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  • SBP allows banks to verify customers through NADRA Verisys for record keeping

    SBP allows banks to verify customers through NADRA Verisys for record keeping

    KARACHI: State Bank of Pakistan (SBP) has allowed banks to retain digital record of identity i.e. NADRA Verisys of customers for record keeping requirements.

    In a statement issued on Monday, the central bank said that the banks and Development Financial Institutions (DFIs) may use the NADRA [National Database Registration Authority] Verisys in place of obtaining certified photo copies of required NADRA identity documents and bio metric verifications wherever required as per SBP AML/CFT Regulations including for request of activation of dormant account by customers.

    “They should retain the NADRA Verisys for record keeping requirements (digitally or hard copy).”

    The directives have been issued under measures taken to mitigate COVID-19 pandemic.

    Keeping in view the ongoing impact of COVID-19 pandemic in the country, it has been decided to extend the validity of the measures from June 30, 2020 to December 31, 2020.

    In addition, it has been observed that customers including (overseas Pakistani /walk in/ occasional) are experiencing problems with regard to operation in their bank accounts, ensuring execution of financial transactions by them and getting financial services from banks/DFI.

    The following revisions are being made in the existing AML/CFT requirements to facilitate such customers:

    Banks/DFIs may use the NADRA Verisys in place of obtaining certified photo copies of required NADRA identity documents and bio metric verifications wherever required as per SBP AML/CFT Regulations including for request of activation of dormant account by customers. They should retain the NADRA Verisys for record keeping requirements (digitally or hard copy).

    Banks/DFIs to update records of their customers with regard to their postal address or email address or register mobile number or land line number. They may use either of these medium for ensuring efficient and reliable communications with their customers including where ever customer request/instruction is desired as per requirement of AML/CFT regulation including for activation of dormant accounts.

    Further, the requirement of originator’s and beneficiary’s address in wire transfer vide Regulation-3, para (3c & 3e) of AML / CFT Regulations for Banks/ DFIs has been amended as below.

     Reference Existing Requirement Revised Requirement

    R-3 Para(3c & 3e)
    Bank/DFI shall include the following information in the message or payment instruction which should accompany or remain with the wire transfer throughout the payment chain:

    ( c )  the originator’s address and CNIC/ passport number (e) the beneficiary’s address and CNIC/ passport number
    Bank/DFI shall include the following information in the message or payment instruction which should accompany or remain with the wire transfer throughout the payment chain:

    ( c )  the originator’s CNIC/ passport number (e) the beneficiary’s CNIC/ passport number

    These instructions are enforceable with effect from July 01, 2020.

  • Record $2.46 billion as remittances received in June

    Record $2.46 billion as remittances received in June

    KARACHI: State Bank of Pakistan (SBP) on Monday said that the workers’ remittances rose by a significant 50.7 percent during June 2020 to reach record high $2.46 billion compared with $1.63 billion in June 2019.

    Similarly, on a cumulative basis, workers’ remittances increased to a historic high level of $23.12 billion during FY20, witnessing a growth of 6.4 percent over $21.74 billion during FY19.

    The significant increase in remittances during June 2020 can be attributed to a number of factors. Since many of the countries eased lockdown in June, overseas Pakistanis were able to transfer accumulative funds, which they were unable to send earlier.  Further, it is also believed that they sent remittances to support extended families and friends due to COVID-19.

    In addition to these, efforts by the Government and SBP also played their role in the increased inflow of workers’ remittances during FY20 in general and Covid-19 period, March till June 2020, in particular.

    Supportive government policies in terms of extension of Reimbursement of TT Charges Scheme (Free Send Remittance Scheme) to small remitters by reducing threshold from USD 200 to USD 100, as well as, broadening the scope of incentive scheme for marketing scheme for financial institutions increased the incentives for sending remittances through regular channels.

    Further, on-boarding of a large number of technology based money transfer companies by SBP and PRI also helped absorb the shock of lockdowns.

    Financial institutions were motivated to use effective marketing campaigns with particular focus on digital channels for sending and receiving remittances to promote the use of legal channels.

    It would also be pertinent to mention here that inflow of workers’ remittances registered an increase of a 7.8 percent during March-June 2020 pandemic period compared with the corresponding period of 2019.

