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  • SBP allows five days sale, purchase of forex

    SBP allows five days sale, purchase of forex

    KARACHI: The State Bank of Pakistan (SBP) on Wednesday allowed five days forward sales and purchase of foreign exchange against export proceeds in order to facilitate managing exchange rate risks associated with realization of export proceeds.

    The SBP issued following two circulars in this regard.

    Five Days Forward Sale Facility against Export of Permissible Foreign Currency Notes

    The SBP invited attention all Exchange Companies is invited to the instructions contained in Para (9)(i)(e), Chapter (3) of the Exchange Companies Manual whereby Exchange Companies are allowed to sell foreign exchange in Ready, Tom and Spot value dates, with banks as counterparty (Interbank Market).

    2. In order to facilitate Exchange Companies in managing exchange rate risks associated with realization of export proceeds against export of permissible foreign currency notes, it has been decided that Exchange Companies may enter into forward sale transaction with banks up to 5 working days against export proceeds in US Dollars.

    3. Accordingly, a new sub-para (e) (i) at Para (9) of Chapter (3) ibid has been added as under:

    “Exchange Companies may sell forward the export proceeds received from abroad in US Dollars to banks against the export of permissible foreign currencies made on consignment basis through cargo/security companies subject to adherence of following terms and conditions:

    a. Forward sale facility may be availed up to maximum five working days (including both transaction and settlement days).

    b. In case Exchange Companies sell forward the export proceeds for less than five working days, forward sale period may be extended provided that the total period of forward sale, including the extended period, does not exceed five working days (including both transaction and settlement days). However, such extensions will be made by closing out the original contract and booking of a fresh contract at the new rate.

    c. Forward sale may be booked before or after the export shipment.

    d. Exchange Companies are required to bring export proceeds within 5 working days from the date of shipment. In case forward sale is booked on or after the shipment date, maximum maturity date of forward sale facility may be up to 5th working day of shipment date.

    e. Forward sale may be booked for full or partial value of export proceeds against export shipment.

    f. Forward sale will be booked based on specific export shipment. For this, Exchange Company shall provide copy of export documents including deal ticket confirmed with foreign buyer to the bank. In case of advance booking, Exchange Companies will submit copy of deal ticket confirmed with foreign buyer to the bank, while copy of other export documents will be submitted subsequent to the shipment.

    g. No substitution is allowed for settlement of export proceeds.

    h. Forward contracts, which are not taken up, may be closed out on the date of maturity at prevailing spot rate. Exchange gain, if any, will not be passed on to the Exchange Company, rather the same will be deposited in favor of State Bank of Pakistan by the bank. To this effect, the Exchange Companies are required to provide their consent/agreement in writing as prescribed by the bank before entering into forward contract.

    4. Further, sub-para (i) of Para (4) of Chapter (5) ibid stands revised as under:

    “Exchange Companies exporting permissible foreign currencies shall repatriate equivalent US Dollars in their foreign currency accounts maintained with banks in Pakistan. Such US Dollars against exports must be credited in foreign currency accounts within five working days from the date of export of foreign currencies”.

    5. F.E. Circular No. 03 dated February 24, 2021 issued to Authorized Dealers is attached herewith for ready reference.

    6. All other instructions relating to the subject shall remain unchanged.

    Five Days Forward purchase Contract with Exchange Companies against Export of Permissible Foreign Currency Notes

    The SBP invited attention of all Authorized Dealers is invited to the instructions contained in Chapter (4) of the Foreign Exchange Manual in terms of which Authorized Dealers may enter into contracts for forward purchase or sale of foreign currencies subject to the regulations set out in this chapter.

    2. In order to facilitate Exchange Companies in managing exchange rate risks associated with realization of export proceeds against the export of permissible foreign currency notes, it has been decided that Authorized Dealers may enter into forward purchase transactions with Exchange Companies.

