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  • SBP issues carrot, stick policy for banks on housing loan targets

    SBP issues carrot, stick policy for banks on housing loan targets

    KARACHI: The State Bank of Pakistan (SBP) has adopted a policy of carrot and stick for banks related to mandatory targets for housing/construction financing.

    The central bank on Wednesday said that it introduced incentive and penalty mechanism for banks to promote housing and construction financing.

    The SBP said that building upon its earlier measure of setting mandatory target for banks to extend mortgage loans and financing for developers and builders, SBP has introduced a mechanism to incentivize meeting these targets.

    The mechanism also penalizes the banks for any shortfall in meeting the target. 

    According to this mechanism, commencing from December 31, 2020, banks will find an incentive of maintaining reduced Cash Reserve Requirement (CRR) with SBP, in the next quarter, in case they achieve or exceed the target of financing for housing and construction of buildings set for the quarter.

    The amount of CRR to be maintained for the forthcoming quarter will be reduced by an amount equal to increase in housing and construction finance from June 30, 2020 to the end of the relevant quarter.

    This incentive, however, will be subject to a ceiling of 1 percent of the total demand and time liabilities based on which CRR is calculated.

    Further, the banks shall continue to maintain daily minimum CRR, which is currently at 3 percent.

    Conversely, if the banks fail to meet the target, they will be penalized by requiring to maintain extra CRR by an amount equal to the shortage from the target.

    It would be pertinent to mention here that banks do not earn any return on the amount of CRR maintained.

    Therefore, a decrease in amount of CRR works as an incentive for banks, whereas an increase in amount of CRR serves as a penalty for banks. 

    SBP has been actively working with banks to support finance for the promotion of housing and construction of building activities in the country.

    The growth of the housing and construction sector is vital for the economy, due to its linkages with a number of allied industries and potential for jobs creation and Pakistan has lower private sector credit to GDP than many comparable countries.

    In order to enhance the flow of financing towards this sector, SBP has required banks to achieve mandatory targets, equivalent to 5 percent of their domestic private sector credit by December 31, 2021, to finance the housing and construction activities.

    Accordingly, quarterly targets from December 31, 2020 till December 31, 2021 have been agreed with the banks.

    SBP expects that this incentive mechanism, through changes in the CRR structure, will result in banks increasing their emphasis on housing and construction finance.

  • SBP softens quarantine for banknotes processed through certified machines

    SBP softens quarantine for banknotes processed through certified machines

    KARACHI: State Bank of Pakistan (SBP) on Friday relaxed the condition for banks of ensuring 14-day quarantine period for those banknotes processed through machines certified by Pakistan Council of Scientific and Industrial Research (PCSIR).

    The SBP said that it had imposed a condition on May 04, 2020 under which banks were advised to quarantine cash collected from the public for fourteen (14) days before re-issuing the same.

    The SBP further said that the 14- day quarantine for banknotes was introduced in line with the international practices and World Health Organization (WHO) guidelines.

    In view of availability of a number of banknote disinfection machines and technologies, it has been decided that the banks shall have the option to either continue with the fourteen (14) days quarantine requirements or process banknotes through Pakistan Council of Scientific and Industrial Research (PCSIR) certified machines in lieu of the fourteen (14) days quarantine.

    The banks procuring such machines shall ensure that the PCSIR certificate specifically mentions the capacity of the machine to disinfect Bacteria and Viruses including the SARS-CoV-2 that causes COVID-19.

  • Foreign exchange reserves dip by $369 million

    Foreign exchange reserves dip by $369 million

    KARACHI: The liquid foreign exchange reserves of the country fell by $369 million to $19.535 billion by week ended September 25, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $19.904 billion by week ended September 18, 2020.

    The official reserves of the SBP have come down by $342 million to $12.36 billion by week ended September 25, 2020 as compared with $12.702 billion a week ago.

    The central bank attributed the decline to the government external debt payments amounting to $311 million, and other official payments.

    The foreign exchange reserves held by commercial banks fell by $27 million to $7.175 billion by week ended September 25, 2020 as compared with $7.202 billion a week ago.

