Pkrevenue.com

Tag: SBP

  • Pakistan’s foreign exchange reserves up by $651 million

    Pakistan’s foreign exchange reserves up by $651 million

    KARACHI: The liquid foreign exchange reserves of the country increased by $651 million by week ended July 30, 2020 owing to foreign inflows, State Bank of Pakistan (SBP) said on Thursday.

    The total foreign exchange reserves of the country increased by $651 million to $19.563 billion by week ended July 30, 2020 as compared with $18.912 billion a week ago.

    The official foreign exchange reserves of the SBP increased by $566 million to $12.542 billion by week ended July 20, 2020 as compared with $11.976 billion a week ago.

    The SBP attributed the increase to the inflows from multilateral and bilateral agencies including US$ 505.5 million received from World Bank.

    The foreign exchange reserves held by commercial banks registered $85 million increase to $7.021 billion by week ended July 30, 2020 as compared with $6.936 billion a week ago.

  • SBP allows opening foreign currency accounts on declared assets abroad

    SBP allows opening foreign currency accounts on declared assets abroad

    KARACHI: The State Bank of Pakistan (SBP) on Thursday introduced a separate category of foreign currency account for non-resident and resident Pakistanis, who have assets abroad and declared with the tax authorities.

    The SBP in a circular said that in order to facilitate the non-resident Pakistanis as well as resident Pakistanis, who have assets abroad duly declared with Federal Board of Revenue (FBR), for investment in foreign currency denominated government registered debt securities on repatriable basis, it has been decided to introduce a separate category of foreign currency account.

    The SBP amended foreign exchange manual to introduce the new facilitation.

    According to the amendment:

    8A. Foreign Currency Value Account (FCVA)

    (i)   Authorized Dealers [banks, financial institutions] may open ‘ Foreign Currency Value Account’ of the following:

    a)  A non-resident individual Pakistani;

    b)  A resident individual Pakistani who has duly declared assets held abroad, as per wealth statement declared in latest tax return with Federal Board of Revenue (FBR).

    Operations of Foreign Currency Value Account shall be governed by the regulations set out below:

    ii) General Operations

    ADs shall clearly mark the account as resident or non-resident at the time of account opening.

    ADs shall allow operations in the account through the digital channels e.g. internet/mobile banking, ATM/ Debit cards. The ADs may also issue cheque book to the account holder, if required.

    ADs may issue supplementary ATM/Debit cards as per applicable laws /regulations.

    The resident individual desirous to open FCVA shall have to provide the declaration of his/her assets held abroad, including latest wealth tax statement filed with the FBR.

    The ADs are encouraged to provide online real time convertibility from FCY to PKR based on the request made by the account holder digitally for the eligible debits from the account. For the sake of transparency, the ADs shall indicate the exchange rate applicable to the transaction.

    ADs may allow non-resident Pakistanis to open the account jointly with other residents/non-residents, as per applicable laws/banking practices. These accounts should, however, be treated as non-resident accounts. However, a resident Pakistani, having foreign assets declared with FBR, may be allowed to open the account jointly with a resident only.

    In case the account becomes dormant due to non-operation, ADs shall devise a mechanism, aligned with applicable regulations, to reactivate the account digitally, in case of non-resident account. However, for resident FCVA, the ADs may reactivate the account digitally or otherwise in compliance with the applicable regulations and their own policy.

    Authorized Dealers will ensure ongoing monitoring of these accounts to mitigate ML/FT risk.

    iii)   Credits to the Foreign Currency Value Account.

    Remittances received from abroad through banking channels.

    Transfer of funds from his/her own NRP Rupee Value Account (NRVA) with the same AD.

    Profit/interest on the permissible investments made from the account

    Dis-investment proceeds from the permissible investments made from the account.

    Reversal of any incorrect debit in the account.

    iv)  Debits to the Foreign Currency Value Account.

    Investment in permissible securities, provided that the relevant laws/regulations permit such investment, as under:

    1. Government of Pakistan’s registered debt securities denominated in FCY only.

    2. Term deposit/remunerative product scheme, denominated in FCY, of the same AD.

    The funds for the above investments shall be transferred by the ADs only in the eligible products, through the instructions received from the account holder in this behalf.

    Transfer of funds to account holder’s own NRP Rupee Value Account (NRVA) with the same AD.

    Transfer to other FCY, PKR account and non-resident Rupee account – non-repatriable with any bank in Pakistan.

    Remittances and payments outside Pakistan to the extent of balances available in the account, without any prior approval from the bank or the State Bank.

    Cash withdrawal in foreign currency and equivalent local currency.

    Any payment in PKR to any person resident in Pakistan. However, any amount so paid shall not be allowed to be credited back into the account.

    Reversal of any incorrect /wrong credit entry.

