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.
KARACHI: The deposits of banking system surged to a new record high of Rs16.886 trillion by end of September 2020, according to data released by State Bank of Pakistan (SBP) on Wednesday.
The bank deposits reached to new record-level from previous all-time high of Rs16.327 trillion by end of August 2020.
The deposits of the banking system recorded growth of 20.39 percent in September 2020 when compared with the stock of Rs14.026 trillion in the same month of the last year.
The significant growth in banking deposits has been attributed to higher foreign inflows and safe venue to keep money amid coronavirus pandemic.
They said that growth in deposits has been fueled by higher remittances (+15 percent YoY in USD and 27 percent YoY in PKR terms during eight months of 2020), while lack of business activity due to COVID-19 (cash-based) may have also resulted in increase in bank deposits.
Investments of banks have increased to Rs11.09 trillion by end of September 2020, which is 19.65 percent higher when compared with the investment of Rs9.269 trillion in the same month of the last year.
Investment to Deposit Ratio (IDR) is around 66 percent in September 2020. The higher IDR is largely due to high interest rates at the start of the year and low appetite for risk (advances) due to COVID-19 lately.
On the other hand, advances have grown by just 1.5 percent YoY to Rs8.094 trillion by end September 2020 as compared with Rs7.975 trillion by end of same month of the last year.
This is despite the aggressive cuts in interest rates by the Pakistan Central Bank since March 2020 as the impact of COVID-19 pandemic has reduced the overall risk appetite of banks.
KARACHI: The Pak Rupee ended down by three paisas against dollar on Tuesday owing to import and corporate payment demand for the foreign currency.
The rupee ended Rs163.84 to the dollar from last day’s closing of Rs163.81 in interbank foreign exchange market.
Currency dealers said that the higher dollar demand for import and corporate demand depreciated the value of the local currency.
They said that higher trade deficit for the month of September 2020 and expected current account deficit for the month also pressured the local unit.
They however hoped that the rupee would make gain during coming days owing to measures taken by the government and substantial inflows in the shape of remittances and export receipts.
KARACHI: State Bank of Pakistan (SBP) on Monday announced interest rates for loan obtained under Naya Pakistan Housing scheme.
The maximum size of loan shall be Rs5 million and the loan shall be available for the maximum limit at 7 percent for first five years and at 9 percent for remaining five years. The bank prices shall be KIBOR + 4 percent.
The SBP said that in line with its vision of providing affordable housing to the masses, Government of Pakistan will be providing a markup subsidy facility for the construction and purchase of new houses.
This facility will allow all individuals, who will be constructing or buying a new house for the first time, to avail bank’s financing at subsidized and affordable markup rates.
This facility will be provided with the administrative support of State Bank of Pakistan as executing partner with Government of Pakistan and Naya Pakistan Housing and Development Authority (NAPHDA).
The government has allocated Rs33 billion for payment of markup subsidy for financing over a period of 10 years and has assured continuity of the facility.
For this purpose, State Bank and Government of Pakistan have signed a memorandum of understanding.
The markup subsidy facility will be available through all banks and is divided in three tiers:
Financing under Tier I is available for purchase of houses/apartments/flats of upto 5 marla or 125 sq. yards, with maximum covered area of 850 sq. feet and maximum price of Rs. 3.5 million, under NAPHDA projects. Maximum financing under this Tier is Rs. 2.7 million with maximum tenor of up to 20 years. Banks will charge maximum markup rate of KIBOR plus 250 basis points.
However, GOP will provide markup subsidy to reduce borrowers’ rate to 5 percent for first five years and 7 percent for next five years.
KIBOR is the Karachi Interbank Offer Rate that is determined in the interbank market on a daily basis and is used as a benchmark for most of the retail lending by banks.
These rates are published on the website of State Bank of Pakistan on a daily basis.
Financing under Tier II is also for houses/apartments/flats upto 5 marla or 125 sq. yards with maximum covered area of 850 sq. feet and maximum price of Rs 3.5 million.
Maximum financing under this Tier is Rs 3 million with maximum tenor of up to 20 years. This Tier facilitates construction or purchase of housing units by individuals and households who have not applied or qualified for NAPHDA projects.
Banks will charge maximum markup rate of KIBOR plus 400 basis points. However, subsidized rate for the borrowers for first 10 years under Tier 2 is the same as that of Tier I.
