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Tag: SBP

  • SBP directs banks to ensure employment quota for disable persons

    SBP directs banks to ensure employment quota for disable persons

    KARACHI: State Bank of Pakistan (SBP) on Monday directed banks to ensure compliance related to employment quota for persons with disabilities.

    In a notification, the SBP directed all banks, Microfinance banks and Development Finance Institutions to ensure compliance with the relevant law as amended from time to time.

    The SBP said that the Disable Persons’ (Employment and Rehabilitation) Ordinance, 1981 was promulgated to provide for the employment, rehabilitation and welfare of the persons with disabilities.

    Similar legislation on Provincial level is also in force. Accordingly, Federal and Provincial Government establishments as well as commercial and industrial establishments are inter-alia required to maintain quota for employment of the persons with disabilities.

  • SBP urged to direct banks for accepting sales tax refund bonds

    SBP urged to direct banks for accepting sales tax refund bonds

    KARACHI: The business community has urged State Bank of Pakistan (SBP) to issue directives to banks for accepting sales tax refund bonds in order to ease hardship in liquidity issues, especially for the exports.

    Karachi Chamber of Commerce and Industry (KCCI) in this regard wrote a letter to SBP Governor Reza Baqir and apprised him about the government papers, which were issued by the Federal Board of Revenue (FBR) against the stuck up refunds, but despite inclusion in the Sales Tax Act, 1990 the banks were not accepting those.

    Agha Shahab Ahmed Khan, President, KCCI in the letter said that due to liquidity crunch the exporters had no option but to curtail their production and were trying to maintain their share in the existing international market.

    “The situation has worsened to such an extent that our exporters simply cannot explore any new market to raise the exports due to lack of funds which, if not timely addressed, is likely to have a negative impact on Pakistan’s economy which is already under immense pressure and is struggling hard to narrow the current account deficit.”

    He said that the Federal Board of Revenue (FBR) has issued Bonds to the claimants and as per provisions of section 67-A of the Sales Tax Act-1990, these bonds shall be traded freely in the Country’s secondary markets and they will be accepted by the banks as Collateral.

    “However, despite specific directions in the relevant Act, these bonds are neither being traded freely in the market nor being accepted by the banks, creating severe liquidity problems for the exporters who are unable to finish their export orders, hence the situation was likely to shrink the overall exports and may also result in further depreciation of the desperately Foreign Exchange reserves of the country which requires Governor State Bank’s indulgence.”

    He stressed that the State Bank has to ensure compliance of the statutory provisions as soon as possible. “Almost a month has passed so far but no relief has been provided to minimize the grievances being faced by the exporters.”

    He was of the opinion that the exporters were already going through the toughest time due to ‘Creative Destruction’ which has made many Pakistani products obsolete in the international markets whereas they are terribly suffering due to high cost of doing business, stagnant industrial activities, the highest ever inflation and many other issues particularly the stuck up refund claims that needs to be resolved and the claimants must get their legitimate refunds on top priority.

  • Pakistan’s weekly forex reserves increase by $149.7 million

    Pakistan’s weekly forex reserves increase by $149.7 million

    KARACHI: The total liquid foreign exchange reserves of the country have increased by $149.7 million to $15.142 billion by week ended October 11, 2019 as compared with $14.992 billion a week ago, State Bank of Pakistan (SBP) said on Thursday.

    The reserves held by State Bank witnessed increase of $56.1 million to $7.813 billion by week ended October 11 as compared with $7.757 billion.

    The reserves held by commercial banks increased by $93.6 million to $7.329 billion as compared with $7.235 billion.

  • Foreign investment grows by 51pc during first quarter

    Foreign investment grows by 51pc during first quarter

    KARACHI: The total inflow of foreign private investment increased by 51 percent growth during first quarter (July-September) of 2019/2020, State Bank of Pakistan (SBP) said on Thursday.

    The total foreign private investment increased to $565 million during the first quarter of current fiscal year as compared with $374 million in the same period of the last fiscal year.