    ADs shall submit a consolidated monthly statement of transaction(s) executed from FCVA on the attached format (Annexure-A) to [email protected] through their head/principle office by 7th of the ensuing month for each reference month.

    The ADs are encouraged to make necessary arrangement in their system to facilitate non-resident Pakistanis in opening and operating this account remotely through digital channels.

    ADs shall comply with all other applicable rules and regulations.

    ADs are advised to bring the above instructions to the knowledge of all their constituents for meticulous compliance.

  • Banks to observe normal working hours from August 03

    Banks to observe normal working hours from August 03

    KARACHI: State Bank of Pakistan (SBP) has said that the banks will observe normal working hours from August 03, 2020.

    In a statement issued a day earlier, the central bank said that the SBP will revert to normal office timings from Monday, August 03, 2020.

    The timings shall be:

    Monday to Thursday: 09:00am to 05:30pm (with prayer/lunch break from 01:30pm to 02:15pm)

    Friday: 09:00am to 06:00 pm (with prayer / lunch from 01:00pm to 2:30pm).

    The SBP directed all banks, development financial institutions (DFIs) and Microfinance Banks to ensure compliance of the above mentioned timings in letter and spirit.

    The bank timings were reduced due to coronavirus pandemic. However, shrinking number of infections in the country the official timings are reverting to normal.

  • Country foreign exchange reserves eases to $18.912 billion

    Country foreign exchange reserves eases to $18.912 billion

    KARACHI: The liquid foreign exchange reserves of the country eased by $135 million to $18.912 billion by week ended July 23, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves were at $19.047 billion by week ended July 17, 2020.

    The foreign exchange reserves held by the central bank also fell by $146 million to $11.975 billion by week ended July 23, 2020 as compared with $12.122 billion a week ago.

    The SBP attributed the decline in reserves to government payment for external sector.

    The reserves held by commercial banks witnessed meager increase of $12 million to $6.937 billion by week ended July 23 as against $6.925 billion a week ago.

  • Pakistan’s GDP growth contraction not severe as expected globally: SBP

    Pakistan’s GDP growth contraction not severe as expected globally: SBP

    KARACHI: The scale of the COVID-19 shock is underscored by the fact that for the first time in 68 years, as per the provisional estimates, Pakistan’s real GDP growth is set to contract in FY20.

    “At 0.4 percent, this contraction is not as severe as that expected in most parts of the world due to COVID-19,” State Bank of Pakistan (SBP) said in its third quarterly report on the country’s economy issued on Thursday.

    According to the report, successful stabilization measures that had fostered macroeconomic improvement in Jul-Feb FY20 provided a valuable cushion against the downturn faced from late March 2020 onward in the wake of the COVID-19 outbreak.

    In particular, major progress had been made during Jul-Feb FY20 period in curbing the fiscal and current account deficits on the back of strong revenue growth, policy shift to a market-determined exchange rate, and build up in foreign exchange reserves buffers. Following this period of necessary stabilization, there were also encouraging signs of recovery in the real economy, including exports.

    This made the economy relatively better equipped to respond to any external shocks than it would have otherwise been. This pre COVID-19 strengthening of Pakistan’s fundamentals and the prudent policy response to the outbreak later on should leave Pakistan well-placed to resume its earlier trajectory of recovery once the pandemic subsides.

    As in other parts of the world, the real, fiscal, and external sectors came under visible strain thereafter as COVID-19 struck the global economy, while the inflation outlook improved as a result of weaker domestic demand and lower oil prices.

    The report emphasizes that the estimated contraction in GDP owes mainly to a decline in industrial and services sector activities.

    The large-scale manufacturing (LSM) posted an improvement during Jan-Feb 2020, driven primarily by exporting sectors with some contribution from food and fertilizer segments.

    However, this nascent recovery was derailed by COVID-19 related disruptions, with LSM growth falling 22 percent on a month-on-month basis in March.

    The agriculture sector emerged largely unscathed by COVID-19 as important crops registered a turnaround compared to last year. That said, unfavorable climate conditions and pest and locust attacks prevented some annual targets from being met.

    The services sector felt the impact of COVID-19 acutely, as evident from high frequency data and negative sectoral growth is expected in FY20.

    The report documents a similar pattern in the fiscal sector, where a primary budget recorded a surplus during Jul-Mar FY20 on cumulative basis, the first ever since 2016.

    However, it turned into a deficit during the third quarter due to COVID-19. On the one hand, the lockdown created a drag for revenue, with growth in all categories of FBR revenues turning negative in March 2020.

