ISLAMABAD – A recent statement by State Bank of Pakistan (SBP) Governor Dr. Reza Baqir has drawn sharp criticism from senators, who termed it “irresponsible” and called for immediate clarification. The contentious statement pertains to the continuous depreciation of the Pakistani Rupee (PKR) against the US Dollar.
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SBP selects eight banks for collateral-free loan scheme
KARACHI: State Bank of Pakistan (SBP) has selected eight banks for lending collateral-free loan to Small and Medium Enterprises (SMEs), a statement said on Wednesday.
Governor State Bank of Pakistan, Dr. Reza Baqir announced that banks have shown overwhelming response to an innovative financing scheme for collateral free lending to SMEs introduced by the State Bank and supported by the Government of Pakistan.
This is the first time a comprehensive collateral free SME lending scheme has been introduced by SBP in the country.
Out of 20 banks that competed for participating in this scheme, 8 banks under four categories have been selected on the basis of highest amount of finance and highest number of SME clients to be served.
These categories include large banks, mid-sized banks, small banks, and banks in collaboration with fintechs.
The winning banks are Habib Bank Ltd, United Bank Ltd, Allied Bank Ltd, Meezan Bank Ltd, Bank Alfalah Ltd, The Bank of Punjab, JS Bank Ltd and The Bank of Khyber. These banks have been selected through a transparent bidding process based on prescribed criteria.
While appreciating banks’ enthusiastic response, Dr. Reza Baqir, Governor State Bank emphasized early roll out of the scheme by banks.
He also underscored the importance of extensive awareness and marketing of the scheme for the SMEs to fully utilize its benefits.
Access to finance for SMEs remains low in Pakistan due to a number of factors including lack of collateral and perceived high risk due to non-availability of track-record.
To address these issues, SBP adopted an innovative approach by designing SME Assan Finance, commonly known as SAAF which refers to the collateral free nature of finance. SAAF has been developed after thorough consultation with stakeholders.
To implement this scheme, the SBP decided that rather than advising all banks to offer this product, only willing banks will be encouraged to be part of this initiative and develop their expertise through a transparent process.
SAAF was launched in August 2021 and bids were solicited from the interested banks. Under SAAF, SBP will provide refinance to the banks at 1 per cent per annum (p.a.) for onward lending to SMEs at a maximum end-user rate of up to 9 per cent p.a.
The end user rate under SAAF would be attractive for SMEs when compared with usual cost of financing for them from informal sources which can run 25 per cent – 50 per cent p.a.
The margin available to banks will help them to make an upfront investment in human resources, technology and processes to cater to promote SME finance.
This incentive has been provided to banks for the first three years of this scheme after which it is expected to become self-sustaining.
Additionally, under SAAF, risk coverage of up to 60 percent is being provided by Government of Pakistan. Under the SAAF scheme, SMEs can avail collateral free financing of up to Rs 10 million to meet their long-term capital expenditure and short-term working capital needs.
Governor Baqir also emphasized that a Shariah compliant version of SAAF is also available.
SBP has allocated refinance limits to eight winning banks for three years. Currently, these banks are finalizing their roll out plans for successful implementation of the scheme.
It is expected that selected banks will shortly roll out their SAAF programs through public announcements and marketing campaigns so that SME borrowers can approach any of these eight banks to request collateral free financing.
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KIBOR rates on November 02, 2021
KARACHI: State Bank of Pakistan (SBP) on Tuesday issued the following Karachi Interbank Offered Rates (KIBOR) on November 02, 2021.
Tenor BID OFFER 1 – Week 7.24 7.74 2 – Week 7.26 7.76 1 – Month 7.30 7.80 3 – Month 8.07 8.32 6 – Month 8.54 8.79 9 – Month 8.75 9.25 1 – Year 8.87 9.37 -
SBP issues customers exchange rates for November 02
KARACHI: The State Bank of Pakistan (SBP) on Tuesday issued customers’ exchange rates for November 02, 2021. The exchange rate is on the basis of weighted average rates of commercial banks.
The SBP said the data is compiled and disseminated for information only.
These exchange rates are estimates that quoted by various commercial banks to their clients.
The banks provide their indicative exchange rates for commercial transactions with customers.
