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Tag: SBP

  • Workers’ remittances increase by 26.5pc in July – October

    Workers’ remittances increase by 26.5pc in July – October

    KARACHI: The inflow of workers’ remittances has sharply increased by 26.5 percent to $9.43 billion during first four months (July – October) of current fiscal year 2020/2021, State Bank of Pakistan (SBP) said on Thursday.

    The central bank received $7.45 billion in the same months of the last fiscal year.

    The SBP said that remittances remained above $2 billion for the fifth consecutive month in October 2020.

    Workers’ remittances amounted to $ 2.3 billion during October 2020, increasing by 14.1 percent compared to October 2019.

    A large part of y/y increase in October 2020 was sourced from Saudi Arabia (30 percent), United States (16 percent) and United Kingdom (14.6 percent).

    Improvements in Pakistan’s FX market structure and its dynamics, efforts under the Pakistan Remittances Initiative (PRI) to formalize the flows contributed to the growth in remittances and limited cross-border travelling, the SBP said.

  • Assets of baking system increase by 7.8pc amid COVID challenges: SBP

    Assets of baking system increase by 7.8pc amid COVID challenges: SBP

    KARACHI: The assets of banking system increased by 7.8 percent during first half (January – June) 2020 despite challenging economic conditions prevailing during the period due to COVID-19 outbreak, State Bank of Pakistan (SBP) said on Wednesday.

    The SBP issued Mid-Year Performance Review (MPR) of the Banking Sector for the year 2020.

    The review comprehensively covers the performance and soundness of the banking sector for the period January to June 2020 (H1CY20).

    The expansion in assets was backed by banks’ investments, which increased by 22.8 percent (or Rs2.0 trillion). The surge in deposits provided the necessary funding support to finance the robust rise in investments.

    Advances, on the contrary, observed mild downtick owing to the economic slackness caused by the disruption inthe business activities after the outbreak. Sans SBP supportive measures, though, the contraction in advances could have been much higher.

    The review also highlighted that the policy measures rolled out by SBP facilitated the banking sector in conserving the capital, enhancing the lending capacity and increasing the loss absorption ability.

    As a result, despite some increase in credit risk, banking sector demonstrated improved profitability and enhanced resilience.

    The Non-performing loans (NPLs) ratio increased from 8.6 percent as of end December 2019 to 9.7 percent as of end June 2020.

    However, net NPLs to loans ratio, which is a better measure of credit risk, increased only marginally from 1.7 percent to 1.9 percent.

    The earnings marked visible improvement as profitability jumped by 52 percent on YoY basis. This improvement resulted from higher interest income, deceleration in interest expenses and rise in non-interest income.

    With better profitability, the soundness of the banking sector further strengthened as Capital Adequacy Ratio (CAR) increased to 18.7 percent in June-20 from 17.0 percent in December 2019.

    The review also includes the results of the 6th wave of SBP’s Systemic Risk Survey (SRS) conducted in July-August, 2020, which represents the views of the market participants.

    The survey results indicate that—at present and for the next six months—the respondents consider global risks and domestic macroeconomic risks to be important.

    Notably, the policy measures taken by SBP to mitigate the implications of COVID-19 have been very well received by the stakeholders.

  • Market based exchange rate helps shrinking current account deficit: SBP governor

    Market based exchange rate helps shrinking current account deficit: SBP governor

    KARACHI: Dr Reza Baqir, Governor of State Bank of Pakistan (SBP) has said that market based exchange rate helped shrinking current account deficit.

    In an interactive session with leading foreign investors, members of the Overseas Investors Chamber of Commerce and Industry (OICCI), he shared an overview of the current Economic Outlook of Pakistan and informed: “since, June 2019, Pakistan has transitioned to a market-based exchange rate regime, resulting for the first time ever in an orderly two-way movement of exchange rates in the country, which has led to a significant shrinking of the current account deficit, and better fundamentals facilitated capital inflows.”

