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  • SBP’s official reserves fall by $804 million in a week

    SBP’s official reserves fall by $804 million in a week

    KARACHI: The official foreign exchange reserves of State Bank of Pakistan (SBP) have decreased by $804 million during one week due to external debt payment.

    The SBP on Thursday said that during the week ended March 27, 2020 its reserves fell by $840 million to $11.185 billion from $11.989 billion a week ago.

    “This decline is attributed primarily to government external debt payments that amounted to $441 million and other official payments,” the SBP said.

    The total liquid foreign reserves of the country fell by $718 million to $17.387 billion on March 27, 2020 as compared with $18.105 billion a week ago.

    The reserves held by the commercial banks however increased by $86 million to $6.202 billion by week ended March 27, 2020 as compared with $6.116 billion a week ago.

  • SBP issues instructions to banks on PM corona relief fund

    SBP issues instructions to banks on PM corona relief fund

    KARACHI: State Bank of Pakistan (SBP) has issued instructions to all commercial banks and microfinance banks regarding receiving payments under newly established PM COVID-19 Pandemic Relief Fund 2020.

    In a circular issued on Thursday, the central bank said that the government had notified establishment of a relief fund, namely, Prime Minister’s COVID-19 Pandemic Relief Fund-2020, for providing relief and assistance to the people of Pakistan affected by the COVID-19 pandemic in the country. The Fund shall accept donations / contributions both from domestic and international sources.

    The government has taken a number of steps with a view to enhance transparency in receipts into and payments out of the fund, including the following:

    Cash balance of the Fund shall be kept separate from and independent of cash balance of the general government account;

    Government shall commission separate audit reports on the receipts and payments of the Fund, including audit report by one of the local affiliates of big-four international accounting and auditing firms; and

    The Fund will be administered by the Poverty Alleviation and Social Safety Division in consultation with the Finance Division.

    The SBP said that a bank account of the Fund has been established for public donations as per the details given below:

    Account Title: Prime Minister’s COVID-19 Pandemic Relief Fund-2020

    Account No: 4162-786-786

    IBAN: PK11NBPA0002004162786786

    SWIFT code: NBPAPKKAMBR

    Bank: National Bank of Pakistan (NBP)

    Branch: Main Branch, I.I. Chundrigar Road, Karachi

    The SBP said that the donors have been provided multiple options for making donation/ contribution to the Fund as described below:

    A. Overseas Donors:

    a. Wire Transfer:

    Overseas donors including overseas Pakistanis may donate to the Fund through wire transfer to the Fund account detailed above. They would simply advise their respective banks to transmit the donation amount in the Fund account by debiting their accounts. The NBP shall transmit the donations received in the Fund account to SBP on daily-basis through ‘Real Time Gross Settlement’ (RTGS) system along with name of donor, country of residence and amount of contribution in both foreign currency and PKR.

    b. E-Payment Gateway:

    Donation / contribution can also be made to the Fund account through a link available at NBP website by using debit / credit cards.

    c. Transfer through Money Service Bureaus, Money Transfer Operators and Exchange Houses:

    Overseas donors may also donate / contribute through Money Service Bureaus (MSBs), Money Transfer Operators (MTOs) (e.g. MoneyGram, Western Union) and Exchange Houses (EHs) in line with the arrangements in place for receiving home remittances. Banks receiving such remittances shall transfer the same through RTGS to the above mentioned account of the NBP every thirty minutes during the banking hours, besides providing the details of their particulars [as specified under A(a) above] to them for the purpose of maintain the register.

    B. Domestic Donors:

    a. Cash Deposits at Banks’ Counters:

    Donors and contributors may make their donations / contributions to the fund in cash at any branch of any bank operating in Pakistan, which shall transfer the amount of donations so received to NBP’s above mentioned account through RTGS after every 30 minutes during the banking hours. Similarly, donations/ contributions may also be made at any of the field offices of SBP Banking Services Corporation.

    b. Deposit of Crossed Cheques in the Name of the Fund in Bank’s Drop Boxes:

    The donors and contributors may make their donations / contributions to the Fund by dropping crossed cheques in the name of the Fund in their respective bank’s drop box. All banks shall make available drop box facility at their selected branches for donors where they may drop their crossed cheques in favor of the Fund. The banks shall, accordingly debit the customer’s account and transfer the proceeds through RTGS/IBFT to the Fund account at NBP.

    c. Alternate Delivery Channels:

    The donor may also use alternate delivery channels e.g. internet banking, mobile banking, automated teller machines (ATMs) and mobile wallets etc. to donate / contribute to the Fund account through Inter-Bank Fund Transfer Facility (IBFT). For this purpose, they will use the IBAN of the Fund given above.

