KARACHI: State Bank of Pakistan (SBP) on Tuesday announced that the central bank will remain closed on August 29 and 30 on occasion of Ashura, Muharram ul Haram, 1442 AH.
The SBP, in a statement, said that the central bank will remain closed on August 29-30, 2020 (Saturday and Sunday) on the occasion of Ashura, Muharram-ul-Haram, 1442 AH.
KARACHI: Banks have missed agriculture credit disbursement target for fiscal year 2019/2020 by Rs135 billion but the credit disbursement was 3.5 percent higher than the preceding fiscal year, State Bank of Pakistan (SBP) said on Monday.
The central bank in a statement said that the banks disbursed Rs 1,215 billion to agriculture sector during 2019-2020. This is 3.5 percent higher than the amount disbursed in the previous fiscal year but less than the credit target of Rs 1,350 billion which was set by Agricultural Credit Advisory Committee (ACAC) in Peshawar in November 2019.
Some factors which have constrained the growth of agriculture credit include the impact of COVID-19 pandemic, locust attack and continuing real side issues including water shortage, low production of cotton, sugarcane, low off take of fertilizers and volatility in prices of agri. produce etc.
The outstanding portfolio of agriculture credit increased to Rs 581 billion at end June, 2020, registering growth of 3.3 percent compared with the last year’s position of Rs 562 billion.
However, the number of agriculture borrowers declined from 4.01 million at end June 2019 to 3.74 million at end June 2020 due to the COVID-19 lockdown situation in the country.
The analysis of disbursement reveals that during FY 2019-20, five major commercial banks collectively disbursed agriculture loans of Rs 708.3 billion or 100.5 percent of their annual target of Rs 705 billion, specialized banks disbursed Rs 71.1 billion or 62.9 percent of their annual target of Rs 113 billion and fourteen domestic private banks as a group achieved 88.7 percent by disbursing Rs 225.0 billion against their target of Rs 253.6 billion.
Further, the five Islamic Banks as a group achieved 76.6 percent of their annual target of Rs 55.0 billion by disbursing Rs 42.1 billion which is 6.1 percent higher than the disbursement made during the corresponding period last year. Similarly, the Islamic windows of commercial banks disbursed Rs 43.5 billion or 79.2 percent against the target of Rs 55.0 billion in FY 2019-20 which is 33 percent higher from the disbursement of Rs 32.7 billion made during last year.
The agriculture credit of microfinance sector remained relatively sluggish due to COVID-19 lockdown in the 2nd half of FY 2019-20. The Microfinance Banks (MFBs) as a group have achieved 75.7 percent by disbursing agriculture loans of Rs 139.3 billion to small farmers which is 9.5 percent lower than the disbursement of Rs 154 billion during same period last year.
Likewise, the Microfinance Institutions/Rural Support Programs collectively achieved 73.4 percent of their targets by disbursing Rs 28.9 billion which is 15 percent lower than the disbursement of Rs 34 billion made during the last year to small and marginalized farmers.
It is important to mention that SBP announced a comprehensive relief package in collaboration with stakeholders for relief of agriculture sector to deal with the adverse implications of the ongoing pandemic on the farming community and agriculture business in the downstream of value chains. These measures which included deferment of principal and restructuring/rescheduling of agriculture loans were initially allowed uptill June 30, 2020 have been extended upto 30 September 2020.
SBP will continue to monitor the situation and it may introduce more measures to help the sector manage its finances during this temporary phase of disruption.
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has praised State Bank of Pakistan (SBP) for timely action to minimize adverse impact of coronavirus on trade and industry, a statement said on Monday.
“However, implementation of such measures is required to reach at the grass root level,” said Khurram Ijaz, Vice President, FPCCI, while chairing webinar on ‘Implications of Covid-19 on the Financial Market/Institutions of Pakistan.’
He said that outbreak of Coronavirus has not only affected the trade and industry of Pakistan, but drastically declined the performance of the financial market and major economic indicators in the economy.
During discussing, Arjumand Qazi, Group Head (SME)- Pak Brunei Investment said that SBP has indeed extended maximum support to the trade and industry in term of designing and announcing effective financing schemes since April 2020.
However, commercial banks and other financial institutions are still reluctant to extend such facilities to rural businesses.
Khurram Shehzad renowned financial expert appreciated SBP’s measure to decrease the interest rate from 13 percent to almost 7 percent in last 6 months.
He said that it is high time that commercial banks, investment companies and other stakeholders of the financial market play their part in the economic and financial survival of the economy.
