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.

Rupee eases two paisas amid higher import payment demand

KARACHI: The Pak Rupee ended down by two paisas against dollar on Monday amid higher demand for import and corporate payments.

The rupee ended at Rs154.85 to the dollar from last Friday’s closing of Rs154.83 in interbank foreign exchange market.

Currency dealers said that the market initiated with higher demand for dollars. The demand was higher due to opening of the market after two weekly holidays.

The foreign currency market was initiated in the range of Rs154.85 and Rs154.90. The market recorded day high of Rs154.89 and low of Rs154.84 and closed at Rs154.85.

The exchange rate in open market however, witnessed appreciation in rupee value. The buying and selling of dollar recorded at Rs154.70/Rs155.00 as compared with last Friday’s closing of Rs155.00/Rs155.40 in cash ready market.

January 13, 2020
Rs40,000 bearer prize bonds allowed conversion up to March 31

KARACHI: People can surrender Rs40,000 denomination bearer prize bonds by March 31, 2020 and exchange the amount with registered bonds or other given options.

The SBP stopped the issuance of Rs40,000 denomination prize bonds on June 24, 2019 and given deadline of March 31, 2020 for exchange the such denomination with other registered mode of investment.

Since the announcement of the central bank, the holders of bearer bonds had surrendered around Rs238 billion till November 2019.

The total investment Rs40,000 denomination bearer bonds peaked at Rs258 billion by May 2019, which reduced to around Rs20 billion by November 2019.

SBP stops banks selling Rs40,000 prize bonds, issues procedure for conversion into registered bonds

The SBP in a notification issued in June 2019 issued the following instructions regarding handling of Rs.40,000/- denomination National Prize Bonds are issued herewith for information, guidance and meticulous compliance:

a) National Prize Bonds of Rs.40,000/- denomination shall not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020.
b) No further draws of Rs.40,000/-denomination National Prize Bonds shall be held.
c) Cash payment for encashments of bonds is not allowed. However, the bond holder (s) shall have the following options to replace / encash these bonds:

1. Conversion of premium prize bonds (registered)

2. Replacement with special saving certificate (SSC)/Defence Saving Certificate (DSC)

3. Encashment at face value.

d) Appended below is the SOP for processing requests under the aforementioned options for compliance by all banks:

Conversion to Premium Prize Bonds (Registered)

i. The bonds can be converted to premium prize bonds (registered) through the 16 field offices of SBP Banking Services Corporation, and authorized branches of six commercial banks i.e. National Bank of Pakistan (NBP), Habib Bank Limited (HBL), United Bank Limited (UBL), MCB Bank Limited (MCB), Allied Bank Limited (ABL) and Bank Alflah Limited (BAFL).

ii. The bond holder shall be required to submit a written request for conversion of bearer bonds to premium prize bonds (registered) to be registered in his (her) name on the prescribed application.

iii. The bond holder shall also be required to submit prescribed applications forms for registrations / purchase of premium prize bond as per the procedure in vogue.

Replacement with the Special Saving Certificate (SSC)/Defence Saving Certificate (DSC)

i. The bonds can be replaced with SSC / DSC through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks and National Savings Centers.

ii. All authorized commercial banks shall, therefore, accept requests for replacement of bearer bonds with SSC or DSC on the prescribed application form.

iii. The bondholder shall also be required to submit application form for purchase of SSC/DSC (SC-1) as per the prescribed procedure.

Encashment at Face Value:

i. The bonds will only be encashed by transferring the proceeds to the bond holder’s bank account through the 16 field offices of SBP Banking Services Corporation as well as the authorized commercial bank branches.

ii. All commercial banks shall receive requests for encashment of bearer bonds on the prescribed application form.

A copy of the application form, duly signed and stamped, shall be provided to the bondholder as an acknowledgement receipt.

The SBP said that it is needless to mention that the National Prize Bonds of Rs40,000 denomination tendered at the counters of banks shall be subject to through scrutiny to ascertain their genuineness. In this regard, details regarding the security features in Rs40,000 denomination National Prize Bonds are available online.

Moreover, the prize bonds encashed / replaced by general public may be surrendered to concerned SBP BSC office through respective regional office of the commercial banks. For the purpose, the regional office may intimate the SBP BSC office three days in advance so that necessary arrangements for receipt of the bonds can be made.

