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.

SBP includes Japanese Yen to Asian clearing union mechanism

KARACHI: State Bank of Pakistan (SBP) on Monday announced to include Japanese Yen to Asian Clearing Union (ACU) mechanism.

A statement issued by the central bank said that it had been decided to include ACU Japanese Yen as the third ACU currency along with USD & EURO with effect from January 01, 2020.

The ACU Yen would be equivalent in value to one Yen. Accordingly, transactions under ACU Mechanism, in addition to ACU Dollar (ACUD) & ACU Euro (ACUE), may also be denominated and settled in ACU Yen (ACUY) from January 01, 2020.

In this regard, ADs may establish ACUY accounts with their correspondents in ACU member countries and open their correspondents’ ACUY accounts with them.

The transactions in ACUY would be reported by ADs to SBP and settled by SBP separately likewise in other two ACU currencies.

Accordingly, three separate accounts will be maintained for the settlement of each ACU currency (ACU Dollar, ACU Euro and ACU Yen).

Further, with a view to encourage ADs to maintain reasonable / sufficient balances in their accounts to ensure timely payments, the authorized dealers are permitted to pay / receive interest, at their discretion, on these (ACUD, ACUE & ACUY) accounts as per mutually agreed terms and conditions.

The balances of ACUD, ACUE & ACUY accounts together with other FCY / Nostro accounts would however be subject to the overall exposure limits of ADs.

December 23, 2019
Bank holiday

KARACHI: The State Bank of Pakistan (SBP) on Monday said that the central bank will remain closed on December 25, 2019 (Wednesday) on the occasion of Qauid-e-Azam Day and Christmas.

In a circular issued to all the presidents and chief executives of banks, development finance institutions and microfinance banks, the central bank said that it will remained closed on December 25, 2019 (Wednesday) on the occasion of Qauid-e-Azam Day and Christmas, as declared by the government of Pakistan.

December 23, 2019
Rupee ends unchanged in lackluster trading

KARACHI: The Pak Rupee ended unchanged against dollar on Friday owing to lackluster trading activities, dealers said.

The rupee ended at Rs154.90, the same previous day’s closing, in interbank foreign exchange market.

The currency dealers said that due to political uncertainty and expected appreciation of rupee value after approval of second tranche by IMF, the importers were cautious in opening letter of credit.

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

The exchange rate in open market witnessed decline in rupee value. The buying and selling of the dollar was recorded at Rs154.50/Rs154.90 as compared with last day’s closing of Rs154.40/Rs154.70 in cash ready market.

December 20, 2019
Law drafted to examine national saving schemes investments for money laundering, terror financing

ISLAMABAD: The government has draft law to examine involvement of money laundering and terror financing in investment made in national saving schemes.

The ministry of finance on Thursday issued draft rules namely National Saving Schemes (AML and CFT) Rules, 2019.

Under the draft rules, the Central Directorate of National Savings (CDNS) would conduct customers due diligence (CDD) of all the customers / investors.

“Every customer, whether permanent or occasional and whether natural or legal person or legal arrangement, shall be identified for establishing business relationship and for the purpose following information shall be obtained, verified using reliable, independent source documents, data or information and recorded namely: –

(a) full name as per identity or registration documents;
(b) national identity card, passport, national identity card for overseas pakistanis, Pakistan origin card or alien registration card number, etc.
(c) registration or incorporation number of business, if applicable;

(d) residential address, telephone numbers and e-mail, if available;

(e) business address, telephone numbers and e-mail, if available;

(f) date of birth;

(g) date and place of registration or incorporation of business, if applicable;

(h) nationality

(i) place of birth;

(j) national tax number (NTN), if applicable;

(k) nature of business and location, if applicable;

(l) sources of earnings;

(m) customer’s net worth in respect of legal persons, legal arrangements and high risk customers; and

(n) annual income

The minimum set of documents to be obtained by the office of issue or third party in case of each category of customers shall be as follows:-

(a) In respect of individuals, a photocopy of any one of the following valid identity documents namely:-

(i) computerized national identity card (CNIC) issued by NADRA; or

(ii) national identity card for overseas Pakistani (NICOP) issued by NADRA; or

(iii) Pakistan origin card (POC) issued by NADRA; or

(iv) alien registration card (ARC) issued by NADRA; or

(v) passport having valid visa on it or any other proof of legal stay along with passport in respect of foreign national individuals only.