CURRENCY BUYING SELLING AED 46.3521 46.4635 AUD 127.3076 127.6078 CAD 137.3389 137.6593 CHF 187.1194 187.5691 CNY 26.6205 26.6801 EUR 197.4940 197.9676 GBP 232.2738 232.8393 JPY 1.4968 1.5004 SAR 45.3671 45.4746 USD 170.1377 170.5605 -
SBP rejects reports of financial losses in cyber attack
KARACHI: State Bank of Pakistan (SBP) has strongly rejected the media reports of financial losses or data stolen in the recent cyber attack.
In a tweet on Monday, the SBP said some fake news regarding cyber security attack on banks is in circulation including remarks attributed to Chief Spokesman Abid Qamar.
According to these fake news, nine banks have been affected by the attack and that money has been withdrawn and data stolen.
“SBP rejects these news [reports].”
No bank, other than the National Bank of Pakistan (NBP), has faced a cyber attack.
“Further, no financial loss or data breach has been observed so far,” the SBP added.
The SBP is monitoring the situation closely and it will share any update or information about the incident through its official channels, according to the tweet.
Earlier, on October 30, 2021, the SBP in another tweet stated that the NBP had reported a cybersecurity-related incident that is being investigated. “NBP has not observed any data breach or financial loss. No other bank has reported any such incidence,” the SBP said adding it was monitoring the situation closely to ensure the safety and soundness of the banking system.
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KIBOR rates on November 01, 2021
KARACHI: State Bank of Pakistan (SBP) on Monday issued the following Karachi Interbank Offered Rates (KIBOR) on November 01, 2021.
Tenor BID OFFER 1 – Week 7.26 7.76 2 – Week 7.27 7.77 1 – Month 7.30 7.80 3 – Month 8.02 8.27 6 – Month 8.46 8.71 9 – Month 8.75 9.25 1 – Year 8.83 9.33 -
SBP issues customers exchange rates for November 01
Karachi, November 01, 2021 – The State Bank of Pakistan (SBP) has released the official exchange rates for customers as of November 01, 2021.
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E-banking transactions of Rs86.48 trillion made in FY21
KARACHI: The e-banking transactions recorded a significant increase during the fiscal year 2020/2021 as transactions worth Rs86.48 trillion were recorded through these channels.
According to a report recently issued by the State Bank of Pakistan (SBP), during 2020/2021, about 1.2 billion transactions of valuing Rs86.5 trillion were processed through retail e-banking channels.
These transactions showed growth of 30.6 per cent and 31.1 per cent in volume and value of transactions, respectively when compared with 905.9 million and Rs65.98 trillion during the last fiscal year.
In total e-banking transactions, Real-Time Online Branches (RTOBs) transactions accounted for the largest share of 77.8 per cent in value of transactions with a volume share of 15.8 per cent whereas ATMs have the largest share of 50.6 per cent in volume of transactions with a value share of 9.3 per cent only.
RTOB Transactions
RTOB channel provides online banking facility to all its customers across the whole branch network of the same bank. During the year under review, this channel processed 186.6 million transactions of Rs 67.3 trillion. These transactions depicted YoY growth of 7.4 per cent and 23.7 per cent in volume and value of transactions respectively.
During FY21, in terms of the number of transactions, cash deposit transactions have the highest share of 46.6 per cent (86.9 million) in total RTOB transactions volume-wise whereas intra-bank funds transfer transactions to other branches have the highest share of 70.0 per cent (Rs 47.1 trillion) in terms of the value of total RTOB transactions.
ATM Transactions
Pakistan is one of those countries where cash is still the dominant mode of making payments and performing transactions. It is evident from a significant increase in ATM transactions that ATMs are still the most widely used payment channel across the country, particularly for cash withdrawal transactions.
As on end June 2021, the total number of ATMs was 16,355 in the country. This accounts for approximately 7.7 ATMs touchpoints for every 100,000 people. During FY21, ATMs processed 598.7 million transactions with a value of Rs 8.1 trillion. It amounts to a YoY change of 16.9 per cent by volume and 25.6 per cent by value. During the year under review, the average size of ATM transactions was approximately Rs 13,489 per ATM transaction and 36,607 transactions were processed per ATM, compared with the average size of Rs 12,555 per ATM transaction and 32,801 transactions processed per ATM last year.
