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: State Bank of Pakistan (SBP) on Friday expanded the economic refinance facilities to existing projects in order to provide relief the industry to dilute impact of coronavirus.
The SBP issued the scheme on March 17, 2020. On the basis of feedback from stakeholders, State Bank has decided to expand the scope of subject facilities.
Accordingly, in addition to the new projects, existing projects/ businesses are being allowed to avail financing under these Facilities for undertaking Balancing, Modernization and Replacement (BMR) and/or expansion of their projects/ businesses.
However, to ensure proper utilization of the Facilities, banks/ DFIs and borrowers are required to ensure the following:
As per TERF’s/ITERF’s eligibility criteria, financing for BMR/expansion will only be available for purchase of new imported and locally manufactured plant & machinery against foreign LC and inland LC, respectively. Second-hand machinery, land or civil works are not covered under the Facilities.
Banks/DFIs will be required to make disbursements to their customers on the basis of certificates of their Internal Audit confirming that financing is within the terms and conditions laid down in the Facilities. A copy of the said Internal Audit Certificate shall be submitted to the concerned office of SBP BSC (Bank) at the time of availing refinance for the first time for a project/ business while copies of certificates in respect of subsequent disbursements may be submitted at the time of availing last refinance for the same project/ business. In case of consortium finance the lead bank will be required to submit the certificate.
The borrowers concerned will be required to submit a report from PBA’s approved surveyors (acceptable to bank/DFI concerned) with regard to confirmation that the newly purchased plant & machinery has been installed as per their initial request/proposal for BMR/expansion. In case of installation/fixation in part, this report will be required at first and final installation of the plant/equipment.
KARACHI: The Board of Directors of Meezan Bank in its meeting, held on May 05, 2020 approved the financial statements of the Bank for the quarter ended on March 31, 2020.
The meeting was presided by Riyadh S.A. A. Edrees – Chairman of the Board; Faisal A. A. A. Al – Nassar – Vice Chairman of the Board was also present.
The bank maintained its deposit base at Rs 928 billion with market share of more than 6 percent in the banking industry. Meezan Bank is the 6th largest bank in Pakistan with a network of 774 branches in 231 cities, complimented with a comprehensive array of digital services, including Internet Banking, Mobile App and other Alternate Distribution Channels for delivery of seamless Shariah-compliant banking services to its customers across Pakistan and around the globe.
The bank’s net spread grew by 66 percent primarily due to higher volume of average earning assets and higher underlying Policy Rate while the Bank’s non-funded income grew by 64 percent mainly due to higher foreign exchange income and gain on sale of securities of Rs 680 million.
Administrative and other operating expenses increased to Rs 7.1 billion from Rs 5.5 billion in corresponding period last year primarily due to costs associated with opening of 98 new branches since March 2019.
The bank’s financing portfolio decreased slightly from December 2019 mainly due to overall slowdown in economic activity and repayment of seasonal financing. Recognizing stresses in certain sectors of the economy due to the COVID -19 outbreak, an additional General Provision of Rs 1 billion was approved by the Board against any potential non-performing financings, bringing the Bank’s non-performing financings coverage ratio to 147 percent – the highest in the banking industry while its infection ratio, at less than 2 percent is one of the lowest in the industry.
The bank has taken several initiatives to safeguard the health of its employees, their families and its customers during the current pandemic, including activation of Business Continuity Plans, deployment of almost 70 percent Head Office staff to work from alternate sites or from the safety of their homes and mandatory use of face masks at all times in all its premises so as to minimize the risk of exposure to the disease.
KARACHI: The Pak Rupee fell by 17 paisas against dollar on Thursday owing to hope of escalation in economic activity and higher demand for imports.
The rupee ended Rs160.22 to the dollar from previous day’s closing of Rs160.05 in interbank foreign exchange market.
Currency experts said that positive sentiments were prevailed in the markets on reports of ease in lockdown.
They said that the announcement of allowing import of petroleum products also deteriorated the rupee value.
However, the trade deficit shrank by 25.68 percent to $19.49 billion during July – April 2019/2020 as compared with the deficit of $26.23 billion in the same period of the last fiscal year.
The exports in first ten months (July – April) 2019/2020 also fell by four percent to $18.41 billion as compared with $19.16 billion in the corresponding period of the last fiscal year.
On the other hand the import bill fell by 16.5 billion to $39.9 billion in the first ten months of current fiscal year as compared with $45.4 billion in the corresponding period of the last fiscal year.
KARACHI: The Pak Rupee depreciated by 41 paisas against dollar on Wednesday owing to hope of escalation in demand.
The rupee ended Rs160.06 to the dollar from previous day’s closing of Rs159.65 in interbank foreign exchange market.
Currency experts said that positive sentiments were prevailed in the markets on reports of ease in lockdown.
