  • Call centers: SBP issues instructions to banks for customers’ protection

    Call centers: SBP issues instructions to banks for customers’ protection

    KARACHI: The State Bank of Pakistan (SBP) on Thursday issued instruction to banks for protection of customers’ identity while making communication through call centers.

    The SBP said that to ensure confidentiality of consumers’ data, banks will put in place adequate controls at their call centers including continuous CCTV vigilance, physical entry and exit checks, restriction on portable devices like cell phones, controlled accessibility to printers and emails.

    Banks will allow their call center staff access to customers’ data on a ‘Need-to-Know’ basis only i.e. restricted only to the customers contacting the call center.

    Proper logs of access to customer’s information will be maintained and monitored to detect unauthorized access.  Moreover, banks will ensure masking of the Credit or Debit card numbers so that the call agents could only view the last four digits of the cards.

    SBP has also instructed banks to deploy sufficient call center resources to ensure a satisfactory customer experience. For this, the banks will have adequate IT controls and contingency and disaster recovery set-ups for their call centers.

    All inbound and outbound calls at the call centers will be recorded and the record will be retained at least for one year.  Banks will also ensure that their call centers are adequately staffed with proper trainings, particularly on digital fraud management, relevant policies and initiatives of banks and query and complaint handling.

    To improve call center management, banks will have proper policy and oversight mechanisms in place and performance will be regularly monitored. The banks will put in place key performance indicators for reviewing performance of call centers with appropriate benchmarks as per international best practices. Banks will also have a comprehensive policy and Standard Operating Procedures (SOPs) on call center management duly approved by their Board of Directors and CEO.

    The SBP said that call centers are rapidly becoming customers’ top choice to communicate with their Banks. Over time, the use of call centers by customers to seek information, guidance and redressal of complaints from their banks has increased significantly.

    On the other hand, the technological advancements are helping the banks to provide self-banking solutions through call centers. The growing importance of call centers in bank-customer relationship makes it imperative for the banks to efficiently manage their call centers for enhanced customer experience. Recently, SBP conducted a thematic review of the call center management at banks.  In the light of findings of the review, it has issued today regulatory instructions to banks on call center management.

    To bring ease in lodging complaints, all the banks are encouraged to deploy toll-free numbers for their call centers besides making sure that call center numbers are displayed prominently on banks’ premises and websites.

    Banks are also required to take measures to reduce the call wait time i.e. the time before connecting to an agent, as much as possible to avoid inconvenience to the customers.

    Further, banks will also ensure that call agents do not refuse to lodge complaint and a proper complaint number is provided to all the complainants.

  • Rupee slips by 54 paisas on import, corporate payment demand

    Rupee slips by 54 paisas on import, corporate payment demand

    KARACHI: The Pak Rupee slipped by 54 paisas on Thursday owing to high demand for import and corporate payments.

    The rupee ended Rs153.30 to the dollar from previous day’s closing of Rs152.76 in the interbank foreign exchange market.

    Currency dealers said market witnessed high demand of the foreign currency for import and corporate payments during the day. They said that due to quarter ending corporate sector was seen buying the foreign currency to send profit and dividends to their parent companies abroad.

    They, however, said that the encouraging inflows of remittances and export receipts would help the rupee to make gain in coming days.

  • Rupee gains 33 paisas against dollar

    Rupee gains 33 paisas against dollar

    KARACHI: The Pak Rupee gained 33 paisas against the dollar on Wednesday owing to improved external position.

    The rupee ended Rs 152.76 to the dollar from previous day’s closing of 153.09 in the interbank foreign exchange market.

    Currency experts said that the improved external position after the inflows of around $498 million under IMF loan program further helped the foreign exchange market.

    In the early trade the dollar recorded a fall and traded at Rs152.25 in the interbank foreign exchange market.

    Currency experts said that alarming rise in coronavirus cases had discouraged the demand of the foreign currency for import payment.

  • Dollar falls to Rs152.25 in early trade

    Dollar falls to Rs152.25 in early trade

    KARACHI: The US Dollar has fallen by 84 paisas to Rs152.25 in early day trade in interbank foreign exchange market on Wednesday, dealers said.

    The dollar has fallen around 21 and half months and being traded at Rs152.25 from previous day’s closing of Rs153.09 in the interbank foreign exchange market.

    Currency experts said that the rupee appreciated due to auction of Eurobond by the government that fetched around $2.5 billion.

  • Banks directed to extend hours for duty, tax collection

    Banks directed to extend hours for duty, tax collection

    KARACHI: State Bank of Pakistan (SBP) on Tuesday directed banks to observe extended banking hours to facilitate collection of duty and taxes.

    The SBP said that to facilitate the collection of government receipts/ duties / taxes, it has been decided that the field officers of SBP Banking Services Corporation (SBP-BSC) and authorized branches of National Bank of Pakistan (NBP) will observe extended banking hours till 6:00 PM on March 31, 2021 (Wednesday). For which purpose a special clearing has been arranged at 5:00 P.M. on the same day by the NIFT. 

    All banks are, therefore, advised to keep their concerned branches open on March 31, 2021 (Wednesday) till such time that is necessary to facilitate the special clearing for Government transactions by the NIFT.