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  • Government borrowing from commercial banks increases by 26pc in seven months

    Government borrowing from commercial banks increases by 26pc in seven months

    KARACHI: The government borrowing from commercial banks has sharply increased by 26 percent during first seven months of the current fiscal year mainly due to financing the ballooning budget deficit.

    The government borrowing from commercial banks increased to Rs906.54 billion during first seven months (July – January) of 2020/2021 as compared with Rs720.68 billion in the corresponding period of the last fiscal year, according to statistics released by the State Bank of Pakistan (SBP) on Tuesday.

    The federal government borrows from scheduled banks through fortnightly auctioning of Market Treasury Bills (MTBs) of 3-, 6- and 12-month maturities. The federal also borrows long-term by quarterly auctioning of Pakistan Investment Bonds (PIBs)/Sukuk of 3, 5, 10, 15, 20 and 30 years maturities.

    The budget deficit for the first half of the current fiscal year widened to 2.5 percent of the GDP as the budget deficit was 2.3 percent in the same half of the last fiscal year, according to fiscal operation for first half of the fiscal year 2020/2021 issued by the finance ministry.

    The government financed the budget deficit with the domestic borrowing to the tune of Rs683.48 billion during the first half of the current fiscal year. Likewise, the government borrowing was Rs481.13 billion in the same half of the last fiscal year.

    Since there is restriction of borrowing from State Bank of Pakistan (SBP) the government is heavily dependent on commercial banks. During the period the government retired borrowing from SBP to the tune of Rs317.7 billion as against the retirement of Rs266 billion in the same period of the last fiscal year.

  • Banking system witnesses Rs790 billion withdrawal in January

    Banking system witnesses Rs790 billion withdrawal in January

    KARACHI: A withdrawal of Rs790 billion has been seen from the banking system during January 2021 owing to higher demand following acceleration in the economy on ease in coronavirus related restrictions, experts said.

    The total deposits of the banking system fell to Rs17,086 billion by end of January 2021 as compared with record high of Rs17,876 billion by December 2020, according to statistics released by State Bank of Pakistan (SBP) on Monday.

    Experts said that the rate of COVID infections had decreased significantly over the last one month and it returned normalcy in business and commercial activities.

    The government also eased the restrictions that were imposed on high number of cases in second phase of the COVID during December 2020.

    The experts attributed the record high banking deposits in December 2020 to financial closing of banks, which made all efforts to show maximum amount of deposits to improve their balance sheet.

    This was reason of large withdrawal from the banking system in the month of January 2021, they added.

    However, the deposits by end of January 2021 at Rs17,086 billion is still 16.5 percent higher when compared with deposits of Rs14,673 billion in same month of the last year.

  • Pakistan’s foreign exchange reserves increase to $20.163 billion

    Pakistan’s foreign exchange reserves increase to $20.163 billion

    KARACHI: Pakistan’s total liquid foreign exchange reserves have increased by $57 million to $20.163 billion by week ended January 29, 2021, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $20.106 billion by week ended January 22, 2021.

    The official reserves of the State Bank increased by $33 million to $13.031 billion by week ended January 29, 2021 as compared with $20.106 billion a week ago.

    The foreign exchange reserves held by commercial banks also increased by $24 million to $7.132 billion by week ended January 29, 2021 as compared with $7.108 billion a week ago.

  • Bank holiday on Kashmir Day announced

    Bank holiday on Kashmir Day announced

    KARACHI: The State Bank of Pakistan (SBP) on Tuesday announced bank holiday on occasion of Kashmir Solidarity Day on February 05, 2021.

    The SBP said that it would remain closed on February 05, 2021 (Friday) on the occasion of “Kashmir Solidarity Day”.

    On this day, one-minute silence shall be observed at 10:00 a.m. to honor Kashmiris Shuhada, as announced by the Government of Pakistan.

    The SBP communicated the announcement to all the presidents and chief executives of banks, development financial institutions and microfinance banks.

  • Joint bank account of pensioners prohibited

    Joint bank account of pensioners prohibited

    KARACHI: The finance division has barred opening of joint account for disbursement of pension amount.

    The State Bank of Pakistan (SBP) on Monday circulated instructions issued by the Finance Division regarding the payment of pension through bank accounts.

    The central bank pointed out BC&CPD Circular Letter No. 01 dated January 18, 2016, regarding Standard Operating Procedures (SOPs) for DCS issued by Finance Division, Government of Pakistan vide letter No. 12(9)-Reg. 6/2012.pt1453 dated January 05, 2016.

    In order to bring transparency and ease in the pension payment process, the government through letter No. 12(9)-Reg. 6/2012 dated January 06, 2021, has made the following amendments into the SOPs for DCS with immediate effect:-

    Pensioner shall be required to undergo biometric verification from any branch of a bank maintaining his/ her pension account, every year in March and September. If the pensioner is unable to undergo biometric verification due to incapacitation by bodily illness, infirmity, or if his/ her fingerprints do not exist due to old age or a genetic condition, he/she will provide a life certificate as per the SOPs.

    In case of family pension, Non-Marriage declaration as required under para 4 and 9(xiii) of SOPs shall be obtained from pensioners on or before 30th September of each year instead of March and September.

