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  • Banks approve financing of Rs126bn for employees’ wages of 2,068 businesses

    Banks approve financing of Rs126bn for employees’ wages of 2,068 businesses

    KARACHI: Banks have approved around Rs126 billion under soft loan scheme to 2,068 businesses in meeting financing requirement for salaries and wages in the wake of difficulties faced due to coronavirus pandemic, State Bank of Pakistan (SBP) said on Monday.

    The SBP said that Under the Scheme, on overall basis, up till July 1, 2020, financing of Rs125.9 billion has been approved by banks for 2068 businesses covering wages and salaries of over 1.2 million employees.

    Soon after the introduction of the Scheme, a large number of applications to avail financing were received by banks but their approvals remained slow.

    However, with the continuous efforts of SBP, banks streamlined their processes and pace of loan approvals increased.

    At the end of April 2020, only 18 percent of loan applications were approved. This has increased to 76 percent by July 10, 2020.

    Similarly, the amount of loans approved against the requested amount also improved. The acceptance ratio for amount of financing increased from 26 percent at the end of April 2020 to 82 percent on July 10, 2020.

    Consequently, the number of employees benefitting from the scheme in terms of acceptance ratio has also increased from 26 percent to 85 percent during the same period.

    To counter the negative impact of Covid-19 on the economy, the central bank introduced the refinance scheme to support employment and prevent layoff of workers, commonly known as SBP RozgarScheme, in April 2020.

    The scheme provides concessional financing to businesses for wages and salary expenses, provided they commit to not lay off their employees for the period of the loan.

    The Scheme was later complemented by a Risk Sharing Facility (RSF) of the Government of Pakistan (GoP) for SMEs and Small Corporates with turnover of up to Rs2 billion.

    Under this facility, the federal government bears up to 60 percent first loss on the principal amount portion of disbursed portfolio for SME borrowers whereas 40 percent risk coverage is available for small corporates.

    The objective of this facility is to incentivize banks to extend loans to SMEs and Small Corporates, to whom they may not cater to for risk considerations.

    The scheme was available till end June 2020 earlier, however, SBP decided to extend the validity of this scheme by another three months to end September, 2020.

    Out of the total approved amount, Rs31 billion were for 1449 SMEs and Small Corporates under the RSF as of July 10, 2020 providing benefit to 280,437 employees.

    Relative to the initial situation related to Rozgar scheme, in terms of processing and approving the requests for financing, banks performed better in catering the requests under RSF and improved further over time.

    The acceptance ratio, both in terms of number of applications and amount increased from 35 percent and 37 percent respectively on May 15, 2020 to 72 percent and 71 percent on July 10, 2020.

    Following similar trends, the total number of employees benefitting from the acceptance of financing requests increased from 36 percent to 75 percent during the same period.

    The performance of banks, however, in terms of processing the number of applications and financing approved is limited to few banks.

    Among the Top Performing Five Banks, for both, JS Bank Limited, Habib Bank Limited (HBL), Bank Al-Habib Limited, Bank Alfalah Limited and Askari Bank Limited have contributed the highest in terms of both approving the number of applications and amount since the beginning of this scheme (RSF) till July 10, 2020.

    These top performing five banks provided Rs18.1 billion or 58 percent of the overall approved financing amount eligible for RSF under SBP Rozgar Scheme up till July 10, 2020.

    Their share declined from 61 percent earlier on June 12, 2020 showing that other banks have improved their performance. Their individual performance is also reflected from the fact that the cumulative approved financing by these banks ranged from Rs2.2 to Rs4.6 billion.

  • SBP allows business to avail loan scheme for early payment of salary, wages

    SBP allows business to avail loan scheme for early payment of salary, wages

    KARACHI: State Bank of Pakistan (SBP) has allowed businesses to avail loan scheme for early payment of salary and wages in the wake of Eid-ul-Azha.

    The SBP also relaxed condition for obtaining loans from more than one bank for the payment of salary and wages.

    The central bank in a notification issued on Friday said that in order to facilitate businesses facing problems in availing financing under the above schemes from one bank due to their credit limits or for any other reason, it has been decided to allow them to avail financing from more than one bank.

    However, a business cannot avail financing for a specific month from more than one bank.

    Further, businesses may avail financing under above schemes for early payment of wages/salaries for the month of July, 2020 before Eid-ul-Azha.

    Businesses may also avail reimbursement of wages/salaries of July, 2020 in case they make early disbursements from their own resources to their workers/employees due to Eid-ul-Azha.

    The central bank in April 2020 introduced loan scheme at reduced rate for businesses to ensure no layoff of employment and payment of salary and wages in the wake of spread of coronavirus.