The Tier III of the facility promotes affordable housing for middle-income families. This Tier allows subsidized financing for construction or purchase of houses/apartments/flats of more than 5 marla (125 sq. yards) and upto 10 marla (250 sq. yards) with maximum covered area from 850 sq. feet to 1,100 sq. feet and maximum price of Rs 6 million.
Maximum financing under this Tier is Rs. 5 million with maximum tenor of up to 20 years. Banks will charge maximum markup rate of KIBOR plus 400 basis points. However, GOP will provide markup subsidy to reduce borrowers’ rate to 7 percent for first five years and 9 percent for next five years.
It is expected that introduction of the facility with supply of fresh housing units through concerted efforts of NAPHDA and other stakeholders will help transform Government’s vision into reality.
The SBP issued following rates and criteria through a circular:
Markup Subsidy for Housing Finance
1. Housing plays an important role in economic development by contributing in GDP growth, employment generation and social wellbeing. Further, more than 40 industries and 70 percent of unskilled labor are linked with housing and construction sector.
2. In order to provide formal financial services at affordable rates, Government of Pakistan is providing Markup Subsidy for Housing Finance. The key features of the facility approved by the Government are given below:
Particulars
Markup Subsidy Program
Eligibility Criteria
All men/women holding CNIC First time home owner One individual can have subsidized house loan facility under this scheme only once Only for construction and first purchase of newly constructed affordable housing units
Size of Housing Unit
Size of the loan is segregated into three tiers, as under: Tier 1 (T1) – Housing Units/apartments of up to 125 square yards (upto 5 Marla) with covered area of up to 850 square feet. (NAPHDA) Tier 2 (T2) – Housing Units/apartments of up to 125 square yards (5 Marla) with covered area of up to 850 square feet. Tier 3 (T3) – Housing Units of more than 125 square yards up to 250 square yards (10 Marla) or apartments with covered area from more than 850 square feet to 1,100 square feet.
Maximum Price of Housing Units
Maximum Price (Market Value) of a single housing unit at the time of approval of financing, as under:
Tier 1 (T1) – Rs 3.5 million Tier 2 (T2) – Rs 3.5 million Tier 3 (T3) – Rs. 6.0 million
Maximum Loan size
Maximum size of the loan of a single housing unit, as under:
Tier 1 (T1) – Rs 2.7 million Tier 2 (T2) – Rs 3.0 million Tier 3 (T3) – Rs. 5.0 million
Loan type
Long term housing finance loans
Loan Tenor
10/15/20 years, depending upon choice of customers.
Security Requirements
As per banks’ credit policy and prudential regulations for housing finance, the housing unit financed will be mortgaged in favor of financing bank.
Allocation in Budget
Finance Division shall give authority to SBP to debit GOP account on quarterly basis for the subsidy payment to banks. Payment will be made to the banks on submission of quarterly-consolidated subsidy statement as per format prescribed by State Bank of Pakistan.
Pricing
Pricing for Housing Loans: Tier-1: 5% for first 5 years & 7% for next 5 years at KIBOR+250 BPS Tier-2: 5% for first 5 years & 7% for next 5 years at KIBOR+400 BPS (Spread may vary) Tier-3: 7% for first 5 years & 9% for next 5 years For loan tenors exceeding 10 years, market rate will be applicable for the period exceeding 10 years.
Executing Agency
All commercial banks including Islamic banks and House Building Finance Company Limited (HBFCL)
Application Form
A standardized Application Form both in English and Urdu will require minimum essential information with simple format.
The processing time will not exceed 30 days after submission of all documents by the borrower and the same will be clearly stated in the application form.
Standardized Procedures
Banks to have standardized loan documents and risk acceptance criteria.
Monitoring
SBP will publish consolidated information about the loans extended under this program for information of the public on quarterly basis on its website.
Geographical distribution
Geographical distribution
3. Banks can also avail risk coverage against the housing finance under the scheme from Pakistan Mortgage Refinance Company (PMRC) at mutually agreeable terms and conditions.
4. The banks are advised to ensure successful implementation of this facility through dissemination of necessary instructions to branches/ regions and capacity building of field staff, development/alignment of financing products and marketing campaigns, etc.