    Submission of above mentioned Non-Marriage declaration will be dispensed with after the widow/ daughter/ sister of the pensioner (family pension recipient) attains the age of sixty years.

    If a pensioner fails to submit a life certificate or fails to undergo biometric verification during March and September or a pensioner does not draw a pension for consecutive six months, the account shall become dormant.

    The requirement of submission of indemnity bond by a pensioner, as laid down in para 3(f) and 9(xii) of the SOPs is discontinued.

    In continuation to the above instructions, the following clarifications have also been issued by Finance Division:

    The Pension shall be paid through a bank account either current or PLS maintained in the pensioner’s name.

    A pension account shall not be a joint account.

    A bank account dedicated to pension transactions only shall not be mandatory for the pension.

    All banks are advised to disseminate the instructions widely to branches and ensure compliance in letter and spirit. Any violation of the instructions would be dealt with under the relevant provisions of the Banking Companies Ordinance, 1962.

  • Foreign exchange reserves ease to $20.106 billion

    Foreign exchange reserves ease to $20.106 billion

    KARACHI: The liquid foreign exchange reserves of the country fell slightly by $14 million to $20.106 billion by week ended January 22, 2021, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $20.12 billion by week ended January 15, 2021.

    The official reserves of the central bank witnessed a decline of $16 million to $12.998 billion from $13.014 billion a week ago.

    The foreign exchange reserves held by commercial banks increased to $7.108 billion by week ended January 22, 2021 as against $7.106 billion a week ago.

  • Financial institutions to ensure complete identity verification of customers for FATF compliance

    Financial institutions to ensure complete identity verification of customers for FATF compliance

    KARACHI: Financial institution are required to ensure complete identity verification of customers for compliance with Financial Action Task Force (FATF).

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  • SBP imposes Rs59.5 million as penalty on Habib Metropolitan Bank

    SBP imposes Rs59.5 million as penalty on Habib Metropolitan Bank

    KARACHI: The State Bank of Pakistan (SBP) on Wednesday imposed a monetary penalty of Rs59.51 million on Habib Metropolitan Bank for violating regulations pertaining to AML/CFT.

    A notification issued by the central bank said that the amount Rs59.51 million was imposed on Habib Metropolitan Bank for violating of instructions and regulations pertaining to Anti-Money Laundering (AML)/ Counter Financing of Terrorism (CFT).

    The SBP said that it had taken action in addition to penal action, the bank had been advised to conduct an internal inquiry on breaches of regulatory instructions and take disciplinary action against the delinquent officials.

  • Foreign investors repatriate $892 million during 1HFY21

    Foreign investors repatriate $892 million during 1HFY21

    KARACHI: The foreign companies operating in Pakistan have repatriated around $892 million as profit and dividend during first half (July – December) of fiscal year 2020/2021 (1HFY21), according to data released by State Bank of Pakistan (SBP) on Tuesday.

    The repatriation of profit and dividend was 6.7 percent higher when compared with $836 million in the same half of the last fiscal year.

    An amount of $840 million was repatriated during the first half of the current fiscal year against foreign direct investment (FDI) as compared with $743 million in the same half of the last fiscal year, showing an increase of 13 percent.

    The repatriation of funds against portfolio investment, however, fell to $52.2 million as during the half under review as compared with $93 million in the same half of the lat fiscal year.

    Major repatriation was witnessed in food sector which recorded $172.9 million against the total foreign investment during July – December 2020/2021 as compared with $54.6 million in the same period of the last fiscal year.

    The foreign companies engaged in telecommunications repatriated around $105 million during the first half of the current fiscal year as against $26 million in the same half of the last fiscal year.

    The repatriation of profit and dividend by companies in financial businesses reduced to $133.5 million during the half under review as compared with $155.6 million in the same half of the last fiscal year.

    The profit repatriation by beverage companies also witnessed increase to $39 million during the period under review as compared with $28 million in the corresponding period of the last fiscal year.

  • Exchange company license may be revoked on false information

    Exchange company license may be revoked on false information

    KARACHI: The State Bank of Pakistan (SBP) has said it can revoke license of any exchange company in case the central bank has been provided with false, misleading or inaccurate information by or on behalf of the exchange company.

    According to Exchange Company Manual, the SBP has the right to revoke a license of an exchange company at any time.

    Before a license is revoked, the Exchange Company shall be served with a notice mentioning therein the reasons for such revocation and instructions for the company to explain its position in writing within 30 days from the date of issuance of notice.

    The SBP said that license of an Exchange Company can be revoked by the central bank if:

    (a) The State Bank is provided with false, misleading or inaccurate information by or on behalf of the Exchange Company.

    (b) It appears to the State Bank that the Exchange Company has violated these or any other regulation, instruction or circular issued by the State Bank or if any of the conditions of license has not been fulfilled or is incapable of fulfillment.

    (c) The interests of the customers of Exchange Company are in any way threatened, whether by the manner in which the company is conducting or intends to conduct its affairs or for any other reason.

    (d) The Exchange Company did not commence its exchange business within three months from the date of issuance of license by the State Bank.

    (e) Deliberate obstruction of the State Bank inspection team in the performance of their duties, by Exchange Companies or officials of its network.

    (f) Any other reason that in the opinion of the State Bank disqualifies the Exchange Company to hold the license.