    3. Accordingly, a new Para ‘3A’ has been added in Chapter (4) ibid as under:

    “Forward Purchase of foreign exchange in US Dollars against export of foreign currencies by Exchange Companies licensed by SBP”.

    i. Authorized Dealers may purchase forward the export proceeds in US Dollars received from abroad against export of permissible foreign currencies by Exchange Companies, subject to adherence of following terms and conditions:

    a. Forward purchase facility may be provided up to maximum five working days (including both transaction and settlement days).

    b. In case Authorized Dealers purchase forward the export proceeds in US Dollars against exports of permissible foreign currencies for less than five working days, Authorized Dealers may extend the maturity date provided that the total period of forward purchase, including the extended maturity period, does not exceed five working days (including both transaction and settlement days). However, such extensions will be made by closing out the original contract and booking of a fresh contract at the new rate.

    c. Forward purchase may be booked before or after the export shipment.

    d. Exchange Companies are required to bring export proceeds within 5 working days from the date of shipment. In case forward purchase is booked on or after the shipment date, maximum maturity date of forward purchase facility may be up to 5th working day of date of shipment.

    e. Forward purchase may be booked for full or partial value of export proceeds against export shipment.

    f. Forward purchase will be booked based on specific export shipment. For this, Authorized Dealers shall obtain copy of export documents from Exchange Companies. In case of advance booking, copy of confirmed deal ticket shall be obtained from Exchange Companies, while copy of other export documents shall be obtained subsequent to the shipment.

    g. No substitution is allowed for settlement of export proceeds.

    h. Forward contracts, which are not taken up, may be closed out on the date of maturity at prevailing spot rate. Exchange gain, if any, will not be passed on to the Exchange Company, rather the same will be deposited in favor of State Bank of Pakistan by Authorized Dealer. In case of exchange loss, the same will be recoverable from Exchange Company by Authorized Dealer. To this effect, the Authorized Dealer should get consent/agreement signed by the concerned Exchange Company before entering into forward contract. The exchange gain shall be deposited in favor of the State Bank through RTGS Clearing Account No. 427517. In this respect, a consolidated statement regarding all such cases shall be submitted by Head/Principal Office of Authorized Dealers to the Director, Off-Site Supervision & Enforcement Department on monthly basis as per prescribed format (Appendix V-145) in excel file at email [email protected]

    4. In addition to above, Authorized Dealers may continue to purchase foreign exchange in Ready, Tom and Spot value dates, from Exchange Companies.”  

  • No paper-based foreign exchange operation after June: SBP

    No paper-based foreign exchange operation after June: SBP

    KARACHI: All the banks will discontinue paper-based foreign exchange operation after June 2021, Managing Director of State Bank of Pakistan’s Banking Services Corporation Muhammad Ashraf Khan said on Monday.

    He said that digitalization of foreign exchange, which started in March 2020, has been expanded from 8 to 13 banks and majority of the banks will be processing 88 percent of foreign exchange digitally by the end of February 2021 and 98 percent by April whereas the banks will completely discontinue paper-based submissions after June 2021.

    MD SBP-BSC, while speaking at a meeting during his visit to the Karachi Chamber of Commerce & Industry (KCCI) on Monday, added that the initiative to digitalize foreign exchange operation was taken to create ease for the business community by completely eradicating the paperwork and expediting the overall process which has successfully been implemented by many banks.

    Head of Foreign Exchange Operations Department SBP Shakeel Muhammad Paracha, Director Exchange Policy Department SBP Arshad Mehmood Bhatti, Vice President KCCI Shamsul Islam Khan, Chairman of KCCI’s Banking & Insurance Subcommittee Qazi Zahid Hussain, Advisor Banking & Insurance Subcommittee Ateeq ur Rehman and others attended the meeting.

    MD SBP-BSC further stated that everything has been transferred from manual to digital processing and the customers have the freedom to get online anytime either from their home or office to apply for delivery of remittances without any paperwork while the customers will receive updates and objections (If any) about his transaction on his/ her registered email address.

    While assuring full support and cooperation, he stressed that the business and industrial community must come forward to adopt the digital mode for foreign exchange in which the customers can get registered themselves and track progress of case while relevant bank staff is also intimated about the progress and history of all the transactions is also maintained in a paperless environment.

    Vice President KCCI Shamsul Islam Khan, in his remarks, pointed that the State Bank, in any economy, plays the role of a heart in the economic development of the country by ensuring smooth circulation of funds and it was heartening to see that the State Bank has also been responsibly playing its role in an efficient manner which can be gauged from improved economic indicators particularly exports and remittances which have witnessed substantial growth.

    “However, the growth in remittances being witnessed nowadays may not last long hence, the State Bank needs to come up with some kind of the effective policy or incentive package which encourages Non-Resident Pakistanis (NRPs) to invest in numerous sectors of the economy.

    Encouraging such investments by NRPs would prove would not only help in dealing with economic crises but would also promote industrialization and create abundant employment opportunities on long term”, he added.

    He also stressed the need to take concrete measures for effectively dealing with the menace of smuggling which terribly hinders the legal trade and causes losses to the national exchequer.