KARACHI: The Pak Rupee made a nominal gain of three paisas against dollar on Monday amid significant rise in home remittances as reported by the State Bank of Pakistan (SBP).
The rupee ended Rs163.81 to the dollar from last Friday’s closing of Rs163.84 in interbank foreign exchange market.
Currency dealers said that market players were remained optimistic about the ease in pressure on the local unit. However, the market witnessed demand from importers and corporate buyers as marked was opened after two days weekly holidays.
The dealers said that the home remittances posted a growth of over 32 percent in the month of September 2020 on Year on Year basis (YoY). Besides, the foreign currency account rules issued by the ministry of finance on Friday evening also sent positive message to the market.
The currency dealers hoped that the rupee would make gain during coming days owing to measures taken by the government and substantial inflows in the shape of remittances and export receipts.
KARACHI: State Bank of Pakistan (SBP) on Sunday issued Frequently Asked Questions (FAQs) in response to SRO issued by the finance ministry related to foreign currency account rules.
KARACHI: State Bank of Pakistan (SBP) has said that recently issued regulations related to foreign currency account have been aimed to strengthen the foreign exchange regime in the country.
“The recently issued rules aim to provide a regulatory framework for the operation of individual foreign currency accounts,” the SBP said in a statement issued on Saturday-Sunday midnight.
Such a framework represents a continuation of the State Bank of Pakistan’s efforts to strengthen the foreign exchange regime and make it more market-oriented.
Looking ahead, SBP will continue to take steps to facilitate greater use of banking channels for individuals to meet all their foreign exchange needs.
The SBP said that on October 06, 2020, the Federal Government issued Foreign Currency Accounts Rules, 2020 under the provisions of Protection of Economic Reforms Act, 1992.
There has been no change in the general or special permissions given by the State Bank to individuals under the foreign exchange regulations. According to paragraph iv, Chapter 6 of the Foreign Exchange Manual, foreign currency accounts can be fed by remittances received from abroad, travelers’ cheques issued outside Pakistan and encashment of securities issued by Govt. of Pakistan.
A foreign currency account of a citizen of Pakistan resident in Pakistan can also be fed with cash foreign currency only if the account holder is a filer as defined in Income Tax Ordinance, 2001.
ISLAMABAD: The ministry of finance on Friday issued rules governing foreign currency accounts of individuals under which there shall be no restriction on cash withdrawal or transfers from the foreign currency account.
The ministry issues rules governing foreign currency accounts of individuals, under which a foreign currency account of an individual may be credited with the remittances received from abroad through banking channel except:
— payment for goods exported from Pakistan;
— payment for services rendered in or from Pakistan;
— proceeds of securities issued or sold to non-residents; and
— any foreign exchange borrowed from abroad under any general or special permission of the State Bank of Pakistan (SBP).
It said that the SBP may issue any general or special permission for credit to the account.
The rules however, stated that a foreign currency account may be credited through transfer from other individual foreign currency account.
“Proceeds realized on account of profit, return and principal amount of investment made in any foreign currency dominated or foreign currency linked scheme of Government of Pakistan may be credited into the account,” it said.
A foreign currency account shall not be credited with any foreign exchange purchased from an authorized dealer, exchange company or money changer except as allowed by the SBP through general or special permission under any law. However, foreign currency brought in from abroad and duly declared at the point of entry into Pakistan with Pakistan Customs may be credited in the account.
The rules explained that there shall be no restriction on cash withdrawal or transfers from the foreign currency account.
The Pakistani rupee experienced a slight decline against the US dollar on Friday, falling by 12 paisas due to increased demand for import and corporate payments. The rupee closed at Rs163.84 to the dollar in the interbank foreign exchange market, down from the previous day’s closing of Rs163.72.
KARACHI: The Pak Rupee gained 25 paisas against the dollar on Thursday owing to improved economic indicators, dealers said.
The rupee ended Rs163.72 to the dollar from previous day’s closing of Rs163.97 in interbank foreign exchange market.
The currency dealers said that the due to lower demand for import and corporate payments and sufficient inflows of export receipts and workers remittances the rupee gained the value.
They said that the sentiments were remained positive in the market due to escalating economic activities.
The experts said that the exports registered 18.24 percent growth to $1.873 billion during September 2020 as compared with $1.58 billion in August 2020.
They hoped that present positivity in the market would help the local unit to make gain further against the greenback.