It is imperative to mention that a notice regarding the above / mentioned facilities must be displayed at prominent places within branch premises for awareness and information of general public.

January 13, 2020
Banks sign pact for setting up restructure company

KARACHI: About 10 banks have signed an agreement on Friday to establish Pakistan Corporate Restructuring Company Limited (PCRCL).

The Presidents and representatives of Habib Bank, National Bank of Pakistan, United Bank, MCB Bank, Allied Bank, Meezan Bank, Bank Al-falah, Bank Al-Habib, Habib Metropolitan Bank and Faysal Bank signed today the shareholders’ agreement for the establishment of Pakistan Corporate Restructuring Company Limited (PCRCL) at State Bank of Pakistan (SBP), Karachi in the presence of Governor, SBP.

Under the provisions of Corporate Restructuring Companies Act 2016 and with an initial Paid-up Capital of Rs500 million, the above banks have decided to establish the Corporate Restructuring Company (CRC), which is first such type of company in Pakistan.

The objectives of the CRC are aligned with the initiatives of the Government of Pakistan to revive the sick industrial units.

It would be pertinent to mention here that the CRCs, under CRC Act 2016, are empowered to acquire, restructure and resolve the Non-Performing Assets (NPAs) of financial institutions and thereby reorganize and revive the commercially or financially distressed companies.

The CRCs are specialized institutions with skillset in NPL resolution and corporate restructuring.

These companies through aggregation of NPLs, will be well positioned to negotiate with the sick units and finalize the restructuring of loans vis-à-vis multiple lenders negotiating simultaneously with the borrower.

It is expected that CRCs will evolve as vibrant economic agent, contributing towards the revival of sick industrial units and generating employment opportunities.

Total Non-Performing Loans of the banking industry stand at Rs758 billion as of September 30, 2019. Total NPL amount includes the loans against such sick industrial units, which can be revived and rehabilitated, provided the NPLs are restructured promptly and the sponsors of the sick units also inject the fresh equity to demonstrate their willingness and commitment in the rehabilitation of sick units.

The Securities and Exchange Commission of Pakistan (SECP) has granted the license to PCRCL on December 31, 2019. State Bank of Pakistan appreciates the initiative of above banks and the supportive role of the SECP in incorporation and licensing of PCRCL.

SBP is also engaged with the Federal Government to introduce amendments in the relevant laws and to strengthen the Banking Courts in order to take forward Government’s agenda of institutional reforms.

January 10, 2020
Rupee gains six paisas on improved economic indicators

KARACHI: The Pak Rupee made gain six paisas against dollar on Friday owing to improved economic indicators.

The rupee ended Rs154.83 to the dollar from previous day’s closing of Rs154.89 in interbank foreign exchange.

Currency dealers said that inflows of export and remittances helped the rupee to make gain.

They said that improved economic indicators and declining import bill also helped the rupee to make gain.

The foreign currency market was initiated at Rs14.85 and Rs154.90. The market recorded day high of Rs154.87 and low of Rs154.82 and closed at Rs154.83.

The exchange rate in open market witnessed gain in rupee value. The buying and selling of dollar was recorded at Rs155.00/Rs155.40 from previous day’s closing of Rs155.30/Rs155.70 in cash ready market.

January 10, 2020
Exchange rate determines by market forces: SBP

KARACHI: State Bank of Pakistan (SBP) on Friday said that exchange rate has been determined by market forces on the basis of demand and supply.

In a tweet message the central bank said that exchange rate is determined by market forces of demand and supply and is a reflection of existing BOP position. Forward exchange rates are determined by the existing spot rates and #Interest rate differentials of the relevant period i.e. time value of money.

“Forward exchange rates (ER) are not a forecast of future exchange rates.”

IMF Report on Pakistan includes ER assumptions which are not predictions. Under the IMF-supported program there is no agreed target level for exchange rate. The exchange rate is market determined, the SBP said.

The IMF had earlier tweeted about the inclusion of exchange rate assumption in its published Staff Report on #Pakistan.

January 10, 2020
Bank deposits increase to record high of Rs14.63 trillion

KARACHI: The deposits of banking system have increased to all time high of Rs14.63 trillion by December 2019, according to data released by State Bank of Pakistan (SBP).