    During June 2020, larger amounts of Workers’ Remittances are received from Saudi Arabia (US $ 619.4 million), USA (US $ 452.0 million), UAE (US $ 431.7 million) and UK (US $ 401.0 million) recording an increase of 42.0 percent, 7.1 percent, 33.5 percent and 40.8 percent respectively as compared to May, 2020.

  • SBP imposes monetary penalty of Rs1.68 billion on 15 banks

    SBP imposes monetary penalty of Rs1.68 billion on 15 banks

    KARACHI: State Bank of Pakistan (SBP) has imposed monetary penalty of Rs1.68 billion upon at least 15 commercial banks for violating various regulations including anti-money laundering (AML) and counter financing of terrorism (CFT).

    The SBP on Saturday released the data of significant enforcement actions by the central bank during March – June 2020.

    The top banks are also amongst the list for serious violation of regulations including customers due diligence, known your customer, asset quality, foreign exchange operation, corporate governance and AML/CFT.

     Sr.NoInstitutionNature of OffenceAction TakenMonetary Penalty (Rupees in million)
    1United Bank LtdProcedural violations in the areas of CDD/KYC, Asset Quality, FX Operations, Corporate GovernanceIn addition to penal action the bank has been advised to strengthen its processes to avoid recurrence of such violations.137.001
    2JS Bank LtdProcedural Violations in the areas of CDD/KYC, FX OperationsIn addition to penal action the bank has been advised to strengthen its processes related to CDD/KYC, to avoid recurrence of such violations in future.71.417
    3Meezan Bank LtdProcedural Violations in the area of CDD/KYCIn addition to penal action the bank has been advised to strengthen its processes to avoid recurrence of such violations.81.060
    4Faysal Bank LtdProcedural violations in the areas of CDD/KYC, Asset Quality, FX OperationsIn addition to penal action the bank has been advised to strengthen its processes to avoid recurrence of such violations.96.128
    5The Bank of PunjabProcedural violations in the areas of CDD/KYC, Asset Quality, FX Operations, Corporate GovernanceIn addition to penal action the bank has been advised to strengthen its processes to avoid recurrence of such violations.286.333
    6Habib Bank LtdProcedural Violations in the area of CDD/KYCIn addition to penal action the bank has been advised to strengthen its processes related to CDD/KYC, to avoid recurrence of such violations in future.204.217
    7MCB Bank LtdProcedural Violations in the area of CDD/KYCIn addition to penal action the bank has been advised to strengthen its processes related to CDD/KYC, to avoid recurrence of such violations in future.158.474
    8National Bank OfProcedural violations in the areas of CDD/KYC, Asset Quality, FX OperationsIn addition to penal action the bank has been advised to strengthen its processes to avoid recurrence of such violations.269.810
    9Bank Alhabib LtdProcedural Violations in the area of CDD/KYCIn addition to penal action the bank has been advised to strengthen its processes related to CDD/KYC, to avoid recurrence of such violations in future.46.802
    10Habib Metropolitan Bank LtdProcedural Violations in the area of CDD/KYCIn addition to penal action the bank has been advised to strengthen its processes related to CDD/KYC, to avoid recurrence of such violations in future.22.805
    11Bank Alfalah LtdProcedural Violations in the area of CDD/KYCIn addition to penal action the bank has been advised to strengthen its processes related to CDD/KYC, to avoid recurrence of such violations in future.40.305
    12Askari Bank LtdProcedural Violations in the area of CDD/KYCIn addition to penal action the bank has been advised to strengthen its processes related to CDD/KYC, to avoid recurrence of such violations in future.29.814
    13Bank Islami LtdProcedural violations in the area of FX OperationsIn addition to penal action, the bank has been advised to strengthen its process related to FX operations, in order to avoid recurrence of such violations in future.11.517
    14Punjab Provincial Cooperative Bank LtdViolations in the area of AML/CFTPenal and administrative action taken against the bank. Moreover, the bank has been advised to conduct an internal inquiry on breaches of regulatory instructions and take disciplinary action against the delinquent officials.81.500
    15Zarai Taraqiati Bank LtdViolations in the area of AML/CFTPenal and administrative action taken against the bank. Moreover, the bank has been advised to conduct an internal inquiry on breaches of regulatory instructions and take disciplinary action against the delinquent officials.147.250

    The SBP said that these actions are based on deficiencies in regulatory compliance and does not constitute a comment on the financial soundness of the entity.