    The fiscal deficit narrowed to 3.8 percent of GDP in July-March FY20 with the current account balance in surplus for the first time since 2016”.

    He added: “a year ago SBP was being perceived as inflicting tough stabilization measures after Pakistan had successfully started an economic reform program to address external and fiscal imbalances and later after the onset of COVID-19 the Government and central bank gave a timely and calibrated economic response without compromising buffers and as a result today the focus is on economic growth of the country,” a statement issued by OICCI quoted SBP governor as saying.

    Dr Baqir also shared that overall Rs1.73 trillion or 4.1 percent of the GDP of Pakistan was injected by SBP in the economy to support individuals and businesses during COVID-19 through various proactive measures, including dramatic reduction in interest rates from 13.25 percent to 7 percent, loan deferment, employment support and Rozgar Schemes.

    He further added SBP is taking appropriate and timely actions to address the ever changing economic environment.

    President OICCI, Haroon Rashid highlighted the significant economic contribution of foreign investors at OICCI, who are among the largest economic stakeholders and have invested over $ 16 billion in the past eight years and continue to have a positive view of the opportunities for investment despite the ongoing challenging economic environment in the country.

    OICCI shared with Dr Reza Baqir the key concerns of OICCI members, including delays in approval of forex payments and cumbersome documentation requirements and sought the Governor’s support in the light of SBP policy to facilitate FDI through improving Ease of Doing Business in Pakistan.

    Dr. Reza Baqir appreciated the contribution of OICCI members to the national exchequer and encouraged all members to figure out ways to increase exports and adopt import substitution practices, as it was a critical step towards moving the country out of poverty.

    “SBP is moving towards digitalization of payment processes and proactive engagement that will address the major issues systematically and facilitate the business community,” informed the Governor.

    Dr. Reza also mentioned that through an online case look-up portal, it is now possible for companies to monitor the progress of their respective cases submitted to SBP with increased transparency.

    He agreed on the need for continuous dialogue with the OICCI members and invited the OICCI members to meet the SBP leadership at regular intervals for timely resolution of their issues.

    While concluding the session, Haroon Rashid commented “OICCI members appreciated the SBP efforts towards continuous improvement in the economy”, and presented a comprehensive list of recommendations to facilitate ease of doing business in Pakistan.

  • Banking system witnesses Rs222 billion withdrawal in October

    Banking system witnesses Rs222 billion withdrawal in October

    The State Bank of Pakistan (SBP) has reported a significant withdrawal of Rs222 billion from the banking system during October 2020. According to SBP statistics, banking deposits fell to Rs16,664 billion by the end of October 2020, down from a record high of Rs16,886 billion at the close of September 2020.

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  • Country’s forex reserves increase to $19.353 billion

    Country’s forex reserves increase to $19.353 billion

    KARACHI: The liquid foreign exchange reserves of the country increased by $57 million to $19.353 billion by week ended October 29, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves were at $19.296 billion by week ended October 23, 2020.

    The official foreign exchange reserves of the SBP increased by $61 million to $12.182 billion by week ended October 29, 2020 as compared with $12.121 billion.

    The foreign exchange reserves held by commercial banks eases to $7.171 billion by week ended October 29, 2020 as compared with $7.175 billion a week ago.

  • Mobile banking registers phenomenal growth; transactions increase to Rs1,764 billion

    Mobile banking registers phenomenal growth; transactions increase to Rs1,764 billion

    KARACHI: The usage of mobile banking has surged phenomenally as transactions worth Rs1,764 billion recorded during fiscal year 2019/2020, which is 104 percent higher over the preceding fiscal year.

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  • Manual tax collection to be eliminated by January: SBP

    Manual tax collection to be eliminated by January: SBP

    KARACHI: The manual collection of taxes will be eliminated by January 2021 and in this regard Federal Board of Revenue (FBR) and State Bank of Pakistan (SBP) have agreed on the timelines.