  • SBP not to hold regular monetary policy committee meeting

    SBP not to hold regular monetary policy committee meeting

    KARACHI: State Bank of Pakistan (SBP) on Friday decided not to hold regular meeting of monetary policy committee meeting scheduled for July 2020.

    Given the number of MPC meetings that have taken place in recent months, and actions taken in those meetings, the MPC does not consider it necessary to hold the regular meeting of July 2020.

    The next regular meeting of the MPC will now be held in September 2020, the SBP said.

    The MPC continues to observe economic conditions and stands ready to take whatever further actions may become necessary in response to any adverse impact on the economy because of the pandemic or any other factor.

  • Foreign exchange reserves increase to $19.047 billion

    Foreign exchange reserves increase to $19.047 billion

    KARACHI: Pakistan’s liquid foreign exchange reserves have increased by $95 million to $19.047 billion by week ended July 17, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $18.952 billion by week ended July 10, 2020.

    The official reserves held by the central bank increased by $66 million to $12.121 billion by week ended July 17, 2020 as compared with $12.055 billion a week ago.

    Similarly, the foreign exchange reserves held by commercial banks improved by $29 million to $6.926 billion from $6.897 billion a week ago.

  • Complaints against banks double in four years: SBP

    Complaints against banks double in four years: SBP

    KARACHI: The State Bank of Pakistan (SBP) on Thursday said that complaints against banks have doubled in four years owing to effective dispute resolution and awareness of consumers.

    The SBP said that the complaints against banks during past four years have increased from 774,656 in 2016 to 1,549,837 in 2019.

    State Bank of Pakistan (SBP) has conducted a four year (2016-2019) review of complaints against Banks/MFBs/DFIs. The objective of the review was to gain insights on effectiveness of complaint management at banks.

    The salient features of the review are being published to emphasize SBP’s narrative that responsible complaint handling is the core element of Fair Treatment of Consumer (FTC).

    This review is conducted in addition to various regulatory measures to enhance consumer grievance handling in the industry including the issuance of detailed guidelines on complaint management at banks and self-assessment framework.

    It is pertinent to mention here that responsible banking conduct and FTC is one of the key regulatory agendas of the State Bank of Pakistan (SBP).

     SBP recognizes that effective and efficient consumer grievance handling mechanisms are crucial elements of FTC regime, therefore, it considers consumer complaints as an opportunity to improve banking services and increase customer satisfaction.

    This increase can be attributed to improved visibility and access of dispute resolution mechanism coupled with enhanced consumer awareness. Further, this is also due to the fact that number and value of banking transactions have increased substantially.

    For instance, the volume and value of ATM/debit card transactions have increased by 101 percent and 110 percent respectively over the reporting period.

    The number of deposit accounts per ATM and per branch shows increase of 62 percent and 81 percent respectively. Similarly, during 2016 to 2019, volume and value of E-banking transactions have substantially increased by 112 percent and 152 percent respectively on account of 71 percent increase in E-banking users.

    Moreover, credit card related transactions increased from 18 to 39 million showing an increase of 118 percent over a span of 4 years. Accordingly, the increase in complaints over the same period can be witnessed as concentrated in ATM/Debit Card, Account maintenance, E- Banking and Credit Cards.

    In terms of addressing the complaints, the resolution rate over the period 2016-2019 remained above 97 percent at each year’s end.

    The average time taken for resolution of complaints remained within regulatory turn around times. However, delays were observed in sending acknowledgments, interim and final responses.

    It may be mentioned here that banks being the first forum of redressal, have been handling 97 percent and above of the total complaints of the industry while less than 3 percent of complaints were escalated at higher levels including State Bank of Pakistan, Banking Mohtasib, and Pakistan Citizen Portal established by the Prime Minister Delivery Unit.

    In order to boost performance of complaint handling at banks and promote competition, SBP plans to further enhance the related disclosures which may include publishing of bank-wise complaint handling performance indicators in the near future by SBP.

    Currently, banks themselves are required to give disclosure about the complaint management in their annual audited account for public information.

  • SBP enhances financing limit to Rs2 billion for renewable energy schemes

    SBP enhances financing limit to Rs2 billion for renewable energy schemes

    KARACHI: The State Bank of Pakistan (SBP) has increased cumulative financing limit to Rs2 billion and also enhanced project size to 5MW.

    According to a statement issued on Wednesday, the central bank said it had enhanced the scope of its Refinance Scheme for Renewable Energy by allowing financing under category III of the scheme to solar and wind based energy sale companies.