Hasan Raza, Head of Project Management in Research Dept. Pakistan Stock Exchange (PSX) said that Pakistan Stock Exchange fell down to 27000 index point in February 2020 at the start of the lockdown, but with the efforts of PSX, the KSE index point has reached upto 40,000 index point in August 2020.
He further shared information regarding newly launched mutual funds and new Sukuk bonds in 2020.
While expressing his views, Zubair Haider Sheikh, Head of Cooperate & Investment Banking-Dubai Islamic Bank said that as the country is moving back to normal activities amid ease of lockdown in the economy, the commercial banks must come upfront to expand Temporary Economic Refinance Facility (TERF) as well as long term financing schemes to the masses.
Ahsan Mahenti, Managing Director, Arif Habib Commodities while appreciating SBP’s initiatives to fight the financial losses bared by the business during lockdown however, there is still need of incentive driven policies to support the corporate sector as well.
Participants of the webinar included Ali Kamal, Head of Research National Investment Trust (NIT), Imran Khali, Chairman Pak-Maldives Business Councils of FPCCI, Shabbir Mansha, Convener FPCCI Standing Committee on Custom Affairs, Amber Paracha Head of Credit Risk Management of Pak-Brunei Investment, members Trade Bodies and prominent members of FPCCI appreciated the initiative by FPCCI for conducting such informative seminars on various topics economic issues highlighting the problems and solutions which is highly commendable.
KARACHI: The balance of payment of the country registered current account surplus i.e. 1.9 percent of the GDP during the first month of the current fiscal year, according to statistics released by State Bank of Pakistan (SBP) on Monday.
The BOP witnessed a current account deficit of 2.8 percent of the GDP in July 2019.
The statistics revealed that the current account surplus stood at $424 million in July 2020 as compared with current account deficit of $613 million in the same month of the last year.
The current account surplus may be attributed to record inflows of workers’ remittances in July 2020. In the month under review the workers’ remittances rose to $2.77 billion. This is the highest ever level of remittances in a single month in Pakistan, according to the SBP.
The exports also exhibited 6.1 percent growth to $2 billion in July 2020 as compared with $1.88 billion in the same month of the last year. On the other hand the import bill of the country declined by 0.7 percent to $3.68 billion in July 2020 as compared with $3.71 in the same month of the last year.
The trade deficit narrowed by 7.7 percent to $1.68 billion in July 2020 as compared with the deficit of $1.83 billion in the same month of the last year.
KARACHI: State Bank of Pakistan (SBP) has allowed extension in settlement of foreign currency loans to facilitate exporters and importers in wake of coronavirus pandemic.
In a statement issued on Thursday, the SBP said that continuing with its commitment to support the industry amid COVID-19 pandemic, the central bank further facilitated the exporters and importers by allowing extension up to 180 days in settlement of their export and import loans under FE-25 Scheme.
Banks can now allow extension up to 180 days to exporters in settlement of their FE-25 loans in case they are facing delay in realization of export proceeds due to COVID-19.
Moreover, banks can also allow settlement of FE-25 loans to exporters through substitute contract during the extended period of 180 days where the original export contract has been cancelled due to COVID-19.
Likewise, SBP has also allowed the bank to extend the maturity of FE-25 import loans by 180 days.
This facilitation has been provided to exporter and importers for their foreign currency loans maturing up to September 30, 2020.
State Bank reiterates its unflinching resolve to continue working with all stakeholders to provide all needed facilitation in these uncertain times in the larger interest of people of Pakistan.
KARACHI: The liquid foreign exchange reserves of the country increased by $137 million to $19.655 billion by week ended August 13, 2020, State Bank of Pakistan (SBP) said on Thursday.
The foreign exchange reserves of the country were at $19.518 billion by week ended August 07, 2020.
The foreign exchange reserves held by the central bank also increased by $139 million to $12.608 billion by week ended August 13, 2020 as compared with $12.469 billion a week ago.
The SBP attributed the increase in reserves to proceeds of $249.4 million from Asian Infrastructure Investment Bank (AIIB). Meanwhile, during the week, SBP also made government external debt repayments of $151.0 million.
The foreign exchange reserves held by commercial banks slightly down by $2 million to $7.047 billion by week ended August 13, 2020 as compared with $7.049 billion a week ago.
KARACHI: The State Bank of Pakistan (SBP) has allocated an additional amount of Rs190 billion under refinancing schemes for exporters during fiscal year 2020/2021, a statement said on Wednesday.