The deposits have increased by 9.58 percent to Rs14.63 trillion by December 2019 as compared with Rs13.35 trillion in the same month of the last year.

Analysts at Topline Securities on Friday said that the deposit growth came in better than last year’s growth of 8 percent, however remained lower than the 5-year average growth of 12 percent.

Banks’ focus for deposit mobilization remained more towards investments compared to advances during the year given the high yields on government papers. As a result, investments grew by 16 percent to Rs8.8 trillion in 2019, with IDR increasing to 60 percent in 2019 from 57 percent in 2018.

On the other hand, advances grew by just 3 percent in 2019 hindered by high interest rates and slowdown in overall economic activity. Over the past 3-years, advances have grown at an average of 19 percent.

Interestingly to note, advances growth remained more subdued in 9M2019 with growth of just 1 percent YTD, however somewhat picked up in the last quarter to close at Rs8.80 trillion, they said.

As a result, ADR dropped to 56 percent in 2019 from 59 percent in 2018.

Sector-wise, Textiles (12.5 percent), Energy (17 percent), Individuals (8.8 percent) and Agribusiness (8.1 percent) accounted for 46 percent of total advances.

As per the available 9M2019 numbers, advances to textile sector declined the most by 6.5 percent (Rs75 billion), while advances to the energy, individuals and agribusiness sectors increased by Rs34 billion, Rs19 billion and Rs4 billion, respectively.

The Currency in Circulation (CIC) in 2019 registered an increase of 19 percent to Rs5.39 trillion. Additionally, CIC as a percentage of M2 clocked in at 29 percent above the historic 5-year average of 27 percent.

Going forward, we see deposit growth in the range of 10-12 percent and advances growth of 11-13 percent in 2020 at the behest of economic recovery and an expected decline in interest rates.

We are presently Market-Weight on the banking sector with Meezan Bank (MEBL) our top pick. We also like Habib Bank (HBL) and Bank Al Falah (BAFL).

January 10, 2020
Rupee makes gain on improved inflows

KARACHI: The Pak Rupee ended with significant gain against dollar on Thursday after witnessing decline for three consecutive days.

The rupee ended with gain of 19 paisas to Rs154.89 to the dollar from previous day’s closing of Rs155.08 in interbank foreign exchange market.

Currency dealers said that the ease in US-Iran conflict and inflows of export receipts and foreign remittances helped the rupee to gain against the greenback.

The foreign currency market was initiated in the range of Rs154.85 and Rs154.90. The market recorded day high of Rs154.92 and low of Rs154.88 and closed at Rs154.89.

The exchange rate in open market also witnessed appreciation in rupee value. The buying and selling of dollar was recorded at Rs155.30/Rs155.70 from previous day’s closing of Rs155.40/Rs155.80 in cash ready market.

January 9, 2020
Rupee recovers 22 paisas in early trading

KARACHI: The Pak Rupee recovered 22 paisas against dollar in early trade on Thursday.

The dollar is being traded at Rs154.86 in interbank foreign exchange market. The rupee ended at Rs155.08 on Wednesday January 08, 2020.

The rupee was remained pressure with start of the year. The inflows of export receipts and ease in geopolitical tension helped the local currency to recover against the greenback.

January 9, 2020
Rupee falls by seven paisas on import, corporate demand

KARACHI: The Pak Rupee further depreciated by seven paisas against dollar on Wednesday owing to higher import and corporate demands, dealers said.
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January 8, 2020
Rupee depreciates six paisas against dollar

KARACHI: The Pak Rupee fell six paisas against dollar on Tuesday owing to demand for import and corporate payments, dealers said.

The rupee ended Rs155.01 to the dollar as compared with Rs154.95 in interbank foreign exchange market.

The dealers said that the rupee was depreciated due to rising demand of dollar for import and corporate payments.

They said that the corporate buyers escalated the demand because of repatriation of profit for the quarter ended December 31, 2019.

The foreign currency market was initiated in the range of Rs155.00 and Rs155.07. The market recorded day high of Rs155.09 and low of R155.00 and closed at Rs155.01.

The exchange rate in open market witnessed stable value of the local currency. The buying and selling of the dollar was recorded at Rs155.00/Rs155.30, the same previous day’s closing, in cash ready market.

January 7, 2020