    The foreign direct investment (FDI) posted nominal decline of 3.1 percent to $542 million during the period under review as compared with $559 million in the same period of the last fiscal year.

    The inflows under FDI were $763 million during July – September 2019, which were 5.4 percent lower when compared with inflows of $806 million in the same period of the last year.

    The outflows under FDI were declined by 11 percent to $221 million as compared with $247 million.

    The foreign investment in capital market witnessed 112.2 percent increase during the first quarter of current fiscal year.

    The portfolio investment recorded $22.7 million inflows during July – September 2019 as against outflows of $185 million in the corresponding period of the last year.

  • SBP directs banks to verify trade price before approving import, export forms

    SBP directs banks to verify trade price before approving import, export forms

    KARACHI: State Bank of Pakistan (SBP) has directed banks, exchange companies to verify trade prices before approving import or exports forms.

    The central bank issued instructions to the authorized dealers in foreign exchange related to Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing.

    The SBP said that the Authorized Dealers (ADs) shall define clear policies and procedures for price verification, including defining the level of acceptable price variance, escalation procedures and suspicious transaction reporting mechanism when significant differences in prices are identified.

    ii. It shall be the exclusive responsibility of an AD to perform due diligence with respect to various risk factors in a trade transaction. In this regard, ADs shall be specifically required to verify the prices of underlying contracts as declared on EIF/MIF, EFE/MFE, Advance Payment Voucher from reliable sources i.e. chambers of commerce, local business circles, daily newspapers, Internet, historic appraisements, Customs valuation rulings, etc. where prices are available and shall satisfy themselves before approving EIF/MIF, EFE/MFE or disbursing the amount to the exporter as the case may be that the prices declared by their client represent the fair market value of goods.

    The ADs shall institute a mechanism, supported by technology-based solutions, to carry out assessment of prices of underlying contracts on post transaction basis that is after the approval of EIF/MIF, EFE/MFE or disbursing the amount to the exporter, where price checks are not performed at pre-transaction stage, and shall satisfy themselves that the prices declared by their client represent the fair market value of goods.

    This function may be performed by the department other than the front office/centralized trade-processing unit where transaction is taking place. To this end, ADs may assign this function either to their risk management department or compliance department.

    The department to which this function is assigned shall be under obligation to conclude the assessment with thirty days of approving EIF/MIF, EFE/MFE or disbursing the amount to the exporter as the case may be.

    The financial institutions shall require the exporter to submit a copy of underlying sale contract along with Advance Payment Voucher.

    The procedure of price verification/assessment shall be documented by ADs for later review /audit/inspection, the SBP said.

    The significant variance between the prices of goods declared on EIF/MIF, EFE/MFE, Advance Payment Voucher and their fair market value shall serve as one of the prime red flag indicators and all such transactions shall be escalated to the higher management, which shall review the same and consider the option of filing STR with FMU etc. This procedure shall be documented by ADs for later review /audit/inspection.

    The SBP further instructed that Authorized Dealers (ADs) shall ensure compliance of the following instructions while approving EIF/MIF, EFE/MFE:

    a) Full details/exact specification, quality/varieties/sub categories of goods being imported/exported are declared on EIF/MIF, EFE/MFE and declaring the description of goods that is general in nature or represents the generic name of goods should be avoided.

    b) Declaration of unit of measurement such as boxes, cases etc. on EIF/MIF, EFE/MFE, which obscures the actual quantity of goods being imported/exported, shall be avoided. In this respect, unit of measurement, if not required to be declared otherwise, shall be declared in line with relevant Custom Valuation Rulings (if available).

    c) In case, the brand/trade name/trademark of a product is to be declared on EIF/MIF, EFE/MFE, it shall be accompanied by the generic name of such product.

    d) H.S. Code of each product which forms the part of the underlying contract is declared on EIF/MIF, EFE/MFE. Where an H.S. Code includes multiple goods/products, ADs shall ensure that the particulars of each product are written against that H.S. Code.

    e) Guideline at (a)(c) & (d) above shall be followed while making declaration on Advance Payment Voucher. Moreover, it shall be ensured by ADs that in case of advance payment export, declaration made on EFE/MFE is strictly in accordance with the particulars declared on Advance Payment Voucher and name of consignee declared on EFE/MFE is of the same entity from which the advance payment is received.

    ii. The particulars of EIF/MIF, EFE/MFE shall be corroborated with that of Goods Declaration Form, where transaction does not involve a letter of credit, to check the cohesion and in case of significant variation(s), the matter shall be escalated to the higher management, which shall review the same and consider the option of filing STR with FMU etc.