In order to further facilitate the exporters, SBP enhanced the limit of refinancing provided to the banks under Exports Finance Scheme (EFS) by Rs100 billion.
Hence, banks will now have overall limits of Rs700 billion for the exporters for 2020/2021.
Moreover, to promote export-oriented investment, Rs90 billion have also been allocated under Long Term Financing Facility (LTFF) for the FY 21.
This amount is in addition to limit of Rs100 billion already allocated to banks/DFIs under Temporary Economic Relief Facility (TERF) – a concessionary refinance scheme for setting up of industrial units, the SBP said.
Export Finance Scheme and Long Term Financing Facility are two of the oldest schemes of SBP under which concessionary financing is provided to the exporters.
EFS is operational since 1973 to meet short-term financing needs of exporters, while LTFF has been available 2008. For both the schemes, their Shariah compliant versions are also available.
Since the emergence of Covid-19, SBP has taken several measures to counter its impact on the economy and safeguarding country’s exports has been a key priority. SBP has provided a number of relaxations under EFS and LTFF since March 2020 including:
Additional period of six months for making shipment against loans availed under EFS Part-I.
Additional period of six months for meeting required export performance against loans availed under EFS Part-II.
The export performance of this extended period will also be considered for calculating the entitlement limit for 2020/2021.
Reduction in showing export performance from 2 times to 1.5 times against financing availed during FY20 and FY21.
Relaxation in the eligibility criteria for availing finance under LTFF.
Allowing deferment of principal amount for one year and/or rescheduling/restructuring of loans under LTFF.
It is expected that with the above already provided relaxations, which were widely appreciated by business community; above enhancement of around Rs190 billion in limits will cater to exporters’ cheaper liquidity requirement. SBP is closely monitoring the situation and is ready to take any further actions required to support the export sector.
KARACHI: The government has decided to generate funds through Islamic mode by reopening of Sukuk and in this regard the State Bank of Pakistan (SBP) on Tuesday issued necessary instructions and guidelines.
The SBP said that subsequent to the issuance of first Ijarah Sukuk issue if the government is in need of additional funds and instead of issuance of a new Sukuk wishes to raise new funds by way of re-opening, then the State Bank of Pakistan will conduct an auction for reopening of the existing Sukuk Issue.
In the Islamic context the steps of reopening of existing Sukuk is similar as that of issuance of a completely new Sukuk i.e. at the time of reopening of Sukuk the transaction is concluded by purchasing additional share in the identified asset on Musha basis which is then given on rent/ Ijarah and a separate Ijarah Agreement is executed.
However, since the underlying asset, maturity date, rental rate and rental payout frequency is kept same as the initial issue, therefore the new issue would be called re-opening of Sukuk instead of a new Sukuk issuance.
The transaction flow for the re-opening of Sukuk would be same as that of an approved structure of the fresh Issue which is re-defined briefly in the following few lines:
At the time of reopening of Sukuk, a fresh Purchase Agreement would be executed between Pakistan Domestic Sukuk Company Limited (PDSCL) (on behalf of Investors) and GOP at an agreed purchase price for the purchase of a new/additional share in the asset.
Subsequently PDSCL (on behalf of Investors) and GoP would enter into an Ijarah Agreement wherein the new / additional assets would be leased to GoP for a fixed period which would be ending on the scheduled maturity date of the first issue.
The other agreements as mentioned in the Shariah Structure of first issue would also be executed simultaneously.
However, the structure of reopening of Sukuk might differ from the structure of the first issue in ways as elaborated below.
The distinguishing features of the re-opening structure are as follows:
• For the first rental period the rental amount of the reopened Sukuk in absolute terms would be the same as the first issue. However, for subsequent period, the Rental Rate for the reopened Sukuk would be same as that of the first issue. Similarly, the maturity of the re-opened Sukuk would also be same as the first issue
• For the determination of the Bid Price the Investors at the time of re-opening would take into consideration the known Rental Rate (in terms of benchmark), the remaining tenor of the issue and the higher first rental amount. The Purchase Price (at which settlement will take place) would have the following three components which can be referred to individually or collectively for the reporting purpose:
i. Face value of Sukuk
ii. Market premium/ discount
iii. Price premium due to higher first rental
The component (iii) mentioned above is based on the rental rate determined in the fresh auction and/or start of last rental period; hence will be known to the investor.