Further, the ratio of On-Us versus Off-Us Cash withdrawal was approximately 60:40 by volume and 67:33 by value which shows that customers mostly prefer to withdraw cash from their own bank’s ATMs.
Internet Banking Transactions
Banks are offering a variety of financial services through Internet Banking (IB) like Intra-bank & Interbank Fund transfer, scheduled fund transfers, Utility Bills Payments, Mobile Airtime top-ups, Intra-bank credit card payments, school fee payments, etc.
As on end June 2021, 27 banks were offering Internet Banking and there were 5.2 million registered Internet Banking Users with these banks. During the year FY21, this channel processed 93.4 million transactions amounting to Rs 5.7 trillion.
These transactions showed a YoY growth of 65.1 per cent and 91.7 per cent by volume and value respectively. In the total Internet Banking transactions, the share of Intra-Bank Funds transfer transactions is 35.0 per cent (32.7 million) and 36.8 per cent (Rs 2,084.2 billion) in volume and value of transactions respectively whereas the share of Inter-Bank Funds transfer transactions in volume and value of transactions is 41.5 per cent (38.8 million) and 43.1 per cent (Rs 2440.3 billion) respectively.
Utility Bills Payments contributed 18.1 per cent (16.9 million) in volume and 8.2 per cent (Rs 464.5 billion) in value of transactions and the residuals share is contributed by other miscellaneous payments including merchant payments, mutual funds payments, zakat, charities, etc. The substantial growth witnessed during the last few years in the Internet Banking channel is quite encouraging.
The push received from COVID-19 last year also resulted in remarkable growth in internet banking transactions in FY21.
Mobile Banking Transactions
Mobile Phone/App-based Banking is being offered by 27 Banks/ MFBs to 10.8 million registered users as of June 2021. This Channel processed 193.4 million transactions worth Rs 4.9 trillion during FY21 showing a YoY growth of more than double the volume and value of transactions, more precisely, it registered a YoY growth of 133.6 per cent and 178.7 per cent in volume and value of transactions respectively.
In the last 5 years, significant progress has been observed in the usage of Internet Banking and Mobile Banking channels showing annualized transaction growth of 38.3 per cent and 106.1 per cent respectively.
Intra-bank and Inter-bank fund transfers were the main contributors in total Mobile Phone Banking transactions. Intra-bank fund transfers contributed 20.1 per cent (38.9 million) transactions by volume and 34.6 per cent (Rs 1,702.8 billion) transactions by value while Interbank fund transfers contributed 44.8 per cent (86.6 million) transactions by volume and 51.2 per cent (Rs 2,516.0 billion) transactions by value.
Utility Bills Payments had the volume of 31.1 per cent (60.1 million) transactions and 2.2 per cent (Rs 106.2 billion) transactions by value within overall Mobile Banking volume and value of transactions respectively and insignificant residual share is contributed by miscellaneous payments using Mobile Phone Apps.
The channel depicted a growing trend of transactions. During the year, FY21, it showed a substantial growth compared to the previous years, as is evident from the trend shown in figure 2.5 above.
It is quite evident that Mobile Banking has been the preferred source of conducting transactions and making payments by the consumers, just because of the fact that the channel has observed more than double increase in terms of both volume and value of transactions during the year under review.
Call Center/ IVR Banking Transactions
During the year FY21, Call Centers/ IVR Banking Channel processed 0.3 million transactions amounting to Rs 8.1 billion. This channel facilitates both Intra and Inter-Bank Funds transfers. Mostly Banks/MFBs high valued customers are also allowed to use this channel for Utilities Bill Payments. As on the end-June 2021, there were 33.4 million Call Centers/IVR Banking Channel registered users.
Digital Adaption by Merchants
Despite the economic downturn during the COVID-19 pandemic, it is quite promising that e-commerce transactions during recent years have seen continuous growth, leading to the belief that the general consumers are realizing the benefits of paying through cards instead of paying through cash, which includes transparency in payments, no hassle of carrying change, paying any amount directly from the account, and avoiding unnecessary carrying of cash at all times.
Card Present – POS Transactions
In Pakistan 5 banks are in the business of open-loop POS acquiring whereas, 4 banks are providing closed-loop services on POS.