They said that the announcement of allowing import of petroleum products also deteriorated the rupee value.
However, the trade deficit shrank by 25.68 percent to $19.49 billion during July – April 2019/2020 as compared with the deficit of $26.23 billion in the same period of the last fiscal year.
The exports in first ten months (July – April) 2019/2020 also fell by four percent to $18.41 billion as compared with $19.16 billion in the corresponding period of the last fiscal year.
On the other hand the import bill fell by 16.5 billion to $39.9 billion in the first ten months of current fiscal year as compared with $45.4 billion in the corresponding period of the last fiscal year.
KARACHI: Ministry of Finance and State Bank of Pakistan (SBP) introduce risk-sharing mechanism to support bank lending to SMEs and small businesses to avail SBP’s Refinance Facility to Support Employment.
Taking cognizance of the SMEs finding difficulties in arranging adequate collateral and banks’ risk averseness in taking exposures for such lending under the SBPs Refinance Scheme to Support Employment and Prevent Layoff of Workers, Ministry of Finance has stepped forward to shoulder risk sharing with banks. Accordingly, the Federal Government has allocated Rs30 billion under a credit risk sharing facility for the banks spread over four years to share the burden of losses due to any bad loans in future. Under thisrisk sharing arrangement, Federal Government will bear 40% first loss on principal portion of disbursed loan portfolio of the banks.
This facility will incentivize banks to extend loans to collateral deficient SMEs and small corporates with sales turnover of upto Rs2 billion to avail financing under SBP refinance scheme.
Under the SBP’s Refinance Scheme to Support Employment and Prevent Layoff of Workers due to the impact of COVID-19, businesses that commit to not lay off workers in the next three months can avail credit through banks for the three months of wages and salaries expenses at a concessional mark-up rate.
The risk-sharing mechanism being introduced today, that is expected to increase the banks’ incentive to lend to SMEs and small corporate under this scheme, was developed on the basis of feedback received from relevant stakeholders and in collaboration between MOF and SBP.
Ministry of Finance’s swift approval of the subsidy to provide risk coverage to banks has made it possible for the SBP to launch this credit risk sharing facility for which relevant circular has been issued today.
SBP will continue to monitor the implementation of the scheme.
With a view to incentivize banks/DFIs for financing to SMEs and small corporates under above mentioned schemes, Government of Pakistan has approved budgetary allocation for ‘Risk Sharing Facility for State Bank of Pakistan (SBP) Refinance Scheme to Support Employment and Prevent Layoff of Workers’.
Accordingly, the risk sharing facility is being provided with immediate effect, with following key features.
S.No
Particulars
Key features
1
Eligibility
The financing extended to businesses with maximum sales turnover of Rs 2 billion, under SBP refinance scheme to support employment and prevent layoff of workers is eligible for Risk Sharing Facility by the GOP.
2
Risk Coverage
GoP will bear 40% first loss on disbursed portfolio (principal portion only) for eligible borrowers. Note: In case of non-repayments, after being classified as ‘Loss’ (as per the classification criteria laid down under respective SBP Prudential Regulations, credit loss subsidy claim will be paid by the GOP).
3
Security Requirements
Security arrangements will be as per executing agency’s own credit policy after taking into account the factor of this risk sharing facility. Hence, banks are encouraged to facilitate collateral deficient borrowers. In any case, banks will not be asking for additional collaterals over and above 60% of the principal amount and markup thereon.
4
Executing Agency
Banks and DFI assigned limits under SBP scheme will be eligible Executing Agencies (EAs).
5
Additional Measures
EAs shall develop and implement robust mechanism to ensure that the loans are utilized for intended purpose only.
6
Administration
Development Finance Support Department (DFSD), SBP BSC will manage operational aspects of the risk sharing facility. DFSD will submit data under the risk sharing facility on quarterly basis to the Finance Division.
7
Subsidy Payment
EAs shall submit credit loss subsidy claims to DFSD on quarterly basis within 15 working days after the end of each quarter. DFSD after scrutiny of the claims shall submit the same to Finance Division, GOP. FD will release payment against submitted claims within 15 working days. Upon receipt of subsidy from GOP, SBP BSC Karachi will credit the account of EAs with the subsidy amount.
The banks/DFIs are advised to ensure immediate implementation of ‘Risk Sharing Facility for SBP Refinance Scheme to support employment and prevent layoff of workers’ and facilitate the eligible businesses to avail financing under this facility.
KARACHI: The Pak Rupee gained another 26 paisas against dollar on Tuesday owing to better economic indicators amid coronavirus pandemic.
The rupee ended Rs159.65 to the dollar from previous day’s closing of Rs159.91 in interbank foreign exchange market.
The local currency gained 56 paisas during past two days.
Currency experts said that the rupee appreciated due to inflows of IMF funds and decline in international oil prices.