    On the other hand, the induced slump in economic activity and rise in unemployment created a need for greater expenditures. The government announced aRs 1.24 trillion stimulus package towards the close of Q3-FY20, consisting of a combination of targeted handouts and sector-specific outlays for agriculture, construction, and exports. While this package is expected to give much-needed relief to individuals and businesses, it would simultaneously contribute to a larger fiscal deficit in the near term.

    Regarding the external sector, the report highlights that a sharp fall in imports, healthy growth in workers’ remittances, and contraction in the services trade deficit all played a part in narrowing the current account deficit (CAD) for Jul-Mar FY20 compared to last year.

    However, the pandemic prompted foreign investors to reduce their domestic debt and equity holdings in emerging markets, including Pakistan, and growth in remittances has moderated.

    These factors together with government debt repayments affected foreign exchange reserves in March 2020. However, Pakistan has generally been less affected than many other emerging markets and foreign exchange reserves of the country have since recovered, on the back of multilateral and commercial inflows.

    The SBP report notes that the inflation outlook improved following the global and domestic spread of COVID-19.

    A marked slowdown in domestic demand, stabilizing food inflation, and historic low oil prices led to a moderation in medium-term inflation prospects.

    The Monetary Policy Committee responded swiftly, slashing the policy rate by a cumulative 625 basis points in five meetings between mid-March to end-June 2020.

    To manage the cash flows of businesses and households, SBP allowed the deferment of principal amount and restructuring of loans. In addition, SBP launched three new refinancing schemes to support employment, new investments and BMR, and improve health facilities in the country. Together, these measures are estimated to provide a benefit of up to Rs.1.3 trillion (3.1 percent of GDP) to businesses and households.

    Together with the government’s stimulus package, these measures are helping to cushion the impact of the COVID-19 outbreak. Beyond their immediate impact, these measures are expected to support the post-COVID-19 economic recovery as well.

  • SBP revises instructions for IBWs of conventional banks

    SBP revises instructions for IBWs of conventional banks

    KARACHI: State Bank of Pakistan (SBP) on Wednesday revised instructions for Islamic Banking Windows (IBWs) of conventional banks in order to enhance the share and outreach of Sharia compliant financial services.

    In a statement the central bank said that keeping in view the significant potential of Islamic Banking Windows (IBWs) in enhancing the share and outreach of Shariah compliant financial services and increase in financial inclusion, instructions have been revised for banks to expand the scope of operations of IBWs.

    IBWs can now offer all types of financing products to their customers including Corporates, SMEs, Agriculture, Housing, and Consumers. However, this facility is subject to the condition that respective IBW branch shall be converted into full-fledged Islamic banking branch within a period of three years.

    At present, Islamic banking products and services are being offered by full-fledged Islamic banks, Islamic banking subsidiaries and Islamic banking branches of conventional banks after getting approval/license from SBP. Conventional banks can open IBWs, which are dedicated counters in conventional branches, after getting permission from SBP; however, these were not allowed to offer any financing products.

    With 1,400 IBWs of 11 banks currently operational in the country, their potential to improve access to finance will increase significantly.

    Further, it will contribute towards increase in financial inclusion through provision of Shariah compliant financing facilities to vast majority of population.

    The revised instructions also incorporate different amendments or additions to existing regulations and include policy formulation on IBWs, submission of annual IBWs expansion plan, physical setup & display requirements for IBWs, opening & closure of IBWs, their fee structure, and revisions in reporting requirements.

    These revised instructions will supersede all previous instructions issued on IBWs by SBP from time to time.

    It is expected that this new policy measure will contribute towards achieving the targets set under National Financial Inclusion Strategy for Islamic banking, which envisages attaining a share of 25 percent percent in total assets and deposits of the banking industry and 30 percent share in total branch network of the industry by the end of 2023.

  • Banks approve financing of Rs126bn for employees’ wages of 2,068 businesses

    Banks approve financing of Rs126bn for employees’ wages of 2,068 businesses

    KARACHI: Banks have approved around Rs126 billion under soft loan scheme to 2,068 businesses in meeting financing requirement for salaries and wages in the wake of difficulties faced due to coronavirus pandemic, State Bank of Pakistan (SBP) said on Monday.

    The SBP said that Under the Scheme, on overall basis, up till July 1, 2020, financing of Rs125.9 billion has been approved by banks for 2068 businesses covering wages and salaries of over 1.2 million employees.

    Soon after the introduction of the Scheme, a large number of applications to avail financing were received by banks but their approvals remained slow.

    However, with the continuous efforts of SBP, banks streamlined their processes and pace of loan approvals increased.

    At the end of April 2020, only 18 percent of loan applications were approved. This has increased to 76 percent by July 10, 2020.

    Similarly, the amount of loans approved against the requested amount also improved. The acceptance ratio for amount of financing increased from 26 percent at the end of April 2020 to 82 percent on July 10, 2020.