    Note: M/s 1-link will submit on daily basis the report of all donations routed through ADCs and IBFT to NBP by giving the particulars of donors including name, bank and branch of deposit, amount of donations etc.

    d. E-Payment Gateway:

    Donation / contribution can also be made to the Fund account through a link available at NBP website by using debit / credit cards.

    NBP shall transfer all the receipts to SBP through RTGS for credit to the Fund account with SBP on daily basis.

  • Date for converting bearer prize bonds of Rs40,000 extended to June 30

    Date for converting bearer prize bonds of Rs40,000 extended to June 30

    KARACHI: People now can surrender Rs40,000 denomination bearer prize bonds by June 30, 2020 and exchange the amount with registered bonds or other given options.

    Finance Division on Tuesday issued a notification to extend the last date for encashment/redemption of Rs40,000 bearer bonds from March 31, 2020 to June 30, 2020.

    The SBP stopped the issuance of Rs40,000 denomination prize bonds on June 24, 2019 and given deadline of March 31, 2020 for exchange the such denomination with other registered mode of investment.

    Since the announcement of the central bank, the holders of bearer bonds had surrendered around Rs238 billion till November 2019.

    The total investment Rs40,000 denomination bearer bonds peaked at Rs258 billion by May 2019, which reduced to around Rs20 billion by November 2019.

    SBP stops banks selling Rs40,000 prize bonds, issues procedure for conversion into registered bonds

    The SBP in a notification issued in June 2019 issued the following instructions regarding handling of Rs.40,000/- denomination National Prize Bonds are issued herewith for information, guidance and meticulous compliance:

    a) National Prize Bonds of Rs.40,000/- denomination shall not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020.

    b) No further draws of Rs.40,000/-denomination National Prize Bonds shall be held.

    c) Cash payment for encashments of bonds is not allowed. However, the bond holder (s) shall have the following options to replace / encash these bonds:

    1. Conversion of premium prize bonds (registered)

    2. Replacement with special saving certificate (SSC)/Defence Saving Certificate (DSC)

    3. Encashment at face value.

    d) Appended below is the SOP for processing requests under the aforementioned options for compliance by all banks:

    Conversion to Premium Prize Bonds (Registered)

    i. The bonds can be converted to premium prize bonds (registered) through the 16 field offices of SBP Banking Services Corporation, and authorized branches of six commercial banks i.e. National Bank of Pakistan (NBP), Habib Bank Limited (HBL), United Bank Limited (UBL), MCB Bank Limited (MCB), Allied Bank Limited (ABL) and Bank Alflah Limited (BAFL).

    ii. The bond holder shall be required to submit a written request for conversion of bearer bonds to premium prize bonds (registered) to be registered in his (her) name on the prescribed application.

    iii. The bond holder shall also be required to submit prescribed applications forms for registrations / purchase of premium prize bond as per the procedure in vogue.

    Replacement with the Special Saving Certificate (SSC)/Defence Saving Certificate (DSC)

    i. The bonds can be replaced with SSC / DSC through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks and National Savings Centers.

    ii. All authorized commercial banks shall, therefore, accept requests for replacement of bearer bonds with SSC or DSC on the prescribed application form.

    iii. The bondholder shall also be required to submit application form for purchase of SSC/DSC (SC-1) as per the prescribed procedure.

    Encashment at Face Value:

    i. The bonds will only be encashed by transferring the proceeds to the bond holder’s bank account through the 16 field offices of SBP Banking Services Corporation as well as the authorized commercial bank branches.

    ii. All commercial banks shall receive requests for encashment of bearer bonds on the prescribed application form.

    A copy of the application form, duly signed and stamped, shall be provided to the bondholder as an acknowledgement receipt.

    The SBP said that it is needless to mention that the National Prize Bonds of Rs40,000 denomination tendered at the counters of banks shall be subject to through scrutiny to ascertain their genuineness. In this regard, details regarding the security features in Rs40,000 denomination National Prize Bonds are available online.

    Moreover, the prize bonds encashed / replaced by general public may be surrendered to concerned SBP BSC office through respective regional office of the commercial banks. For the purpose, the regional office may intimate the SBP BSC office three days in advance so that necessary arrangements for receipt of the bonds can be made.

    It is imperative to mention that a notice regarding the above / mentioned facilities must be displayed at prominent places within branch premises for awareness and information of general public.

  • SBP facilitates cheque based transactions amid COVID-19 pandemic

    SBP facilitates cheque based transactions amid COVID-19 pandemic

    KARACHI: The State Bank of Pakistan (SBP) has issued directives for cheque based transactions in the wake of coronavirus pandemic.