The investors would bid in the auction on the price for re-opening of the Sukuk, which may be at premium or discount based on market conditions, considering component (i) and (ii) mentioned above.
The component (iii) will be added to the Cut-off Bid Price (as per auction result) for determining purchase price at which settlement will take place.
• On completion of the bidding, the Purchase Agreement for the purchase of new/additional asset between PDSCL (on behalf of the Investors) and GoP would be executed at purchase price.
• The Sukuk would be recorded in the books of accounts at Absolute Auction Price i.e. the purchase price without any adjustment. ‘However, for reporting purpose the above identified 3 components of the Purchase Price may be recorded separately or collectively as required.
• In case the date of Ijarah Agreement lies in between the two rental payment dates of the original issue, then the first rental period would be of a period less than 6 months. In this case the first rental amount for the reopened sukuk would be communicated to the lessee in absolute terms. This rental amount would be equal in absolute terms with the corresponding 6-month rental of the first/ previous issue.
• The full amount of first rental of the re-opened sukuk would be booked as rental income by the Investors without adjustment.
• On the expiry of the first lease period subsequent to re-opening of Sukuk an Asset Comingling Declaration’ shall be executed by PDSCL (as trustee and agent of investors) on the last day of first rental period to inform GoP about the combined proportionate share of investors in the underlying asset.
• Subsequently, a single rental notice referring to Comingled Assets shall be executed for subsequent lease periods.
KARACHI: The State Bank of Pakistan (SBP) has decided to enhance the limit of loan for women entrepreneurs up to Rs5 million from Rs1.5 million in order to encourage women participation in the economy.
In a statement issued on Tuesday the central bank said that it had enhanced the financing limit under its Refinance and Credit Guarantee Scheme for Women Entrepreneurs from Rs1.5 million to Rs5 million.
The decision has been taken in light of feedback received from various stakeholders about current financing limit being insufficient to cover the financing needs of women entrepreneurs, the SBP said.
This decision is in line with the government policy to support and revive economic activities in the country and SBP’s key objective of improving access to finance for priority segments including women entrepreneurs.
Initially in August 2017, State Bank had introduced Refinance and Credit Guarantee Scheme for Women Entrepreneurs in underserved areas to promote financial inclusion and access to finance for women entrepreneurs in the country.
Subsequently, the scope of scheme was enhanced to cover whole of Pakistan.
Under this scheme, SBP provides refinance to participating financial institutions at 0 percent on their financing to women entrepreneurs at maximum end user rate of 5 percent. Moreover, 60 percent risk coverage is also available to the participating institutions.
The enhancement in financing limit under SBP scheme is expected to increase financial inclusion of women since more women entrepreneurs are likely to be attracted for setting up of new businesses or for expanding the scope of their existing businesses by availing concessional financing under SBP scheme.
KARACHI: The inflow of workers’ remittances hit monthly record high of $2.77 billion in July 2020, State Bank of Pakistan (SBP) said on Monday.
In July, workers’ remittances rose to US $ 2.768 billion. “This is the highest ever level of remittances in a single month in Pakistan,” the SBP said.
In terms of growth, remittances increased by 36.5 percent over July 2019 (y/y) and 12.2 percent over June 2020 (m/m). Given the impact of Covid-19 globally, this increase in worker’s remittances is encouraging.
In July, sizeable amounts of workers’ remittances were received from Saudi Arabia (US $ 821.6 million), UAE (US $ 538.2 million), UK (US $ 393.9 million) and USA (US $ 250.6 million).
The growth rate in remittances compared to the same month in the previous year is around twice as high as the Eid-ul-Adha related seasonality typically experienced over the last decade.
Several factors have likely supported the growth in remittances to date, including orderly exchange rate conditions and policy steps taken by the State Bank and the Federal Government under the Pakistan Remittance Initiative. These steps include reducing the threshold for eligible transactions from USD 200 to USD 100 under the Reimbursement of Telegraphic Transfer (TT) Charges Scheme, an increased push towards adoption of digital channels, and targeted marketing campaigns to promote formal channels for sending remittances.
To improve data quality and better capture the source country of the remitter, the compilation methodology for ‘country wise’ workers’ remittances has been strengthened from this month. Therefore, country-by-country trends will be available on a consistent basis from August 2020 onwards.
Importantly, the new data collection method does not affect the reporting of the level of remittances arriving into Pakistan.
Importantly, the revised country shares under the improved data do not necessarily imply that remittances from one country have increased over another. Instead they demonstrate that the source country of remittances is being recorded more accurately now.