    The central bank in a report said that the timelines were agreed with FBR to gradually eliminate the manual tax collections by January 2021.

    “As a first step in this direction, the option of manual tax payment by corporate sector was eliminated from August 2020,” the SBP said.

    During 2019/2020, the SBP intensified efforts to digitize government receipts and payments. In order to bring the cost of digital tax payments and manual paper based tax payment, the nominal fee on digital payment of taxes on the tax payers was eliminated which would be absorbed by SBP.

    As the fee is nominal as compared to the agency commission, the SBP pays to agent banks for traditional paper based tax collection, the absorption of digital tax payment fee by SBP, will in fact reduce the net cost of tax collections for SBP.

    Further, in a significant development in this respect, timelines were agreed with FBR to gradually eliminate the manual tax collections by January 2021. As a first step in this direction, the option of manual tax payment by corporate sector was eliminated from August 2020.

    The SBP said that the Alternate Delivery Channels (ADC) system for collection of government taxes is functioning and robustly for different agencies of the federal government and Government of Punjab.

    The taxpayers pay their taxes through internet banking, mobile banking, ATMs and Over-the-Counters (OTC) facility of branches of commercial banks across the country.

    “Since its launch in March 2018, an aggregate amount of Rs.829 billion of government taxes and duties has been collected.”

    In order to promote digital payments of government taxes and duties, SBP with effect from January 1, 2020, eliminated the transaction fee for taxpayers using digital modes for payment of duties and taxes of federal and provincial governments.

    Further, to utilize the potential of ADCs system fully, SBP and FBR have agreed to gradually replace the manual payments of FBR’s taxes with the ADCs system starting with corporate taxpayers from first quarter (July – September) of 2020/2021.

    Accordingly, payments of FBR’s Taxes by AOPs/Partnerships and individuals will be shifted completely on the ADCs in the Second Quarter and Third Quarter of 2020/2021 respectively.

    Similarly, SBP is negotiating with other provincial governments to use this facility for their taxpayers and utilize the umbrella of ADCs for collection of their taxes and levies. Recently, SBP, M/s 1Link and Islamabad Capital Territory Administration (ICTA) have executed a tripartite agreement for extension of ADC system for collection of ICTA taxes and duties.

    While negotiation with Finance Department, Khyber Pakhtunkhwa are at advance stage for initiation of online collections, negotiation with other provincial governments will be initiated in FY21. The project will be broadly based on the model already implemented for FBR and Government of Punjab.

    After digitization and automation of Person to Government (P2G) payments, SBP and GoP are now working on digitization of Government to Person (G2P) payments.

    As a part of G2P digital payments, SBP and Pakistan Customs are working on digitization of Duty Drawbacks refunds to business in the first phase. After digitization of this process, Customs will generate and deliver a message to SBP for payment of refunds directly into the exporter’s bank account upon realization of foreign exchange proceeds of export consignment.

    The successful implementation of this project will be a milestone towards digitization of G2P payments and will help in the government’s initiatives for ease in doing business.

  • Money printing cost rises to Rs13.32 billion in FY20: SBP

    Money printing cost rises to Rs13.32 billion in FY20: SBP

    KARACHI: The State Bank of Pakistan (SBP) has said that cost of printing of money increased to Rs13.32 billion in fiscal year 2019/2020.

    The central bank in its annual performance report said that the banknote printing charges increased to Rs.13.325 billion in 2019/2020 from Rs.11.419 billion in 2018/2019, thereby registering an increase of 17 percent mainly due to larger volumes of printing and increase in printing rates.

    The exchange gains/ (losses) arise on FCY assets and liabilities of the Bank. Major part of the foreign currency assets of the Bank are USD denominated whereas the foreign currency liability exposure is mainly SDR and USD denominated.

    Accordingly, the movement in the PKR/SDR and PKR/USD exchange rates directly affects the exchange account.