The turnover of 88.8 million POS transactions valuing Rs 453.1 billion was recorded in FY21 as compared to 70.3 million transactions valuing Rs 364.2 billion in FY20, showing a YoY growth of 26.3 per cent by volume and 24.4 per cent by value of transactions.
POS transactions have a 7.5 per cent share in the total volume of transactions with a value share of 0.5 per cent showing low uptake of merchant onboarding and insignificant usage of debit cards for retail transactions. The increase in POS transactions can be attributed to the reopening of shops and markets as the lockdown was gradually lifted on an on-and-off basis.
Card-not-Present – e-Commerce
There were 3,003 locally registered e-Commerce Merchants having their merchant accounts in 6 banks as of end-June 2021 compared to 1,707 Merchants last year, showing significant growth of 75.9 per cent boarding of e-Commerce merchants in the country.
In Pakistan, International Payment Gateway Services (IPGs) are being provided by 4 banks, whereas 2 microfinance banks were also working as merchant aggregators and are providing e-commerce gateway to their clients while leveraging on 4 IPGs in Pakistan. Consumers carried out 21.9 million online transactions worth Rs 60.6 billion on these locally registered e-Commerce Merchants during the year FY21 through cards. These transactions showed significant YoY growth of 114.8 per cent and 74.1 per cent by volume and value of transactions respectively.
In addition to the above, domestically issued Debit, Credit, and Pre-paid cards collectively processed 33.6 million transactions of Rs 124.6 billion on local and international e-commerce merchants. Debit cards took the lead with the highest share of transactions i.e., 67.0 per cent (22.5 million) in volume; when it comes to value, credit cards registered the highest share with 49.8 per cent (Rs 62.0 billion).
It is worth mentioning that the number of transactions per debit card issued (0.75 transactions) is very less when compared with e-commerce transactions processed per credit card issued (6.4 transactions), leaning to infer that credit cards still remain the preferred instrument to perform e-commerce transactions.
Payment Cards Transactions
In Pakistan, payment cards can be categorized as Credit, Debit, Proprietary ATM, Social Welfare, and Pre-Paid Cards. As on end-June 2021, there were 45.9 million total cards in circulation. Collectively, these cards processed 708.7 million transactions amounting to Rs 8.4 trillion.
Credit Cards
As on end-June 2021, the number of reported Credit Cards in circulation is 1.7 million. These cards processed 47.4 million transactions of value Rs 270.1 billion during the year FY21. The total volume of Credit Card transactions has 76.2 per cent share on POS transactions and 23.1 per cent share in e-Commerce transactions whereas in terms of value, these transactions have 75.8 per cent share of usages on POS, 23.1 per cent share of usage for e-Commerce and the residual share of transactions pertains to ATMs.
The average transactions size of Credit Cards is Rs 5,699 (down from Rs 5,770 last year) whereas, on average, each credit card conducted 28 transactions (up from 25 transactions last year).
Debit Cards
The number of debit cards at the end of FY 2021 has been 29.8 million, observing a YOY growth of 11.8 per cent, whereas exhibiting annualized growth of 13.8 per cent during the last 4 years. It is point worthy to note that the number of debit cards increased mainly due to the mandate given by SBP to issue more secure Europay Master Visa (EMV) Chip and PIN Compliant cards, thus adding more security without compromising customer experience.
During the year under review, these debit cards processed 634.1 million transactions worth Rs 7.9 trillion, showing a YoY growth of 24.0 per cent by volume and 30.1 per cent by value of transactions. In the total volume of transactions processed by Debit Cards, ATMs transactions have 86.3 per cent share with a value share of 95.8 per cent whereas POS transactions have a 10.2 per cent share in volume and 3.4 per cent share in the value of transactions. The residual share of Debit Cards is contributed by e-Commerce transactions for online purchases of the Card Not Present (CNP) environment. The average transactions size by Debit Cards is Rs 12,395 whereas 21 transactions on average were processed by a single card.
Proprietary ATMs only Cards
Proprietary ATMs only cards are issued by 12 banks for cash withdrawals on ATMs. As on end-June 2021, there were 5.7 million ATMs only cards in circulation and these cards processed 25.1 million transactions worth Rs 278.1 billion.