    In this regard, he particularly suggested to establish Common Industrial Zone or Common Industrial Park near Pak-Iran border where all Custom Duties/ taxes should be kept at minimum level while this zone should be fully equipped with required infrastructure and the gas and electricity supplies should be provided by Iran which would surely bring down the cost of doing business due to cheaper electricity and gas tariffs that would attract a large number of industrialists to set up their units and warehouses in this particular zone.

  • Foreign direct investment plunges by 27 percent in seven months

    Foreign direct investment plunges by 27 percent in seven months

    KARACHI: The foreign direct investment FDI) has declined by $432 million or 27 percent during first seven months of the current fiscal year as compared with same months of the last fiscal year, State Bank of Pakistan (SBP) said on Monday.

    The net inflows of FDI fell to $1.145 billion during July – January 2020/2021 as compared with $1.577 billion in the corresponding months of the last fiscal year.

    The inflows of FDI were at $1.792 billion during the period under review as compared with $2.04 billion in the corresponding period of the last fiscal year. Similarly, the outflows increased by 39.5 percent to $647 million during July – January 2020/2021 as compared with $464 million in the same period of the last fiscal year.

    The portfolio investment in the capital market witnessed massive outflow during the period under review. The outflows from the capital market recorded $237 million during first seven months of the current fiscal year as compared with inflow of $21.5 million in the corresponding months of the last fiscal year.

    The overall investment, including foreign public investment, fell by 78 percent to $755 million during first seven months of the current fiscal year as compared with $3.438 billion in the corresponding period of the last fiscal year.

  • SBP governor to moderate dialogue on ‘banking on equity’ hosted by World Bank

    SBP governor to moderate dialogue on ‘banking on equity’ hosted by World Bank

    KARACHI: The World bank is hosting a webinar on ‘Consultative Dialogue on the State Bank of Pakistan’s Gender Financial Inclusion Policy – Banking on Equality’ on Tuesday, February 23, 2021, a statement said on Sunday.

    During the webinar, Governor SBP, Dr. Reza Baqir will moderate a high profile international panel discussion.

    The State Bank of Pakistan (SBP) has developed a draft policy titled ‘Banking on Equity’, which aims to introduce a gender lens within the financial sector through targeted measures to bring a shift to women friendly business practices and to significantly increase women’s financial inclusion in Pakistan, a statement said on Sunday.

    This policy is currently in a public consultation phase and is expected to be launched shortly.  SBP has held several Focus Group Discussions led by Governor SBP, Dr. Reza Baqir and Deputy Governor Sima Kamil with key stakeholders including government, financial institutions, regulatory bodies, academia, business federations, gender policy experts, civil society and women entrepreneurs. 

    This Webinar will draw on global experiences of gender responsive policies to inform how these may work effectively in the context of a developing country like Pakistan.

    During the webinar, Governor SBP, Dr. Reza Baqir will moderate a high profile international panel discussion. Joining him will be Ms. Caren Grown (Global Director, Gender, World Bank), Ms. Mary Ellen Iskenderian  (President & CEO, Women’s World Banking) and Ms. ParwatiSurjaudaja (President Director, Bank OCBC NISP Indonesia).

    The panelists are renowned global experts with rich experience in women’s financial inclusion and the benefit of their insights will help conclude the consultative phase of this policy.   

    The program will include views from Hartwig Schafer (Vice President for the South Asia Region, World Bank), Alfonso Garcia Mora (Vice President for Asia and Pacific, IFC) while Deputy Governor SBP Ms. Sima Kamil will present the key pillars of the policy.

  • SBP issues regulations for payment card security

    SBP issues regulations for payment card security

    KARACHI: State Bank of Pakistan (SBP) on Friday issued regulations for payment card security to curtail the risk of card-skimmig.