    Consequently, the number of employees benefitting from the scheme in terms of acceptance ratio has also increased from 26 percent to 85 percent during the same period.

    To counter the negative impact of Covid-19 on the economy, the central bank introduced the refinance scheme to support employment and prevent layoff of workers, commonly known as SBP RozgarScheme, in April 2020.

    The scheme provides concessional financing to businesses for wages and salary expenses, provided they commit to not lay off their employees for the period of the loan.

    The Scheme was later complemented by a Risk Sharing Facility (RSF) of the Government of Pakistan (GoP) for SMEs and Small Corporates with turnover of up to Rs2 billion.

    Under this facility, the federal government bears up to 60 percent first loss on the principal amount portion of disbursed portfolio for SME borrowers whereas 40 percent risk coverage is available for small corporates.

    The objective of this facility is to incentivize banks to extend loans to SMEs and Small Corporates, to whom they may not cater to for risk considerations.

    The scheme was available till end June 2020 earlier, however, SBP decided to extend the validity of this scheme by another three months to end September, 2020.

    Out of the total approved amount, Rs31 billion were for 1449 SMEs and Small Corporates under the RSF as of July 10, 2020 providing benefit to 280,437 employees.

    Relative to the initial situation related to Rozgar scheme, in terms of processing and approving the requests for financing, banks performed better in catering the requests under RSF and improved further over time.

    The acceptance ratio, both in terms of number of applications and amount increased from 35 percent and 37 percent respectively on May 15, 2020 to 72 percent and 71 percent on July 10, 2020.

    Following similar trends, the total number of employees benefitting from the acceptance of financing requests increased from 36 percent to 75 percent during the same period.

    The performance of banks, however, in terms of processing the number of applications and financing approved is limited to few banks.

    Among the Top Performing Five Banks, for both, JS Bank Limited, Habib Bank Limited (HBL), Bank Al-Habib Limited, Bank Alfalah Limited and Askari Bank Limited have contributed the highest in terms of both approving the number of applications and amount since the beginning of this scheme (RSF) till July 10, 2020.

    These top performing five banks provided Rs18.1 billion or 58 percent of the overall approved financing amount eligible for RSF under SBP Rozgar Scheme up till July 10, 2020.

    Their share declined from 61 percent earlier on June 12, 2020 showing that other banks have improved their performance. Their individual performance is also reflected from the fact that the cumulative approved financing by these banks ranged from Rs2.2 to Rs4.6 billion.

  • SBP allows business to avail loan scheme for early payment of salary, wages

    SBP allows business to avail loan scheme for early payment of salary, wages

    KARACHI: State Bank of Pakistan (SBP) has allowed businesses to avail loan scheme for early payment of salary and wages in the wake of Eid-ul-Azha.

    The SBP also relaxed condition for obtaining loans from more than one bank for the payment of salary and wages.

    The central bank in a notification issued on Friday said that in order to facilitate businesses facing problems in availing financing under the above schemes from one bank due to their credit limits or for any other reason, it has been decided to allow them to avail financing from more than one bank.

    However, a business cannot avail financing for a specific month from more than one bank.

    Further, businesses may avail financing under above schemes for early payment of wages/salaries for the month of July, 2020 before Eid-ul-Azha.

    Businesses may also avail reimbursement of wages/salaries of July, 2020 in case they make early disbursements from their own resources to their workers/employees due to Eid-ul-Azha.

    The central bank in April 2020 introduced loan scheme at reduced rate for businesses to ensure no layoff of employment and payment of salary and wages in the wake of spread of coronavirus.

  • SBP not to hold regular monetary policy committee meeting

    SBP not to hold regular monetary policy committee meeting

    KARACHI: State Bank of Pakistan (SBP) on Friday decided not to hold regular meeting of monetary policy committee meeting scheduled for July 2020.

    Given the number of MPC meetings that have taken place in recent months, and actions taken in those meetings, the MPC does not consider it necessary to hold the regular meeting of July 2020.

    The next regular meeting of the MPC will now be held in September 2020, the SBP said.

    The MPC continues to observe economic conditions and stands ready to take whatever further actions may become necessary in response to any adverse impact on the economy because of the pandemic or any other factor.

  • Foreign exchange reserves increase to $19.047 billion

    Foreign exchange reserves increase to $19.047 billion

    KARACHI: Pakistan’s liquid foreign exchange reserves have increased by $95 million to $19.047 billion by week ended July 17, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $18.952 billion by week ended July 10, 2020.

    The official reserves held by the central bank increased by $66 million to $12.121 billion by week ended July 17, 2020 as compared with $12.055 billion a week ago.

    Similarly, the foreign exchange reserves held by commercial banks improved by $29 million to $6.926 billion from $6.897 billion a week ago.