These transactions showed a YoY decline of 45.3 per cent and 44.5 per cent by volume and value of transactions respectively, mainly due to the fact that the banks are in the continuous process of migrating their existing ATM-only card portfolio towards EMV Chip and PIN cards.
Social Welfare Cards
Social welfare cards are issued by the Government of Pakistan or provisional governments to support needy and disaster-affected people. As on end-June 2021, there were 8.4 million Social Welfare cards in circulation. During the year FY21, these cards processed 1.5 million transactions worth Rs 5.6 billion.
Prepaid Cards
Prepaid cards are being issued by a few banks in Pakistan in order to ensure that customers can enjoy flexibility while paying at merchant locations or online e-commerce portals. As on end-June 2021, there were 0.13 million cards in circulation. These cards processed 0.6 million transactions worth Rs 2.3 billion during the year FY21.
With the growth of digital access points, the associated risks are also evolving. SBP has been cognizant of the inherent risks in digital payments, therefore, it has been strengthening the oversight functions to ensure the security of digital payment systems and consumer protection.
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No disruption in transactions post cyber-attack on NBP
KARACHI: 1LINK, transaction service provider to banks, on Sunday confirmed that there was no disruption of any interoperable banking services during or after the cyber-attack on one of the major banks in Pakistan.
All transactions, both financial (ATM cash withdrawal, 1IBFT-Inter Bank Funds Transfer and Bill Payments) and non-financial transactions (balance inquiry, title fetch and bill inquiry) are completely functional and safe.
There was no downtime from Thursday, October 28, 2021, till now, and the transaction volumes suggest that consumers are conducting transactions as usual.
This clarification is to dispel all rumors and give comfort to all banking customers that Pakistan’s Payment Systems and Digital Banking is safe, as neither customer data is compromised, nor any compromise has been reported through 1LINK grid or its member banks.
The State Bank of Pakistan (SBP) on Saturday stated that the National Bank of Pakistan (NBP) had reported a cyber security related incident which is being investigated.
“The bank has not observed any data breach or financial loss. No other bank has reported any such incidence,” the central bank said. The SBP added that it was monitoring the situation closely to ensure safety and soundness of banking system.
State Bank of Pakistan, 1LINK and all banks are closely monitoring the situation to ensure continued safety and soundness of the banking and digital payments system.
Customers can comfortably conduct their transactions using their accounts, mobile apps, internet banking and debit and credit cards through all available channels, i.e., ATMs, POS terminals, internet banking, mobile banking, OTC and other digital means. However, customers are advised to practice extreme caution in safeguarding their digital credentials which are required to perform transactions, including ATM pin, passwords, OTP, etc.
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FBR applies digital payment amid cyber security incident
ISLAMABAD: The Federal Board of Revenue (FBR) is all set to apply a digital mode of payment from November 01, 2021, for corporate entities as one of the largest banks in the country reported a cyber security incident.
The digital mode of payment has been made mandatory from November 01, 2021. The FBR has already made necessary amendments to relevant tax laws to implement the digital payment system.
The new provision of law was promulgated through Tax Laws (Third Amendment) Ordinance, 2021, where a new sub-section (la) was inserted in Section 21 of the Income Tax Ordinance, 2001.
The State Bank of Pakistan (SBP) on Saturday stated that the National Bank of Pakistan (NBP) had reported a cyber security related incident which is being investigated.
“The bank has not observed any data breach or financial loss. No other bank has reported any such incidence,” the central bank said. The SBP added that it was monitoring the situation closely to ensure safety and soundness of banking system.
Interestingly, a day earlier, the apex tax bar of the country Pakistan Tax Bar Association (PTBA) in a letter to FBR chairman mentioned about the cyber security issues while implementing the mandatory digital mode of payment.
“It will not be out of place to mention that online transactions are still considered as unsecured mode, due to various type online frauds and hacking of software,” according to the PTBA’s letter.
The apex tax bar urged the tax authorities to defer the condition as the implementation was not practical at present.
“The condition for allowable expenditure through digital mean is a contradiction with the other modes of payment through banking channels, which is historically remained in practice and accepted under the provisions of the Income Tax Ordinance, 2001 and this provision of law is incorporated without taking the stakeholders into confidence and it is not practically possible for many business houses,” the PTBA said.