(b) In respect of limited corporations and companies.-

(i) certified copies of-

(A) resolution of board of directors for opening of account specifying the persons authorized to open and operate the account (not applicable for single member company);

(B) memorandum of association;

(C) articles of association, wherever applicable;

(D) certificate of incorporation;
(E) Securities and Exchange Commission of Pakistan (SECP) registered declaration for commencement of business as required under the Companies Act, 2017 (XIX of 2017); and

(F) list of directors required to be filed under the Companies Act, 2017 (XIX of 2017), as applicable;

(ii). photocopies of identity documents as per sub-clause (b) of all the ` directors and persons authorized to open and operate the account;

(c) In respect of trust clubs, societies and associations, etc.-

(i) Certified copies of-

(A) certificate of registration or instrument of trust; and

(B) by-laws, rules and regulations;

(ii) resolution of the governing body, board of trustees or executive committee, if it is ultimate governing body, for opening of account authorizing the person to operate the account;

(iii). photocopy of identity document as per sub-clause (i) of clause (c) of the following:

(A) authorized persons;

(B) members of governing body, board of trustees or executive committee, if it is ultimate governing body; and

(C) settlor, the trustees, the protector if any, the beneficiaries or class of beneficiaries

(d) In respect of NGOs, NPOs and charities,-

(i) certified copies of –

(A) registration documents and certificates; and

(B) by-laws, rules and regulations;

(ii) resolution of the governing body, board of trustees or executive committee, if it is ultimate governing body, for opening of account authorizing the persons to operate the account;

(iii) photocopy of identity document as per sub clause (i) of clause (d) above of the authorized persons and of the members of governing body, board of trustees or executive committee, if it is ultimate governing body; and

(iv) any other documents as deemed necessary including its annual accounts and financial statements or disclosures in any form which may help to ascertain the detail of its activities, sources and usage of funds in order to assess the risk profile of the prospective customer;

(e) In respect of minor accounts,-

(i) photocopy of Form-B or birth certificate of the minor; and

(ii) photocopy of identity document as per sub-clause (i) above of the guardian of the minor;

(f) In respect of government institutions and entities not covered herein above.-

(i) CNICs of the authorized persons; and

(ii) letter of authorization from the concerned authority.

the office of issue or third party shall verify identity documents of the customers from relevant authorities and bodies, including through NADRA’s verification system or biometric identification system and, where necessary, use other reliable, independent sources and retain copies of all reference documents used for identification and verification.
The office of issue or third party shall be responsible for verification of the identity documents and the customer shall neither be obligated nor the cost of verification be charged to the customer.

Where the customer is represented by an authorized agent or representative, or where customer is a legal person, the Office of issue or third party shall identify the natural persons who act on behalf of the customer and verify the identity of such persons and the authority of such natural persons shall be verified through documentary evidence, including specimen signature of the persons so authorized.

Where beneficial owner is different from the customer, the office of issue or third party shall identify and take reasonable measures to verify identity of the beneficial owners using relevant information or data obtained from a reliable source, to the satisfaction of the office of issue.

The verification of the identity of customers and beneficial owners, if any, shall be completed before business relations are established.

The office of issue shall conduct ongoing due diligence on the business relationship, including;-

(a) scrutinizing transactions undertaken throughout the course of that relationship to ensure that the transactions being conducted are consistent with the office of issue’s knowledge of the customer, their business and risk profile, including where necessary, the source of funds; and

(b) ensuring that documents, data or information collected under the CDD process is kept up-to-date and relevant, by undertaking reviews of existing records, particularly for higher risk categories of customers.

The office of issue or third party shall maintain a list of all such customers and accounts where the business relationship needed to be closed on account of negative verification that includes all type of customer identity verification such as NADRA, UNSCR or any other document or information etc.