    Referring to PSD Circular No. 05 of 2016, the SBP said that in light of the progress made by industry on implementation of central bank’s instructions issued vide the afore-mentioned circular, it has now been decided that:

    i. In order to curtail the risk of card-skimming, existing magnetic stripe cards and fallback to magnetic stripe on EMV cards shall be blocked by Card Service Providers (CSPs) at host end. For customers travelling abroad, CSPs shall have the functionality to turn on fallback upon specific customer request. Further, CSPs shall ensure that their cardholders activate their new EMV Chip and PIN cards well before the deadline of June 30, 2021 to avoid any inconvenience.

    ii. CSPs after implementing EMVCo’s 3DSecure protocol may enable e-commerce transactions by default on their card portfolios for both local and cross-border e-commerce transactions. Accordingly, for all 3DSecure compliant CSPs, requirement of customer consent, as per clause 4.2.3. (b) of PSD Circular No. 5 of 2016 shall be considered as complied with. However, CSPs shall ensure that they fully inform their customers about the risks of using their cards for cross border e-commerce transactions.

    iii. CSP’s shall provide their customers with the option to activate, enable and disable their cards using mobile banking applications and internet banking portals. Furthermore, options to enable cards for usage on various channels like ATMs, POS and e-commerce shall also be available through mobile and internet banking channels. However, the use of at least Two Factor Authentication (2FA) shall be mandatory.

    iv. In order to enhance customer experience and reduce checkout time on payment counters/terminals, CSPs may relax the requirement of Multi Factor Authentication (MFA) as required vide Section 4.2. (b) of PSD Circular No. 05 of 2016 for card present transactions (including contactless payments either through a card or through mobile devices) up to Rs. 3,000 per transaction. However, CSPs shall ensure that they fully inform their customers and adequately protect them from undue liability arising out of any potential misuse of this facility.

    v. For refund payments pertaining to both card present and card not present transactions, CSPs shall immediately credit their respective customer account upon the receipt of funds.

    vi. To facilitate their customers, CSPs shall provide them the facility of lodging their complaints and disputes using mobile apps and internet banking portals without the need for physically visiting their premises. For expedited investigation and resolution of complaints/disputes, CSPs shall arrange for obtaining necessary data/information from their customers digitally or through their call centers.

    The card service providers shall bring the above measures and the changes being introduced to the knowledge of their customers by running awareness campaigns on print, digital and social media. They shall also ensure that customers are fully facilitated while using their payment cards.

    CSPs are advised to meticulously comply with the instructions contained herein by June 30, 2021. Failure to do so shall attract penal action under relevant laws and regulations.

  • Procedure for investment through Pound Sterling, Euro in NPC

    Procedure for investment through Pound Sterling, Euro in NPC

    KARACHI: State Bank of Pakistan (SBP) on Friday issued procedure for making investments in Naya Pakistan Certificate (NPC) through foreign currencies i.e. Pound Sterling (GBP) and Euro.

    The SBP informed all agent banks that Government of Pakistan, Finance Division (External Finance Wing), vide Gazette notification S.R.O.211(I)/2021, dated February 18, 2021 had notified that the NPCs shall also be issued in Pound Sterling (GBP) and Euro in following maturities, carrying gross rate of return (before deduction of tax) as under:-

    The minimum investment in both the currency shall be 5,000.

    The rate of return in case of GBP is 5.25 percent, 5.5 percent, 5.75 percent, 6.25 percent and 6.5 percent for tenors 03-month, 06-month, 13-month, 03-year and 05-year, respectively.

    The rate of return in case of Euro is 4.75 percent, 5 percent, 5.25 percent, 5.5 percent and 5.75 percent for tenors 03-month, 06-month, 13-month, 03-year and 05-year, respectively.

     The 3-Month, 6-Month and 12-Month tenor certificates shall be single-coupon securities on which principal and profit shall be paid on maturity or on premature encashment.

    Whereas, 3-Year and 5-year certificates shall be coupon securities, on which periodic profit payment shall be paid on half-yearly basis.

    The procedure for investment in Certificates, periodic coupon payment, pre-mature encashment and redemption at maturity as notified vide above referred Circular, shall also apply to the NPCs denominated in GBP and Euro. However, the agent banks shall remit the face value of the Certificates to the following nostro accounts of SBP maintained with United National Bank London (GBP) and NBP Frankfurt (Euro):-

  • EMV chip, PIN compliant cards made mandatory for ATM, POS networks

    EMV chip, PIN compliant cards made mandatory for ATM, POS networks

    KARACHI: The State Bank of Pakistan (SBP) on Friday made mandatory for ATM and POS networks to only accept Europay MasterCard Visa (EMV) Chip and PIN compliant payment cards for payments and online e-commerce services.

    To eliminate the risk of skimming of payment cards by fraudsters, SBP has directed that ATM and POS networks in Pakistan shall only accept EMV Chip and PIN compliant payment cards in the country.

    The SBP said that in order to promote digital payments, SBP has been taking steps to make them more secure, introducing new features and promoting their use.