  • List of customer information to be verified by banks under latest AML regulations

    List of customer information to be verified by banks under latest AML regulations

    KARACHI: The State Bank of Pakistan (SBP) on Wednesday issued the Anti-Money Laundering, Combating the Financing of Terrorism & Counter Proliferation Financing (AML/ CFT/ CPF) Regulations for banks and other financial institutions, which shall supersede previous regulations/instructions.

    Under the new regulations, the SBP issued the list of information, which the banks and financial institutions shall require to verify customer identity.

    List of Information Required for Customer Identity

    A. Basic Identification Information

    1. Full name as per identity document

    2. Mother Maiden name

    3. Date of Birth

    4. Place of Birth

    5. Permanent Address

    6. Identity document number, whichever applicable

    7. Date of expiry of applicable identity document

    B. Other basic information

    8. Father/ spouse name as per identity document

    9. Date of issuance of applicable identity document

    10. Contact Number: Mobile Number (s)/ Land Line Number

    11. Purpose of account/ transaction/ business relation

    12. Beneficial ownership/ controlling rights

    C. Other relevant Information for natural persons, as applicable

    13. Current/ Mailing Address

    14. Personal Email Address (as applicable)

    15. Nationality – Resident/ Non-Resident Status

    16. FATCA/ CRS Declaration, wherever required

    17. Profession/ Source of Income/ Funds: Salary, Business, investment income

    18. Next of Kin

    19. Attested Passport Size Photo (in case of Photo Account instructions)

    20. Live Photo (in case of digital onboarding)

    D. Information for Legal Persons/ Legal Arrangements

    1. Registration/ incorporation number or business registration number (as applicable)

    2. Date of incorporation or registration of legal person or arrangement (as applicable)

    3. Place of incorporation or registration of legal person or arrangement (as applicable)

    4. National Tax Number (NTN)

    5. Nature of business, geographies involved and expected type of counter-parties (as applicable)

    6. Registered or business address

    7. Intended nature of business relations

    8. Purpose of account or transaction (where accounts are not maintained and transactions are done by walk in/ occasional customers)

    9. Type of account/ financial transaction/ financial service

    10. Expected monthly credit turnover (amount and No. of transactions)

    11. Normal or expected modes of transactions/ delivery channels

    12. Wherever instructed/ advised, regulatory limits imposed such as: credit and debits/ deposit and withdrawals/ execution of financial transaction/ types of financial services allowed/ restricted.

    E. Additional Information in case of ”Trusts”

    13. Whether the Trust is a Public Trust or Private Trust including foreign and national trust

    14. Trust Deed whereby the Trust has been created;

    15. Details of Settlor (this will also be available in the Trust Deed);

    16. Objects of the trust (this will also be available in the Trust Deed);

    17. Trustee of the trust (whether trustee is associated person of the settlor);

    18. Description of each class or type of beneficiary (this information may also be checked from Trust Deed);

    19. Details of any possibility of influence of any other person on trustee regarding management and control of trust property;

    20. In the case of “Private Trust” if the beneficiary of a trust is also the beneficial owner of the trust, identification and verification of the beneficiary is required otherwise the name and CNIC of each beneficiary of a trust should be obtained.

  • SBP doubles loan size for setting up hospital to combat COVID

    SBP doubles loan size for setting up hospital to combat COVID

    KARACHI: State Bank of Pakistan (SBP) has enhanced loan size to Rs 1 billion from Rs500 million for setting up new hospital to combat COVID-19.

    The central bank in a notification said that in order to meet financing needs for setting up new hospitals allowed through a notification issued on July 2020, it has been decided to enhance loan size from Rs 500 million to Rs 1 billion per hospital.

    The scheme for setting up of new hospitals will remain valid up till June 30, 2021, as mentioned in Circular Letter No. 16 of 2020.

    The SBP further invited attention to to IH&SMEFD Circular No. 03 and 04 of 2020 read with IH&SMEFD Circular Letter No. 08 and 16 of 2020 and said that the applications approved by Participating Financial Institutions up till September 30, 2020 will be eligible for refinance under the scheme.

