KARACHI: The current account balance of the country has posted surplus of $959 million during first nine months (July – March) of 2020/2021 as compared with a deficit of $4.14 billion in the corresponding months of the last fiscal year, according to data released by State Bank of Pakistan (SBP) on Friday.
Due to high import volume balance of trade in goods registered a deficit of $18.65 billion during the first nine months of the current fiscal year as compared with deficit of $15.85 billion in the corresponding months of the last fiscal year.
However, the current account deficit on trade in services narrowed to $1.36 billion during July – March of the current fiscal year as compared with the deficit of $2.86 billion in the corresponding period of the last fiscal year.
The deficit in balance of primary income also narrowed to $3.59 billion during the period under review as compared with the deficit of $4.13 billion during first nine months of the last fiscal year.
The major component that helped a surplus current account is worker remittances received by the central bank during the period under review. The inflows of workers’ remittances were at $21.46 billion during July – March 2020/2021 as compared with $17 billion in the corresponding period of the last fiscal year.
The balance of payment posted a current account deficit of $4.44 billion for the fiscal year 2019/2020 and a deficit of $13.43 billion for the fiscal year 2018/2019.
KARACHI: The State Bank of Pakistan (SBP) has imposed around Rs96 million as monetary penalties on top banks for violating regulatory instructions, including instructions related to anti-money laundering (AML) and combating financing of terrorism (CFT), a notification said on Friday.
The SBP imposed these penalties during quarter ended March 31, 2021 on Habib Bank Limited, MCB Bank Limited, MCB Islamic Bank Limited and United Bank Limited.
The details shows that the central bank imposed an amount of Rs39.77 million on Habib Bank Limited for violating regulatory instructions pertaining to Foreign Exchange and General Banking Operations. The SBP, in addition to penal action, directed to strengthen its process with respect to identified areas.
The SBP imposed penalty of Rs10 million on MCB Bank Limited for violating the regulatory instructions pertaining to general banking operations. In addition to penal action the bank has been advised to strengthen its processes with respect to identified areas.
The central bank imposed monetary penalty of Rs37.09 million on MCB Islamic Bank Limited for violating the regulatory instructions pertaining to AML/CFT, Foreign Exchange and 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.
The SBP imposed an amount of Rs10.71 million as monetary penalty on United Bank Limited for violating the regulatory instructions pertaining to CDD/KYC and general banking operations. In addition to penal action the bank has been advised to strengthen its processes to avoid recurrence of such violations.
The SBP from July 2019 started public disclosure of penal action against banks. “Enforcement actions are an integral part of regulatory regime which involves imposition of monetary penalties and other actions against institutions and individuals for violations of laws, rules, regulations, guidelines or directives issued by SBP from time to time,” according to a circular issued by the central bank.
In order to bring more transparency and strengthen market discipline, SBP has decided to publicly disclose significant enforcement actions.
KARACHI: The foreign exchange reserves of the country registered nominal fall of $7 million to $23.213 billion by week ended April 16, 2021, State Bank of Pakistan (SBP) on Thursday.
The official foreign exchange reserves of the SBP fell by $62 million to $16.044 billion by week ended April 16, 2021 from $16.106 billion a week ago.
However, foreign exchange reserves maintained by commercial banks increased by $55 million to $7.169 billion by week ended April 16, 2021 as compared with $7.114 billion a week ago.
KARACHI: The State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP) have amended the Terms of Reference (ToRs) of their Joint Task Force (JTF) on Financial Conglomerates to further strengthen the supervisory cooperation, inter alia, in AML/CFT/CPF supervision at financial-group level. Dr, Reza Baqir, Governor, SBP and Aamir Khan, Chairman, SECP have signed the Letter of Understanding (LoU) for amendments in the ToRs, according to a statement issued on Thursday.
The interagency cooperation between financial sector regulators is a crucial element for the effective supervision of financial groups, which comprise various types of financial institutions.
Accordingly, the SBP and SECP established the JTF in March 2009 to proactively identify and tackle the risks posed by conglomeration in the financial sector.