December 19, 2019
Rupee gains four paisas amid lackluster payment demand

KARACHI: The Pak Rupee made four paisas against dollar on Thursday owing to lackluster demand for import and corporate payments, dealers said.

The rupee ended Rs154.90 to the dollar from previous day’s closing of Rs154.95 in interbank foreign exchange market.

The dealers said that the foreign currency demand for import and corporate payments was remained lackluster.

The foreign currency market was initiated in the range of Rs154.91 and Rs154.95. The marked witnessed day high of Rs154.91 and low of Rs154.90 and closed at Rs154.90.

The exchange rate in open market was remained unchanged. The buying and selling of dollar was recorded at Rs154.40/Rs154.70, the same previous day’s closing, in cash ready market.

December 19, 2019
SBP directs banks to ensure facilitation in donations for Dam Fund

KARACHI: State Bank of Pakistan (SBP) on Wednesday directed banks to facilitate people in depositing their donations for Diamer-Bhasha and Mohmand Dam Fund.

The SBP said that in compliance with the directives of the Supreme Court of Pakistan in the Constitution Petition No.57/2016, the State Bank of Pakistan (SBP) vide Circular No. 04 dated July 10, 2018 and Circular No. 07 dated September 7, 2018 prescribed the mode, manner and channels for collection and deposit of donations to the subject Fund.

Specifically, following channels were made available to the domestic donors:-

a) Counters of the banks: Donors may deposit their donations and contributions at the counters of any branch of any bank in Pakistan, including microfinance banks, and remittance of donation so deposited to the principal account of the Fund at SBP within 30 minutes through Pakistan Real- time Interbank Settlement Mechanism;

b) Alternate Delivery Channels (ADCs): In order to facilitate donors and to obviate the need to visit the branches; Internet Banking, Automatic Teller Machines (ATM) and other ADCs were also activated for collection and subsequent remittance thereof to the Fund Account at SBP; and

c) Branchless Banking: The commercial and microfinance banks offering Branchless Banking (BB) were directed to facilitate the donors in depositing donations through their BB agents.

Similarly, Overseas donors were facilitated to deposit their donations by using any of the following channels:-

a) Wire transfer to SBP Nostro account with NBP, New York;

b) Transfer through Money Service Bureaus, Money Transfer Operators and Exchange Houses;

c) Deposit of donations at Pakistan Missions and Embassies abroad;

d) Deposit of donations at branches of domestic banks abroad; and

e) Transfer through Debit/Credit Cards

The apex court in its recent hearing observed that donors still encounter difficulties in depositing their donations, both locally and overseas.

The banks are directed that instructions, so far issued on the subject, vide circulars referred above must be meticulously complied with especially with regards to display of banners and panaflex advertising “DONATIONS TO THE SUPREME COURT OF PAKISTAN AND PRIME MINISTER OF PAKISTAN’S DIAMER BHASHA AND MOHMAND DAMS FUND ARE ACCEPTED HERE”.

December 18, 2019
Rupee ends unchanged amid inflows

KARACHI: The Pakistani rupee remained unchanged against the US dollar on Wednesday, closing at Rs154.95 in the interbank market—the same level as the previous day. According to currency dealers, the stability in the rupee was largely due to steady inflows from exports and workers’ remittances.
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December 18, 2019
Bank deposits by wholesale trade sharply increase by 240%

KARACHI: The bank deposits by wholesale trade sharply increased by 240 percent in November 2019 owing to higher interest rate and abolishing withholding tax rate on cash withdrawal, market sources said on Wednesday.

According to data released by State Bank of Pakistan (SBP) on December 17, 2019, the bank deposits by wholesale trade increased to Rs511.45 billion by end of November 2019 as compared with Rs150.24 billion a month ago.

The market sources said that the sharp increase in deposits by wholesale trade was mainly due to prevailing higher interest rate.

The SBP in its monetary policy announcement on November 22, 2019 kept the policy rate unchanged at 13.25 percent.

The sources said that the improvement in economic indicators also helped the confidence building of investors.

This is also evident in the collection of withholding tax by Federal Board of Revenue (FBR) on profit on debt. The collection of tax from bank deposits registered increase by 204 percent to Rs21.6 billion during July – November 2019/2020 as compared with Rs7.1 billion in the corresponding period of the last fiscal year.