    The SBP from July 2019 started public disclosure of penal action against banks. “Enforcement actions are an integral part of regulatory regime which involves imposition of monetary penalties and other actions against institutions and individuals for violations of laws, rules, regulations, guidelines or directives issued by SBP from time to time,” according to a circular issued by the central bank.

    In order to bring more transparency and strengthen market discipline, SBP has decided to publicly disclose significant enforcement actions.

  • SBP notifies amendments to consumer financing regulations

    SBP notifies amendments to consumer financing regulations

    KARACHI: State Bank of Pakistan (SBP) on Friday notified amendment in the Regulation R-4 of Prudential Regulations for Consumer Financing.

    Following are the amendments notified by the central bank:

    REGULATION R-4: GENERAL PROVISION AGAINST CONSUMER FINANCE

    The term “general reserve” used in the Regulation R-4 of Prudential Regulations for Consumer Financing shall henceforth be read as “general provision”.

    The Banks/DFI, subject to conditions prescribed below, can release and use the general provision maintained, in terms of Regulation R-4 of Prudential Regulations for Consumer Financing, against the secured and unsecured consumer finance portfolio:

    The general provision will only be available for use to make good the specific provision requirement of the consumer financing portfolio; and,

    The aforesaid treatment will expire on December 31, 2021. Thereafter, the general provision against the consumer financing portfolio will be maintained as per the method prescribed in the Regulation R-4 of Prudential Regulations for Consumer Financing prevailing on July 09, 2020.

    The Banks/DFIs may, as per their own discretion and in terms of relevant internal policies, maintain the general provision against consumer financing.

    The SBP said that all other instructions on the subject shall, however, remain unchanged. The Banks/DFIs are advised to follow the regulations in letter and spirit.

    Any deviation or non-compliance of the same shall attract punitive action under the relevant provisions of the Banking Companies Ordinance, 1962, the SBP said.

  • SBP issues revised features of PM’s youth business loan

    SBP issues revised features of PM’s youth business loan

    KARACHI: State Bank of Pakistan (SBP) on Friday issued revised features of Prime Minister’s Kamyab Jawan Youth Entrepreneurship Scheme.

    The SBP said that the government had approved revision in key features of loan program under Prime Minister’s Kamyab Jawan Youth Entrepreneurship Scheme.

    The revised features of the scheme as approved by the government are reproduced below:

    S. NoParticularsKamyab Jawan Program

    1
      Eligibility Criteria    		  All men/women holding CNIC, aged between 21 and 45 years with entrepreneurial potential are eligible. For IT/ E-Commerce related businesses, the lower age limit will be 18 years. Small and medium enterprises (startups and existing businesses) as per definition of SBP and owned by youth as per above mentioned age brackets are also eligible.

    For IT/E-Commerce related businesses, at least matriculation or equivalent education will be required.  

    2
      Loan size    		  Size of the loan is segregated into three tiers, as under:
    Tier 1 (T1) loans- Rs 100,000 to Rs. 1 million
    Tier 2 (T2) loans- Above Rs 1 million and upto Rs 10 million Tier 3 (T3) loans-Above Rs 10 million and upto Rs 25 million


    3
     Loan type    		  Long Term Loan for Machinery and Equipment / Working Capital Loan/ Running Finance, and Leasing of Business on wheels on 2/3/4 wheel locally manufactured vehicles.
    4 Loan TenorUpto 8 years with maximum grace period of upto one year.

    5
      Debt: Equity ratio    		  For New Businesses:
    Tier 1 – 90:10
    Tier 2 & 3 – 80: 20
    For Existing Businesses:
    Nil for all tiers
    The Borrower’s contribution of equity would be in the form of cash or immovable property and will be required after approval of loan.

    6 Focus on Women25% of the loans will go to women borrowers.

    7
      Security Requirements    		  Security arrangements will be as under:
    T1 loans: Clean; however only personal guarantee of the borrower
    T2 & T3 loans: As per bank’s own credit policy

    8
      Risk Mitigation    		  Government will bear credit losses (principal portion only) on the disbursed portfolio of the banks as under:
    T1 loans: Upto 50%
    T2 loans: Upto 20%
    T3 Loans: Upto 10%



    9
      Allocation in Budget    		  Finance Division shall allocate funds in each fiscal year’s budget as per estimates provided by SBP. Payment will be made on submission of consolidated claims of all banks by the SBP on quarterly basis.

