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Tag: SBP

  • Foreign direct investment grows by 9 percent in four months

    Foreign direct investment grows by 9 percent in four months

    The State Bank of Pakistan (SBP) reported a 9.1% increase in net inflows of foreign direct investment (FDI) during the first four months of the current fiscal year (July – October). The net FDI inflows amounted to $733 million, up from $672 million in the same period of the previous fiscal year, signaling a moderate improvement in investor confidence in Pakistan’s economy.

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  • SBP cuts loan write-off history to 10 years

    SBP cuts loan write-off history to 10 years

    KARACHI: State Bank of Pakistan (SBP) has allowed to reduce the history of write-off/waived loans and advances for corporate borrowers from 15 years to 10 years.

    A statement issued on Thursday, the central bank said it had decided to reduce the reflection period of written off/waived loans and advances for corporate borrowers in the Electronic Credit Information Bureau (eCIB) of SBP from 15 years to 10 years.

    eCIB is a repository of information about the credit history of borrowers of the banking system and is largely used by banks/Financial Institutions to assess the creditworthiness of borrowers.

    This decision follows a detailed assessment of international practices.

    It has been a general impression that reflecting the negative history/ write-off for a longer period might deprive the borrowers of a fresh start and would exclude borrowers from access to finance for longer periods (following the write-offs/waivers) regardless of the borrowers’ current financial performance and other favorable information.

    It may be noted that various business bodies and Chamber Members frequently also raised such concerns.

    They were of the view that placing a one-time write-off/waiver in eCIB for 15 years is a long period particularly when a business has paid back or settled its transaction with the bank. It creates difficulties for businesses in availing fresh financing for a long time.

    Decreasing the reflection period to 10 years will bring our system in line with the international practice and provide a conducive business environment to boost economic activities besides helping to improve the country ranking in the Ease of Doing Survey conducted by the World Bank periodically.

    Credit Information Bureau/Credit registry (eCIB) is one of the supervisory tools used worldwide to assist the supervisors in off-site supervision and on-site examinations.

    SBP established its Credit Registry i.e. eCIB in 1992 with the objective to complement its role of prudential supervision and assessment of the risk monitoring functions of its regulated FIs.

    Since then, the eCIB of SBP has evolved from manual to modern electronic online credit reporting system fueled by improvements in system and technology.

    The existing eCIB system is not only helping in the expansion of credit but also enabling FIs to move from the traditional subjective approach of granting credit to a more efficient lending process.

  • Country’s forex reserves increase to $19.907 billion

    Country’s forex reserves increase to $19.907 billion

    KARACHI: The liquid foreign exchange reserves of the country increased by $553 million to $19.907 billion by week ended November 06, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $19.354 billion by the week ended October 29, 2020.

    The official reserves of the SBP increased by $558 million for the week ended November 06, 2020 as against $12.183 billion a week ago.

    The SBP attributed the increase to receipt of $500 million as government loan proceeds.

    The foreign exchange reserves of the commercial banks eased to $7.166 billion by week ended November 06, 2020 as compared with $7.171 billion a week ago.

  • SBP blocks payment for subscribing Indian contents

    SBP blocks payment for subscribing Indian contents

    KARACHI: State Bank of Pakistan has banned online payment for subscribing Indian entertainment content. In a circular issued to all banks, the SBP directed to block the payment to Indian content.

    The central bank said that the decision had been taken on the directives of federal cabinet to stop different modes of payments including credit cards for subscribing Indian content in Pakistan including Zee5 video-on-demand service.

    “In this regard, it is advised to ensure meticulous compliance of aforementioned instructions of the government of Pakistan and submit compliance status to PSD, SBP by November 13, 2020,” the central bank said.

  • 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.