The ToRs of the JTF envisage the supervisory cooperation, holding periodic meetings and information sharing between both the regulators in respect of the financial groups. The ToRs have been revised from time to time to align with the developments in the regulatory sphere and dynamics of the financial market.
Keeping in view the importance of the group-level AML/CFT/CPF supervision, both SBP and SECP jointly agreed to specifically cover this area in the ToRs of the JTF in a more explicit manner.
These improvements in the ToRs will allow the regulators to effectively implement group-level AML/CFT/CPF supervision in line with the international standards, and strengthen cooperation and information sharing in a more systematic manner. Revised TORs will further the overall policy objectives of soundness, integrity and fair conduct in the financial system.
KARACHI: Habib Bank Limited (HBL) has paid monetary penalty of Rs42.2 million to State Bank of Pakistan (SBP) for violation of various regulatory provisions.
According to HBL it paid Rs42.2 million during first quarter (January – March) of 2021 against penalties imposed by the SBP. The bank had paid around Rs231.6 million as monetary penalties to SBP in the same quarter of the last year.
A total amount of Rs42.23 million was paid by the bank as penalties, including those imposed by other regulatory bodies. The bank had paid around 232.19 million as total penalty for the same quarter of the last year.
The bank had paid an amount of Rs320.79 million as penalty for various regulatory violations during the year ended December 31, 2020.
For the year ended December 31, 2020, the bank paid the amount of Rs320.79 million as penalties for violation of various regulations.
However, the payment of penal amount reduced by 33 percent when compared with Rs480.56 million paid in the preceding year.
The bank paid an amount of Rs296 million against fine imposed by the SBP for the year ended December 31, 2020. The latest amount of monetary penalty has been reduced when compared with Rs476 million that was imposed by the SBP on the bank during the preceding year.
KARACHI: The influx of foreign direct investment (FDI) into Pakistan has plummeted by 35 percent during the first nine months (July – March) of the fiscal year 2020/2021, as per data released by the State Bank of Pakistan (SBP) on Monday.
KARACHI: State Bank of Pakistan (SBP) on Monday issued mechanism for payment of markup subsidy for housing finance and issued instructions to banks and development financial institutions (DFIs) for the facility.
The SBP advised banks to submit their claims to Development Finance Support Department (DFSD), SBP BSC, Karachi as per instructions contained in the attached payment mechanism within 15 working days from the end of each Quarter.
However, the banks shall submit their claim within 15 working days for the quarter ending December 2020 and March 2021 from the date of issuance of this circular.
According to markup subsidy payment mechanism (MSPM), the SBP said that the government had issued markup subsidy scheme to provide concessional housing finance for promoting home ownership.
The SBP issued necessary instructions to all commercial banks, microfinance banks and HBFCL through a circular no. 03 dated March 25, 2021 and revised instructions issued from time to time.
All loans disbursed under the scheme shall be reported to SBP under housing finance.
Under the Scheme, loans are segregated into four tiers:
i. Tier 0 (T0) – (a) House up to125 sq yds (5 Marla) and (b) flat/apartment with maximum covered area of 1,250 sq ft.
ii. Tier 1 (T1) – (a) House up to125 sq yds(5 Marla) with maximum covered area of 850 sq ft and (b) Flat/apartment with maximum covered area of 850 sq ft.
iii. Tier 2 (T2) – (a) House up to125 sq yds (5 Marla) and (b) flat/apartment with maximum covered area of 1,250 sq ft.
iv. Tier 3 (T3) – (a) House up to250 sq yds (10 Marla) and (b) flat/apartment with maximum covered area of 2,000 sq ft.
Pricing for Housing Loans
Loan Tiers
Customer Pricing
Bank Pricing
Tier 0
5% for first 5 years & 7% for next 5 years
1 Year KIBOR + 700 BPS
Tier 1
3% for first 5 years & 5% for next 5 years
1 Year KIBOR + 250 BPS
Tier 2
5% for first 5 years & 7% for next 5 years
1 Year KIBOR + 400 BPS (Spread may vary)
Tier 3
7% for first 5 years & 9% for next 5 years
1 Year KIBOR + 400 BPS (Spread may vary)
For loan tenors exceeding 10 years, market rate i.e. bank pricing will be applicable for the period exceeding 10 years.