    10
      Pricing    		  Pricing for Working Capital & Term Loans: Product Customer Pricing Bank Pricing Tier 1 3% KIBOR+400 BPS Tier 2 4% KIBOR+400 BPS Tier 3 5% KIBOR+400 BPS
    11 Executing AgencyAll Commercial, Islamic and SME banks are advised to come on board.
    12 Sectors and ProductsAll sectors and products including agriculture.

    13
      Application Form    		  The Form would be both in English and Urdu and require minimum essential information with simple format available on Government provided Kamyab Jawan portal. The processing time will not exceed 30 days and will be stated clearly in the application form. Non-refundable form processing fee will be Rs. 100/- inclusive of NADRA online CNIC verification fee.

    14
     Monitoring


    		  SBP will publish consolidated information about the loans extended under this program for information of the public on quarterly basis on its website.

    15
     Geographical distribution    		  Whole of Pakistan. In case of Balochistan, at least one branch of NBP will be designated per Division. All non-designated NBP branches will also provide and receive filled application forms and dispatch them to the nearest branches.

    16
     Additional Measures    		  Executing Agencies (EAs) under this program should ensure following additional measures: Criteria for assessing entrepreneurial potential should be developed and implemented. In case of loan for existing businesses, a robust independent verification mechanism may be introduced to ensure proper utilization of loans. Further, for new businesses, a robust mechanism for ongoing monitoring of the loans’ utilization should be developed and implemented. All loans previously disbursed or approved under this scheme will be converted into the new parameters with effect from July 01, 2020.

    The SBP directed the banks to gear up their systems for successful implementation of this scheme and to avoid any misuse of the scheme. Eligible borrowers may apply for the loans immediately after formal launch of the scheme by the Prime Minister’s Office.

  • Pakistan’s foreign exchange reserves increase by $819 million

    Pakistan’s foreign exchange reserves increase by $819 million

    KARACHI: The liquid foreign exchange of the country increased by $819 million to $18.79 billion by week ended July 03, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $17.971 billion a week ago ended on June 26, 2020.

    The official reserves held by the SBP increased by $811 million to $12.042 billion by week ended July 03, 2020 as compared with $11.231 billion a week ago.

    The SBP attributed the increase in reserves to proceeds of $1,000 million as GOP loan disbursement from China.

    During the week, SBP also made government external debt payments of $ 231.2 million.

    The foreign exchange reserves held by commercial bank witnessed nominal growth of $8 million to $6.748 billion by week ended July 03, 2020 as compared with $6.74 billion a week ago.

  • SBP revises banking timings from July 13

    SBP revises banking timings from July 13

    KARACHI: State Bank of Pakistan (SBP) on Thursday revised timings for banks and microfinance banks to be observed from July 13, 2020.

    The central bank said that effective from July 13, 2020, the banks/MFBs shall observe the following office timings till further orders.

    However, banks/MFBs may prescribe business hours for branches as per their business requirement subject to observance of SBP business (banking) hours for public dealings as notified vide BPRD Circular Letter No. 20 dated April 23, 2020.

    The timings shall be:

    Monday to Thursday: 09:00 a.m. to 5:30 p.m. (with prayer / lunch break from 1:30 p.m. to 2:00 p.m.)

    Friday: 09:00 a.m. to 5:30 p.m. (with prayer / lunch break from 1:00 p.m. to 2:30 p.m.)

    The SBP said that all banks / MFBs are accordingly advised to ensure compliance of the above-mentioned timings in letter and spirit.

  • SBP asks banks not to accept institutional investment in saving schemes

    SBP asks banks not to accept institutional investment in saving schemes

    KARACHI: State Bank of Pakistan (SBP) on Thursday informed banks about restriction imposed on institutional investment in saving schemes.

    The central bank said that the Central Directorate of National Savings (CDNS) on July 01, 2020 restricted participation of institutional investors in national saving schemes.

    In this connection, the SBP advised all authorized commercial banks to review the instructions contained in the above mentioned letters and ensure that no institutional investment of any kind should be accepted in National Savings Schemes (NSS) dealt by banks i.e. Special Savings Certificate (SSC) / Defence Savings Certificate (DSC) on or after July 01, 2020.