    The SBP on Saturday issued a notification related to facilitation regarding paper-based clearing operations in the wake of COVID-19.

    The central bank said that to combat the potential spread of COVID-19 pandemic by limiting person-to-person interactions and to provide ease of services to the customers, Banks/MFBs are allowed to provide the following services to their customers:

    Direct Cheque Deposit Facility under which:

    a) A crossed cheque may be presented by payee/beneficiary directly into the paying/drawee bank, instead of their bank branches as per the existing practice.

    b) In this case, funds may be transferred by the paying/drawee bank either through RTGS customer fund transfer – MT102 or Over the Counter (OTC) IBFT or Bank’s internal online system (in case both payer & payee banks are the same).

    c) Before debiting their customer’s account, the paying/drawee bank must take all necessary precautions including but not limited to customer call back or multifactor authentication to verify the authenticity/genuineness of the instrument and verification of their respective customers. Similarly, before crediting the customer account, the payee/beneficiary bank must ensure the authenticity of the customer’s credentials as well.

    Doorstep Cheque Collection Facility under which Banks/MFBs may make arrangements to collect cheque from registered addresses of their customers upon their request.

    Drop box Cheque Collection Facility under which customers may drop their cheques in drop boxes of their Banks, installed in selected branches.

    Banks may allow their Corporates/Priority customers to send them the scanned image of the cheque along with relevant details of the Beneficiary either through registered emails or through mobile Apps of their banks to push funds from their accounts to the payee bank.

    However, such arrangement must be duly agreed with the customer under proper Terms & Conditions along with complete disclosure of risks and liabilities.

    The Paying/Drawee bank shall implement all necessary controls including call back confirmation or multifactor authentication to ascertain the authenticity and genuineness of the instrument and identity of the payee. Upon satisfactory validation, Paying/drawee bank may transfer funds to beneficiary bank using MT 102 of RTGS (PRISM).

    The recommended modus opernadi for options 2 to 5 is attached at Annexure-A. However, banks are encouraged to implement additional risk mitigating measures as per their internal policies while offering these services to their customers.

    Further, to minimize person-to-person interaction, Banks/MFBs may also make arrangements with the Clearing House (NIFT) for clearing their cheques through Image Based Clearing (IBC) functionality as per the agreed SOPs between NIFT and banks.

    While transferring funds through RTGS, the concerned Banks/MFBs shall ensure compliance with relevant clauses of PSD Circular No. 3 of 2018 on “Electronic Fund Transfers Regulations”.

    Further, Banks/MFBs are advised to follow all relevant laws, rules and regulations issued by SBP from time to time.

    Above mentioned measures may be made part of campaigns to create awareness in order to promote the use of clearing options as per PSD Circular No. 2 of 2020.

  • SBP issues banking timings during coronavirus lockdown

    SBP issues banking timings during coronavirus lockdown

    KARACHI: State Bank of Pakistan (SBP) has notified banking times during lockdown to prevent spread of coronavirus.

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  • SBP allows 100 percent advance payment facility for medical equipment import to fight coronavirus

    SBP allows 100 percent advance payment facility for medical equipment import to fight coronavirus

    KARACHI: State Bank of Pakistan (SBP) has allowed import of medical equipment for treatment of coronavirus against 100 percent advance payment and open account.

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  • SBP cuts policy rate by 150 basis points to 11 percent as coronavirus severely increases

    SBP cuts policy rate by 150 basis points to 11 percent as coronavirus severely increases

    KARACHI: The State Bank of Pakistan (SBP) on Tuesday announced reduction of 150 basis points in key policy rate to bring it at 11 percent. The central bank cut the policy rate second time in last seven days considering massive deterioration in the economy due to large scale spread of coronaviruse.

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  • SBP directs banks to operate branches with minimum staff during fight against coronavirus

    SBP directs banks to operate branches with minimum staff during fight against coronavirus

    KARACHI: State Bank of Pakistan (SBP) on Monday directed all banks to operate their branches with bare minimum staff during measures taken by the authorities to fight against coronavirus.

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  • SBP announces loan scheme to fight coronavirus

    SBP announces loan scheme to fight coronavirus

    KARACHI: State Bank of Pakistan (SBP) on Tuesday announced a refinancing scheme for combating coronavirus. The size of the scheme is Rs5 billion and available for end-user at three percent.

    Dr. Reza Baqir, SBP governor, announced the scheme namely “Refinance Facility for Combating COVID–19 (RFCC)” and its Shariah compliant version to support hospitals and medical centers in combating the spread of COVID–19.