    In light of the feedback received from stakeholders, the size of the project established by vendor/ supplier/ energy sale company has been enhanced from 1 MW to 5 MW. Accordingly, the cumulative financing limit has also been increased from Rs.1 billion to Rs.2 billion.

    SBP Financing Scheme for Renewable Energy was announced in June 2016with an aim to help addressing the challenges of energy shortages and climate change in the country.

    The scheme comprised of two categories: Category 1 allowed financing for setting up of renewable energy power projects with capacity ranging from 1 MW to 50 MW for own use or selling of electricity to the national grid or combination of both.

    Category II allowed financing to domestic, agriculture, commercial and industrial borrowers for installation of renewable energy based projects/ solutions of up-to 1 MW to generate electricity for own use or selling to the grid/distribution company under net metering.

    Later, in July 2019, SBP introduced a new Category III for facilitating financing to vendors/suppliers for installation of wind and solar systems/solutions of upto 1 MW. SBP also launched a Shariah complaint version of the scheme in August 2019.

    Since the introduction of the scheme, total outstanding financing under the Scheme has reached to Rs.15.6 billion for 217 projects having potential of adding 292 MW of energy supply.

    This revision in the scheme is expected to not only attract fresh local and foreign investment in the sector but also facilitate production of clean energy in the country, helping in managing climate change.

  • Annual foreign direct investment grows by 88 percent

    Annual foreign direct investment grows by 88 percent

    KARACHI: Foreign Direct Investment (FDI) into the country registered 88 percent growth to $2.56 billion during fiscal year 2019/2020, State Bank of Pakistan (SBP) said on Friday.

    The FDI posted $1.198 billion increase during the fiscal year under review as compared with $1.36 billion in the preceding fiscal year i.e. 2018/2019.

    The inflows under the head of FDI grew by 18 percent to $3.285 billion during fiscal year 2019/2020 as compared with $2.78 billion in the preceding fiscal year. However, outflows recorded 49 percent decline to $724 million as against outflow of $1.42 billion in the preceding fiscal year.

    The portfolio investment registered 32 percent contraction in outflows during the period under review. The outflows from the capital market recorded $281.7 million during fiscal year 2019/2020 as compared with the outflow of $415 million in the preceding fiscal year.

    The total foreign private investment posted 140.7 percent growth to $2.279 billion during July-June 2019/2020 as compared with $947.2 million in the preceding fiscal year.

    The foreign public investment in debt securities witnessed outflow of 241.3 million during fiscal year 2019/2020 as compared with $1 billion in the preceding fiscal year.

    The total foreign investment including public and private rose to $2.038 billion during fiscal year 2019/2020 as compared with outflow of $54.8 million in the preceding fiscal year.

  • Foreign exchange reserves up by $163 million to $18.953 billion

    Foreign exchange reserves up by $163 million to $18.953 billion

    KARACHI: The liquid foreign exchange reserves of the country increased by $163 million to $18.953 billion by week ended July 10, 2020, the State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $18.79 billion by week ended July 03, 2020.

    The official reserves of the SBP increased by $13 million to $12.055 billion by week ended July 10, 2020 as against $12.042 billion a week ago.

    The reserves held by commercial banks witnessed growth of $150 million to $6.898 billion by week ended July 10, 2020 as against $6.748 billion a week ago.

  • SBP fixes mandatory housing loan targets for banks

    SBP fixes mandatory housing loan targets for banks

    KARACHI: State Bank of Pakistan (SBP) on Wednesday fixed mandatory targets of housing loan disbursement for banks in order to promote housing and construction of buildings in the country.

    The central bank in a notification said that with a view to promote housing and construction of buildings (Residential and Non-Residential) in Pakistan, the SBP decided to advise mandatory targets to the banks.

    “Accordingly, each bank shall ensure that the financing for housing and construction of buildings (Residential and Non-Residential) shall be at least 5 percent of their domestic private sector credit by December, 2021,” the notification stated.

    The banks are advised to gear up their infrastructure and capacity to ensure compliance of meeting these targets.

    Accordingly, each bank is required to develop a concrete action plan with detailed measures and their timelines to achieve its housing and construction finance targets.

    This action plan should contain breakdown of overall targets into quarterly targets, development of suitable products, launching of media campaigns, development of internal technology, capacity building of staff, and other actions needed to ensure the 5 percent target is met.

    The SBP directed the banks to submit their concrete action plans to this department within 15 working days.

    Banks will be required to report data of approvals and disbursements against these targets on monthly basis starting from September 2020.

    The central bank said that it will keep a close monitoring of progress on the mandatory targets. Non-compliance in meeting the targets shall attract punitive action under the relevant provisions of the Banking Companies Ordinance, 1962.