    The SBP asked the banks to disseminate necessary instructions down the line to all authorized branches and concerned officials for information and strict compliance.

  • SBP slashes refinance rate to five percent for temporary, long term schemes

    SBP slashes refinance rate to five percent for temporary, long term schemes

    KARACHI: State Bank of Pakistan (SBP) has decided to reduce the mark up rates on temporary economic refinance facility (TERF) to five percent from 7 percent and on long term financing facility (LTFF) from non-textile sector to five percent from six percent.

    The central bank on Wednesday said that taking cognizance of the negative fallout of COVID-19 Pandemic for the economy, SBP has been constantly taking steps to safeguard the businesses and households and a reduction in the policy rate has been a key step since March 2020.

    SBP has reduced the policy rate by 625 basis points since 17th March, 2020 to 7 percent.

    To extend the benefits of this reduction in the policy rate to the users of its refinance schemes, SBP has now decided to align the end user markup rates on two of its refinance schemes for promoting investment in the country.

    Temporary Economic Refinance Facility (TERF): SBP introduced this facility to provide stimulus to the economy by supporting new investment and balancing, modernization and restructuring (BMR) of the existing projects.

    To further improve the incentive under the scheme, SBP has lowered the end user mark-up rates from existing 7 percent to 5 percent.

    SBP will now be providing refinance to banks at 1 percent with banks’ maximum margin of 4 percent. Further, SBP has also allowed the TERF facility in cases where LCs/Inland LCs were opened prior, but retiring after the introduction of the scheme on March 17, 220.

    These measures, in the backdrop of earlier policy action of allowing BMR under TERF, are expected to further support the economic activity, new long term investment and employment generation.

    Under this scheme, up till 2nd July 2020, Rs10.5 billion have been approved by banks for 21 projects.

    Long Term Financing Facility (LTFF): LTFF is one of the oldest refinance schemes of SBP under which financing is available for export-oriented projects for purchase of imported and locally manufactured new plant and machinery.

    In March, 2020 SBP opened the LTFF to all sectors across the board. Earlier the end user markup rate under this scheme were 5 percent for textile sector and 6 percent for non-textile sectors.

    State Bank has now reduced its refinance rate for non-textile sector by 1 percent and therefore the end user rate for all sectors across the board will be 5 percent.

    It is expected that the above measures will help facilitate long term investment in both domestic and export market.

  • Bank deposits reach record high at Rs16.23 trillion

    Bank deposits reach record high at Rs16.23 trillion

    KARACHI: The deposits of banking systems have reached record high at Rs16.23 trillion by end of June 30, 2020, according to data released by State Bank of Pakistan (SBP) on Tuesday.

    The deposits of baking system registered 12.24 percent growth by end of June 2020 as compared with Rs14.46 trillion by end of same month last year.

    Analysts at Topline Securities explained that during second quarter of 2020, the deposits have increased by higher-than-largely-expected 7 percent, as Net Domestic Assets (NDA) of the Banking System increased by 6 percent during this period, on the back of 11 percent increase in the government borrowings for budgetary support.

    Investments have grown by 40 percent YoY and 3 percent MoM to Rs10.68 trillion by end June 2020. The same is up 21 percent YTD (vs. 6 percent YTD growth by end March 2020).

    As a result, IDR has increased to 66 percent in June 2020 from 53 percent in June 2019 and 61 percent in March 2020.

    On the other hand, Advances have grown by just 1 percent YoY, and have actually declined by 2 percent MoM in June 2020 despite the aggressive cuts in interest rates by the Pakistan Central Bank since March 2020.

    This is due to the impact of the pandemic COVID-19, which has caused the overall slowdown in the economic activity. In YTD 2020, advances are up 1 percent.

    As a result, ADR has dropped to 51 percent in Jun-2020 from 56 percent in Jun-2019 and 55 percent in March 2020.

    The Currency in Circulation (CIC) has increased by 17 percent in YTD 2020 to Rs6.19 trillion, with CIC as a percentage of M2 clocking in at 31 percent, above past 5-year average of 27 percent.

    Going forward, the analysts expect deposit growth in the range of 10-11 percent during 2020 (vs. historical 3-year average growth of 11 percent), while they expect advances to grow by around 5 percent during the year (vs. historical average 3-year growth of 14 percent).