    Under this scheme, the SBP will refinance banks to provide financing at a maximum end-user rate of 3 percent for 5 years for the purchase of equipment to detect, contain and treat the coronavirus.

    The SBP will provide this facility to banks at zero percent.

    All hospitals and medical centers registered with federal or provincial health agencies and which are engaged in the control and eradication of COVID-19 will be eligible for this facility.

    The total size of the scheme is Rs 5 billion, with a maximum financing limit per hospital or medical center of Rs 200 million.

    This scheme will help contain the spread of the Coronavirus and reduce its human toll. It is available until end-September 2020.

    The SBP governor said that considering the necessity and success of the scheme the size of the scheme could be enhanced.

    He said that the medical institutions and banks had jointly conducted survey for the purchase of ventilators, which was primary need to fight against coronavirus.

  • SBP cuts policy rate by 75bps below expectations: analysts

    SBP cuts policy rate by 75bps below expectations: analysts

    KARACHI: Analysts have said that the policy rate cut by 75 basis points by the State Bank of Pakistan (SBP) is below the street expectations.

    The central bank in its Monetary Policy Statement (MPS) has cut Policy Rate by 0.75 percent to 12.5 percent – lower-than-our expectations of 1.0 percent, analysts at Topline Securities said.

    While the latest move by SBP follows aggressive emergency rate cuts by its global counterparts to combat coronavirus pandemic that has jolted financial markets and the world economy, it falls short of street expectations.
    In a survey conducted by Topline Research before the spread of the coronavirus, 80 percent of the fund managers were expecting 50-100bps cut in Policy Rate. That said, a similar poll conducted yesterday revealed that 80 percent of the fund managers have revised their expectations to a 100-200bps cut in Policy Rate.

    While acknowledging that medium term inflation target of 5-7 percent is likely to be achieved earlier-than-expected due to steep fall in international oil prices and deceleration in domestic food prices, the SBP opted to conservatively cut the Policy Rate by just 0.75 percent – even though the Pak economy is also likely to face significant impact of coronavirus outbreak.

    The analysts estimated that an average 0.5 percent MoM rise in CPI over the next five months would result in CPI inflation clocking in at 8.9 percent YoY in Jul-2020 (sensitivity on next slide), which will translate in a Real Interest Rate of 3.6 percent.

    Analysts at Arif Habib Limited said that in response to the rapid contagion of the novel coronavirus world over, with confirmed cases exceeding 183,000 as off latest tally, majority of the effected countries have ordered closure of schools, prohibited large gatherings with a few cities under quarantine and pressed citizens to avoid unnecessary travelling. In addition to this, the Pakistani government advised the public against hoarding of essential food items.

    Whereas the prime minister has directed senior government officials to not only carry all preventative measures to mitigate the outbreak of the virus, but also remain in close contact with various international agencies so as to secure monetary assistance to combat the emergency.

    With major decline in food inflation previously emanating from temporary supply side shocks, and an abrupt crash in International oil prices amid disintegration of the OPEC-Plus alliance (Arab Light down by 37 percent since Russia’s resistance to deepen cuts and an ensuing price war led by Saudi Arabia), a cut in the benchmark policy rate remained imminent.

    Moreover, given the announcement of monetary and fiscal relief by major global economies to contain the potential economic fallout post spread of corona, Pakistan’s case for a rate cut appeared stronger than before given rising interest rate differential. More so since the incumbent government had limited fiscal space.

    Accordingly, the State Bank of Pakistan has decided to cut the key policy rate by 75bps in its latest Monetary Policy Statement (MPS).

    Analysts at Taurus Research said that outlook for inflation has improved in the light of declining food prices, the significant decrease in international oil prices and slowdown in aggregate demand owing to the coronavirus pandemic.

    SBP projects real GDP growth for Pakistan to be around 3 percent for FY20. FY20 inflation target of 11 percent-12 percent.

    The MPC noted that under an adverse scenario of economic slowdown, declining exports, lower remittances and dampened sentiment among consumers and businesses, there could be a material negative impact on growth.

    Further, the increase in net reserve buffers of the SBP of around USD 10.7Bn (on account of build-up in SBPs reserves and reduction in forward liabilities), was flagged as sufficient to cope with outflows of any foreign portfolio investments.

    The MPC also noted that with the reduced policy rate, real interest rates are appropriate to achieve the medium-term inflation target of 5 percent-7 percent.

    With the reduction, the analysts anticipate the banking sector spread to peak during 2QCY20, on account of immediate re-pricing of deposits.