    In consultation with the industry and other stakeholders, SBP has taken more steps to make digital transactions and card payments more secure and easier.

    Now the consumers will only have Europay MasterCard Visa (EMV) Chip and PIN compliant payment cards, which will be active right from the day issued to themfor payments and online e-commerce services.

    They will be able to make payments up to Rs. 3,000 by just tapping the card on POS machines and no PIN will be required.

    Consumers will also be able to make loan repayments through cards. They will be able to lodge complaints through digital channels without the need to visit a bank branch. State Bank has directed the banks to implement all these measures by June 30, 2021.

    The measure, aimed at further strengthening the security of digital payments and curtailing the risk of frauds, is a culmination of SBP’s efforts that started in 2016 outlining a detailed roadmap for adoption of EMV Chip and PIN standard for payment cards in Pakistan. Banks have also been directed to step-up their efforts to facilitate customers in case they face any issue while using their payment cards.

    SBP has allowed those banks who have already implemented 3-D Secure (an international standard that secures online e-commerce transactions) can now activate their customers’ payment cards for online e-commerce transactions without the need of specific requests for activation. Earlier in 2019, SBP had directed banks to implement 3-D Secure protocol to prevent frauds in online transaction and as a result, 15 banks had already adopted this international standard for securing online transactions. The new measure is expected to promote online e-commerce ecosystem and shape consumer behavior towards online e-commerce digital payments in the country.

    To make it easier and quicker to make small payments, SBP has allowed banks to relax the requirement of entering PINs for transactions up to PKR. 3,000. Banks depending on their risk management policies may decide on the amount, which may be exempted from PIN requirement on card transactions including contactless payments. However, SBP has directed banks to ensure that customers are adequately protected from undue liability arising out of misuse of this facility. With this measure, SBP hopes to see wider adoption of card-based payment acceptance by merchants who may be reluctant to do so because of longer processing times.

    Taking notice of consumer complaints regarding delays in receiving refunds after resolution of disputes, SBP has directed all banks to immediately credit customer accounts once they receive fund from either merchants or acquiring banks. The regulator has also directed banks to facilitate their customers in registering their complaints and disputes using mobile apps and internet banking portals without the need for physically visiting branches. 

    Enhancing the drive towards digitization of payments, SBP has also directed all banks/microfinance banks to take measures to facilitate their borrowers in making repayments of loans such as consumer loans, auto loans etc. digitally using internet and mobile banking applications of any bank.

  • SBP takes measures for prevention of digital bank fraud

    SBP takes measures for prevention of digital bank fraud

    KARACHI: The State Bank of Pakistan (SBP) on Friday taken measures for prevention of digital bank fraud and issued directions to stakeholders in this regards.

    The central bank said that in collaboration with other stakeholders it had initiated various measures to curtail digital banking frauds, conducted by employing social engineering tactics including fake calls.

    In order to successfully design and deploy additional measures, it is vital to have sufficient information about these frauds.

    In this respect, two standardized formats have been developed to record information relating to attempted and committed fake call frauds.

    At the time of receiving the calls from customers for reporting of these frauds, the agents at call centers of all Banks/MFBs will record the information, where available, as per the given formats.

    Banks/MFBs will report data recorded as per the prescribed formats to the Offsite Supervision & Enforcement Department (OSED) of SBP on monthly basis.

    The data will be reported to the SBP in soft copy in Microsoft Excel within 10 days from the close of every month.

    The SBP directed banks/MFBs to ensure that the call center agents are sufficiently trained to handle calls received for reporting digital banking frauds.

    They must be capable of identifying attempted digital banking frauds related calls when a naive customer unaware of fraudulent attempt reports such instances.

    Banks/MFBs will report the relevant information to PTA for blocking SIM/Device of the fraudsters used for committed/attempted digital banking frauds as soon as identified.

    As a control mechanism to avoid any further financial loss, the call agents upon receiving calls for blocking digital channels/cards in case of fraud will immediately block all channels temporarily, under intimation to the customer, before seeking detailed verification from the customer.

    The verification required from the customer as per procedure will subsequently be acquired on the same call.

    For blocking of digital channels, the requirement to call from registered numbers would not be necessary since the customer may not have access to his/her registered telephone number; however, the banks may conduct enhanced verification in cases where the request for blocking of channels was received from an unregistered number.

    In order to unblock the account/continue services, the Banks/MFBs will guide the customers as per their relevant policies.

    Banks/MFBs are advised to implement the above measures within 30 days from the issuance of this circular.