    The bank earned a net exchange gain of Rs.66.402 billion during FY20 as against exchange loss of Rs. 506,131 million during FY19.

    The PKR depreciated against USD and SDR during the period however, exchange gain arose due to improvement in net FCY liability exposure as compared to previous year.

    Other operating income include penalties levied on banks/financial institutions, licenses and e-CIB fee, gains/(losses) on sale and re-measurement of investments and other income.

    The other operating income increased to Rs.8.604 billion in FY20 from Rs.4.347 billion in last year. The increase is primarily attributed to increase in income on penalties levied on banks and financial institutions, licenses fee, e-CIB fee and gain on disposal of foreign investments classified as “fair value through profit or loss”.

  • State Bank’s annual profit surges to historic high of Rs1.16 trillion

    State Bank’s annual profit surges to historic high of Rs1.16 trillion

    KARACHI: The State Bank of Pakistan (SBP) has declared profit of Rs1.16 trillion, the highest profit in the history of the bank, for the year ended June 30, 2020.

    The SBP in performance report issued on Thursday said that the stability in the exchange rate allowed SBP to return to profitability after incurring loss in the preceding year. The SBP recorded a loss of Rs846 million for the year ended June 30, 2019.

    “The profit so earned by the SBP in the year ended June 30, 2020 is highest in its history.”

    The high interest rate prevalent in the first three quarters of the year allowed the central bank to accrue significant amount of interest income from the interest sensitive assets, particularly lending to the Government and income from the Bank’s open market operations.

    Further, during the year, the liquidity mopping up operations were relatively on reduced scale and hence the interest expense registered a substantial decline.

    The total assets stood at Rs.12,273 billion as at June 30, 2020 as compared to Rs.11,467 billion on June 30, 2019, registering an increase of Rs.806 billion primarily due to increase in foreign currency accounts and investments.

    Similarly, the total liabilities of the bank stood at Rs.11,219 billion as at June 30, 2020 as compared to Rs.10,761 billion as at June 30, 2019, registering an increase of Rs.458 billion. This rise was primarily led by increase in currency in circulation.

    SBP introduced certain interest free/subsidized refinancing schemes during COVID-19 pandemic. As per the requirements of IFRS-9, the subsidized loans are required to be recorded at fair value.

    Accordingly, an amount of Rs.4,194 million has been recognized as fair valuation adjustment against these loans. This fair valuation adjustment will be amortized and recorded as income over the period of loans.

  • SBP imposes penalty of Rs272 million on four banks

    SBP imposes penalty of Rs272 million on four banks

    KARACHI: State Bank of Pakistan (SBP) has imposed a monetary penalty of Rs272 million on four commercial banks for violating regulatory instructions related to Know Your Customer (KYC) and AML/CFT.

    According to details of significant enforcement action by the central bank issued on Wednesday, the SBP imposed penalty on the four banks during first quarter (July – September) 2020/2021.

    The SBP imposed the highest amount of penalty of Rs116.27 million imposed on Bank Islami Limited for procedural violations in the areas of CDD/KYC, General Banking Operations & Asset Quality. The SBP directed the bank to strengthen its processes to avoid recurrence of such violations.

    The central bank imposed an amount of Rs 59.23 million as penalty on Soneri Bank Ltd for procedural violations in the area of CDD/KYC. In addition to penal action the bank has been advised to strengthen its processes to avoid recurrence of such violations.

    The SBP imposed an amount of Rs10 million as penalty on The Bank of Punjab for procedural violations in the area of General Banking Operations. In addition to penal action the bank has been advised to strengthen its processes to avoid recurrence of such violations.

    The central bank imposed Rs86.12 million as monetary penalty on Albaraka Bank (Pakistan) Ltd for violations in the areas of AML/CFT,FX Operations &General Banking Operations.

    In addition to penal action the bank has been advised to conduct an internal inquiry on breaches of regulatory instructions and take disciplinary action against the delinquent officials.