They said that local currency would gain in coming trading days due to fall in international oil prices and improved external accounts.
They said that that improved foreign direct investment and shrinking current account deficit helped the local currency to make gain.
The inflow of Foreign Direct Investment (FDI) into Pakistan has witnessed sharp growth of 137 percent during first nine months (July – March) 2019-2020.
The FDI increased to $2.15 billion during first nine months of current fiscal year as compared with $905 million in the corresponding period of the last fiscal year.
Current account deficit (CAD) has contracted by 73 percent during first nine months (July – March) 2019/2020 due to significant decline in import bill.
The current account deficit fell to $2.77 billion during first nine months of current fiscal year as compared with $10.28 billion in the corresponding period of the last fiscal year.
KARACHI: State Bank of Pakistan (SBP) on Monday said that it will not issue fresh currency notes on this Eid ul Fitr.
The decision has been taken due to measures taken by the government to prevent spread of COVID-19.
The SBP issued a notification suspending the issuance of fresh currency notes to public.
The SBP said that the bank’s management had taken multiple precautionary measures to ensure social distancing and mitigate the spread of COVID-19.
“These include but are not limited to performing of only essential / critical functions, making comprehensive work from home arrangements, ensuring workplace SOPs, issuance of medical advisories, etc.”
Accordingly, the bank’s COVID-19 committee had decided not to issue fresh notes to general public and employees / ex-employees of SBP and its subsidiaries on occasion of Eid-ul-Fitr 2020.
KARACHI: State Bank of Pakistan (SBP) has advised banks to use the infected banknotes that have completed 14 days quarantine period.
The SBP on Monday issued advisory for banks related to COVID-19 – Uninterrupted Supply of Disinfected Cash at Banks and ATMs.
The SBP previously issued a circular dated March 23, 2020 under which banks were advised to disinfect, seal and quarantine the cash collected from hospitals and clinics, until further orders. The banks were given credit for all such cash so quarantined and kept on behalf of SBP.
In the meanwhile, central banks’ practices on the matter have been reviewed which indicate that quarantine of cash for 14 days is sufficient to disinfect the banknotes, which can then be put back into circulation.
Similarly, the World Health Organization has also advised that the life of the virus on porous surfaces (such as paper banknotes) is lower, compared to other hard surfaces.
In view of the above, banks are allowed to use the quarantined cash, which have completed quarantine period of fourteen (14) days.
Consequently, the credit given to banks on account of quarantined cash would be reversed on the fifteenth (15th) day from each reported date.
However, the facility of same day credit for quarantined cash introduced via FD Circular No. 1/2020 dated March 23, 2020 shall continue with contra debit on 15th day, as stated above.
KARACHI: The Pak Rupee gained 26 paisas against dollar on Monday owing to inflows of IMF loan payment.
The rupee ended Rs159.91 to the dollar from previous close of Rs160.17 on April 30, 2020.
Currency experts said that the rupee appreciated due to inflows of IMF funds and decline in international oil prices.
They said that local currency would gain in coming trading days due to fall in international oil prices and improved external accounts.
They said that that improved foreign direct investment and shrinking current account deficit helped the local currency to make gain.
The inflow of Foreign Direct Investment (FDI) into Pakistan has witnessed sharp growth of 137 percent during first nine months (July – March) 2019-2020.
The FDI increased to $2.15 billion during first nine months of current fiscal year as compared with $905 million in the corresponding period of the last fiscal year.
Current account deficit (CAD) has contracted by 73 percent during first nine months (July – March) 2019/2020 due to significant decline in import bill.
The current account deficit fell to $2.77 billion during first nine months of current fiscal year as compared with $10.28 billion in the corresponding period of the last fiscal year.
KARACHI: State Bank of Pakistan (SBP) on Friday increased the refinancing limits for hospitals and medical centers in the background of rising cases of COVID-19 in the country and with the need to strengthen health sector in fight against COVID-19.
The central bank enhanced financing limit of a single hospital/ medical center under its Refinance Facility for Combating COVID -19 (RFCC) from Rs. 200 million to Rs. 500 million.
RFCC is an emergency funding facility to support hospitals/medical centers to develop their capacities for treatment of infected patients of COVID-19.
The financing under this facility is being made available by State Bank at zero percent to banks that can charge a maximum rate of 3 percent per annum to hospitals/medical centers.
State Bank has been continuously improving features of this Facility to ensure timely financial support to hospitals/medical centers engaged in combating COVID-19.
So far, financing of Rs. 2.2 billion for 11 hospitals/medical centers has been approved whereas financing requests of Rs 3.6 billion for 23 hospitals/medical centers are being processed by the banks.
With today’s enhancement of financing limit, it is expected that large scale facilities will be created for treating COVID-19 patients by using subsidized funding being extended under this facility.