The market sources also attributed to rise in bank deposits by wholesale trade to abolishing withholding tax on cash withdrawal by the government.

The withholding tax at 0.3 percent which was applicable on the income tax return filers on withdrawal of cash above Rs50,000 in a day was abolished through Finance Supplementary (Second Amendment) Act, 2019.

The sources said that majority of people making financial transactions had filed their annual returns to avoid paying withholding taxes or avail reduced rate of withholding tax.

The filing of income tax returns has increased to record level of 2.71 million for tax year 2018.

According to the SBP data the bank deposits of retail trade however slightly fell to Rs234.6 billion by end of November 2019 as compared with Rs241.25 billion in October 2019.

The overall deposits under the head of wholesale and retail trade, repair of motor vehicles and motorcycles increased to Rs775.6 billion in November 2019 as compared with Rs419.6 billion in October 2019.

December 18, 2019
SBP issues instructions on foreign currency loan by private sector

KARACHI: The State Bank of Pakistan (SBP) on Tuesday issued instruction to banks and exchange companies related to foreign currency loan by private sector.

A circular issued by the central bank said that the chapter 19 of Foreign Exchange Manual 2019 contained that it is required to register all foreign currency (FCY) loans, above USD one (1) million, with Exchange Policy Department, State Bank of Pakistan.

In this regard, the SBP decided that all FCY loans will be registered by the banks and exchange companies irrespective of the amount. ADs will be responsible to ensure that FCY loans registered by them, are in compliance with all the parameters given against each type of FCY loan, in Chapter 19 of FEM 2019. However, prior permission of SBP will continue to be required for raising following FCY Loans:

Private sector FCY loans mobilized through securitized instruments, issuance of bonds and financing under Islamic arrangements.

Long term FCY borrowing by ADs.

FCY borrowing by other Financial Institutions i.e. NBFIs, DFIs, PSOs, PSPs, Leasing Companies, House Building Finance Companies & Insurance Companies.

The SBP said that authorized dealers shall also ensure to have independent assessment of each FCY loan proposal/ transaction from money laundering/ terrorism financing risk and foreign exchange risk perspective, by their Compliance or Risk Management Department, prior to its registration. For this purpose, ADs shall conduct appropriate due diligence of the proposal including particulars of lender and shall determine the ultimate beneficial ownership, if it is not a Financial Institution.

In case, the lending entity is controlled by residents, ADs shall ensure that their investment abroad is in compliance with foreign exchange regulations. Further, ADs shall conduct annual focused Internal Audit of FCY Loan Registration function.

Further, the minimum tenor of loans raised as PSBA for working capital under Para 7(iii) and FSBA for liquidity management purposes under Para 9(iii) of Chapter 19 of FEM 2019 has been reduced to one month.

For reporting these foreign private loans (FPL) data on Data Acquisition Portal (DAP), all ADs are required to get Loan Registration Number (LRN) of each loan from Statistics and Data Warehouse Department by 5th of the following month by providing information along with repayment schedule.

All other terms, conditions and instructions in the matter shall remain unchanged. Accordingly, Chapter 19 of the FEM 2019 has been revised and is attached herewith. ADs are advised to bring the above contents to the notice of all their constituents and ensure meticulous compliance.

December 17, 2019
Rupee recovers six paisas on inflows of export receipts

KARACHI: The Pak Rupee recovered six paisas against dollar on Tuesday owing to inflows of exports and remittances, dealers said.

The rupee ended Rs154.95 against dollar from previous day’s closing of Rs155.01 in interbank foreign exchange market.

The dealers said that the rupee was under pressure earlier in the day due to demand for import and corporate payments. However, the rupee managed to recover on inflows of exports and remittances.

The foreign currency market was initiated in the range of Rs155.00 and Rs155.05. The market recorded day high of Rs155.05 and low of Rs154.95 and closed at Rs154.95.

The exchange rate in open marked witnessed no change in rupee value. The buying and selling of dollar was recorded at Rs154.40/Rs154.70, same as the previous day’s closing, in cash ready market.

December 17, 2019