Procedure for loans disbursements and availing markup subsidy:
EAs shall evaluate financing applications of customers as per parameters of Markup Subsidy Scheme for Housing Finance approved by the Federal Cabinet and circulated by the State Bank of Pakistan to all banks/DFIs vide IH&SMEFD Circular No. 03 dated March 25, 2021 and revised from time to time. The financing facility for a borrower shall be sanctioned and disbursed by the EA after completion of documentation formalities. These financing shall be entitled for markup subsidy as prescribed above. No further evaluation on eligibility of borrowers would be conducted by the State Bank of Pakistan.
Calculation of Equally Monthly Installment (EMI) for Borrower
For first five years EMI, amortization schedule would be prepared for full tenor of financing at markup rate i.e. 3 percent, 5 percent or 7 percent depending upon the financing tier.
EMI for next five years i.e. 6th year to 10th year would be on the basis of amortization schedule prepared at the applicable subsidized markup rate (i.e. 5 percent, 7 percent or 9 percent depending upon the financing tier) on outstanding principal for remaining financing tenor.
After 10th year of financing, EMI would be calculated on the basis of amortization schedule at applicable markup rate.
Calculation of Markup Subsidy for Banks
After calculating the EMI for end user, the EAs will calculate the difference to be paid by Government of Pakistan by applying the difference between 1-Year KIBOR + spread and end user markup rate on the outstanding principal.
The banks will calculate the subsidy for the period of markup subsidy i.e. 10 years.
Mechanism for Payment of Markup Subsidies: Payment of subsidy to EAs will be made through SBP’s operational arm viz. Development Finance Support Department (DFSD), SBP BSC, Head Office, Karachi.
The executing agencies (EAs) / banks shall prepare and submit claims on quarterly basis to DFSD for receiving government markup subsidy on outstanding principal amount of their performing housing finance portfolio up to expiry of each individual loan. In case of a loan becoming non-performing, no markup subsidy will be paid after being classified as ‘Loss’ as per SBP PRs for Housing Finance. The EAs claims shall contain particulars of each individual loan along with calculations of subsidy based on relevant 1-year KIBOR used. For the sake of simplicity, EAs shall assign unique number to each loan i.e. “Bank Name—Loan Number” (ABC-12345678). The markup subsidy claim should be duly vetted by internal audit department of the EA. The audited claim along with a certificate from EA relating to eligibility of borrowers for the subject scheme and correctness of the subsidy amount shall be submitted to DFSD within 15 working days after the end of respective quarter for payment of subsidy. The claims shall be submitted to DFSD as per the format attached as Annexure B (Annexure B-1 for Banks/DFIs and Annexure B-2 for MFBS).
DFSD, SBP BSC shall scrutinize subsidy claim of EAs within 15 working days after receipt of complete information from EAs. DFSD shall ascertain that calculations of EAs subsidy claim are correct and applicable KIBOR has been used by the EAs. Thereafter, DFSD shall submit scrutinized claims to Accounts Department, SBP BSC for release of funds, through Karachi Office, to respective EA account maintained with SBP BSC, Karachi from Government account ‘Non-Food Account 1’.
Banking Inspection Department of State Bank during regular inspection of the EAs shall conduct inspection of their housing finance portfolio on sampling basis using its own sampling techniques. SBP inspectors shall randomly select credit files and review them from the perspective of eligibility of borrowers under the Program, status of loan (regular or NPL) and GOP subsidy claim. The BID inspection report section on ‘Markup Subsidy on Housing Finance’ shall be used as an important input for reviewing the Scheme and assessing its effectiveness in fulfilling the Government objective of promoting home ownership in the country.
KARACHI: The foreign exchange reserves of the country have increased by $2.54 billion to $23.22 billion by week ended April 09, 2021, State Bank of Pakistan (SBP) said on Thursday.
The foreign exchange reserves of the country were at $20.679 billion by week ended April 02, 2021.