    Hence, LCs established under these approved applications will be eligible for refinance even if these LCs are established after September 30, 2020. Details of all these approved cases should be reported in weekly report of RFCC/IRFCC by 1st October, 2020.

  • SBP issues framework for cloud outsourcing arrangements

    SBP issues framework for cloud outsourcing arrangements

    KARACHI: State Bank of Pakistan (SBP) has issued framework for financial institutions outsourcing to cloud service providers (CSPs). The SBP said that to BPRD Circular No. 05 of 2017 on ‘Enterprise Technology Governance and Risk Management Framework for Financial Institutions (FIs)’ and BPRD Circular No. 06 of 2019 on ‘Framework for Risk Management in Outsourcing Arrangements by Financial Institutions’.

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  • Foreign exchange reserves ease to $19.904 billion

    Foreign exchange reserves ease to $19.904 billion

    KARACHI: The liquid foreign exchange reserves of the country fell by $55 million to $19.904 billion by week ended September 18, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $19.959 billion by week ended September 11, 2020.

    The foreign exchange reserves held by the central bank declined by $118 million to $12.702 billion by week ended September 18, 2020 as compared with $12.82 billion a week ago.

    The SBP attributed to decline in reserves to external debt repayment of the country.

    However, the reserves held by commercial banks increased by $63 to $7.202 billion by week ended September 18, 2020 as compared with $7.139 billion a week ago.

  • SBP relaxes 100pc cash margin condition on import of certain raw materials

    SBP relaxes 100pc cash margin condition on import of certain raw materials

    KARACHI: The State Bank of Pakistan (SBP) on Thursday relaxed the condition of 100 percent cash margin requirement on import of certain raw materials.

    A statement issued by the SBP stated that it had eased 100 percent cash margin requirement on the import of certain raw materials to support manufacturing and industrial sectors and further enhance their capacity to contribute towards the recovery of the economy in post COVID-19 era.

    The cash margin condition was initially imposed in 2017 on 404 HS Codes and later in 2018 on a further 131 items, with a view to contain the import of mostly consumer goods and to allow room for the import of more growth-inducing items.

    Considering the challenges posed by the COVID-19 to the manufacturing sector and other economic segments, and on the representations made by various businesses and associations, the SBP re-evaluated the cash margin requirements and decided to remove this requirement on 106 items/HS Codes.

    The removal of the cash margin requirements on these items will support businesses’ cash flows and liquidity, by freeing up funds previously held with the banks under cash margin against imports, and route these funds towards avenues of growth and development that will benefit the economy.

    The SBP remains committed to facilitate industries and businesses in contributing to the growth and development of the country, and is ready to take any further actions required to support the overall manufacturing and industrial activity.

  • SBP sells Rs478 billion worth treasury bills through auction

    SBP sells Rs478 billion worth treasury bills through auction

    KARACHI: The government has borrowed an amount of Rs474.8 billion through sale of market treasure bills on Wednesday.

    The State Bank of Pakistan (SBP) said that bids were invited for the auction of 3-, 6- and 12-month maturities. The auction target was Rs450 billion.

    The auction witnessed aggressive participation of the banks as the central bank received total bids amounting Rs918.47 billion (face value) for all the three maturities.

    The central bank accepted bids worth Rs474.8 billion in the sale of treasury bills.

    The SBP accepted Rs113.8 billion against offered amount of Rs490.9 billion in three-month treasury bills. The cut-off yield for the paper was 7.1292 percent.

    The central bank accepted bids of Rs192 billion against the offer of Rs239.57 billion in six-month treasury bills. The cut-off yield was at 7.18 percent.

    The SBP accepted Rs169 billion against the offer of Rs188 billion in 12-month treasury bills. The cut-off yield was at 7.3090 percent.

    Experts said that the banks were desperate to invest in government papers due to sufficient liquidity available with them.

    The government borrowed funds through sale of treasury bills for budget financing.