The official foreign exchange reserves of the State Bank increased by $2.579 billion to $16.106 billion by week ended April 09, 2021 as compared with $13.527 billion a week ago.
The increase in reserves has been attributed to receipt of proceeds of $2.5 billion against issuance of Pakistan Euro Bonds.
The foreign exchange reserves held by commercial banks eased by $38 million to $7.114 billion by week ended April 09, 2021 as compared with $7.152 billion a week ago.
KARACHI: State Bank of Pakistan (SBP) has issued instructions for opening accounts for raising funds through donations / contributions for Prime Minister’s Ehsaas Koye Bhooka Na Soye initiative.
The SBP said that the Finance Division, Government of Pakistan, had notified establishment of the subject Fund under the Prime Minister’s Ehsaas Koye Bhooka Na Soye initiative, to eliminate hunger in the country by providing meals to the people in need, especially those at risk of, or experiencing hunger.
In this regard, the State Bank of Pakistan (SBP) is pleased to announce opening of “Ehsaas: Koye Bhooka Na Soye (EKBNS) Fund Account-2021”, for raising funds through donations/contributions from general public to support the above initiative. All the commercial banks and field office of SBP Banking Services Corporation shall open the account of the Fund and shall receive donations/contributions in cash, through cheques, and through Alternate Delivery Channels (ADCs), at all their branches across the country.
Donors shall be provided multiple options for making donation/contribution to the Fund as described below:-
a. Counters of the banks
All commercial banks in Pakistan and field offices of SBP Banking Services Corporation shall collect donations at their counters across their branch network in Pakistan. The donors may deposit their donations at any branch of the above banks. The daily donation/contribution collected by the commercial shall be settled on aggregate basis with the SBP, through Pakistan Real-time Settlement System (PRISM) via MT-103.
b. Crossed Cheques Drop Box Facility
Due to COVID-19 pandemic situation, banks shall also make available at their branches, the drop box facility enabling the donors to drop crossed cheques in the name of the fund. The banks shall, accordingly debit the customer’s account and transfer the proceeds to the Fund’s account at SBP through PRISM. The banks are advised to ensure that the drop box facility is fully operational and prominent notices or banners are placed in all such branches that the donors can drop the crossed cheques in the name of the Fund.
c. Alternate Delivery Channels ( ADCs)
The banks shall allow their respective customers to make donations/contributions through internet banking, Automatic Teller Machines (ATM) and other Alternate Delivery Channels (ADC). For the purpose, commercial banks shall prominently display the IBAN of the Fund at their websites and ATMs screens and send the same to their clients through SMS alerts. The amount collected through ADCs shall be settled with SBP through PRISM on aggregate basis, once in a day.
The banks shall keep the detail files of settlement of donations collected through mechanism specified in a, b and c above (i.e. name of donor and amount of his/her donation/contribution) in their record for subsequent verification and reference.
KARACHI: The National Assembly likely to adopt amendments to State Bank of Pakistan (SBP) Act by September 2021.
This was assured by the Pakistani authorities to International Monetary Fund (IMF).
The ministry of finance submitted the amendments to parliament in March 2021 and the authorities expect adoption by parliament by end-September 2021.
The authorities assured the IMF about making good progress toward strengthening the SBP’s autonomy, governance, and mandate.
The authorities said: “We have worked closely with IMF staff in the preparation of amendments to the SBP Act to address existing gaps.”
The amendments aim to:
(i) establish domestic price stability as the primary objective, with financial stability and growth as secondary objectives;
(ii) clearly define the SBP’s functions to help achieve these objectives;
(iii) strengthen the SBP’s financial autonomy, including through statutory mechanisms for sufficient recapitalization and profit retention; (iv) prohibit the extension of direct credits or guarantees to the general government;
(v) establish the statutory underpinnings for audits;
(vi) secure stronger protection of the personal autonomy of senior officials;
(vii) further strengthen collegial decision making at the executive management level;
(viii) provide stronger oversight by the Board; and
(ix) improve SBP’s accountability regarding the conduct of its monetary policy and the achievement of its objectives.