  • Open account, advance payments considered as higher risk transactions for trade based money laundering

    Open account, advance payments considered as higher risk transactions for trade based money laundering

    KARACHI: State Bank of Pakistan (SBP) has advised financial institutions dealing foreign exchange to enhance due diligence on higher risk transactions to stop trade based money laundering.

    The SBP on Tuesday issued Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing and said that banks and financial institutions should ensure that high risk transactions in the area of trade business are subject to more extensive due diligence and are escalated, where required, to the higher management.

    ii. In this respect, following transactions may have higher Money Laundering/Terror Financing risks and may be considered for Enhanced Due Diligence (EDD):

    a) Open Account

    b) Advance Payments (Import & Export of Goods)

    c) Import/Export of Services

    d) Import/Export of Free of Cost Goods

    e) Trade transactions with related party

    f) Import of goods that are exempt from import related duties

    g) Import of goods that are subject to over 25% import duties

    h) Export of goods on which export related rebates are allowed by the Government of Pakistan

    i) Where an exporter allows trade discounts to the same importer consistently by the way of deduction of amount of discount from the proceeds of export bills.

    j) Trade transaction of sole proprietorship or partnership concern received by centralized trade processing unit from a different branch of an AD with whom their relationship is not generally associated or frequent switching of branch for trade transactions by such concerns.

    k) Trade transactions with high-risk jurisdictions or jurisdictions with lax AML/CFT regulations and implementations

    l) Outward remittance from personal FCY account of the importer

    m) Unusually relaxed terms for settlement of counter value both for exports as well as imports e.g. no specific timeline for shipment of goods against exports advance payment, extended credit period for payment against import of goods especially between unrelated parties.

    Due weightage shall be given by authorized dealers to the risk rating of the customer while allowing high-risk transactions.

    In this respect, a criteria shall be developed by the ADs whereby transactions falling in high-risk category specifically Advance Payments (Import & Export), where clients have outstanding overdues/poor performance history, shall be escalated to the higher management for taking appropriate decision about the fate of transactions.

    In case of recurrence of non-performance post allowing the transaction, the higher management of financial institutions may subject the customer to enhance/continuous monitoring.

    However, in case of persistent non-performance during the period in which the customer has been subjected to enhance/continuous monitoring, the AD may evaluate the transaction for filing an Suspicious Transaction Report (STR) with Financial Monitoring Unit (FMU) if they have sufficient grounds to form suspicion that the customer is using trade transaction to launder money, finance terrorism etc. ADs, in such circumstance, should also evaluate the risks of continuing relationship with the customer.

    Notwithstanding the above, even if the senior management of ADs on the matter escalated to it does not find sufficient grounds for filing of an STR, they may consider subjecting the customer to enhanced/continuous monitoring.

  • SBP issues framework for controlling trade based money laundering, terror financing

    SBP issues framework for controlling trade based money laundering, terror financing

    KARACHI: The State Bank of Pakistan (SBP) on Tuesday issued framework for controlling trade based money laundering and terror financing.

    In order to strengthen trade related Anti Money Laundering/Combating Financing of Terrorism (AML/CFT) regime and restrict possible misuse of banking channel, a comprehensive framework on the subject has been developed and attached herewith.

    Accordingly, Authorized Dealers (ADs) are advised to upgrade their systems and controls and bring policies and procedures in line with the requirements of the framework to ensure meticulous compliance with the provisions thereof with immediate effect except as otherwise provided in the framework

    The provisions of this framework are in addition to and not a replacement of already issued instructions on the subject of ML/FT risks. Therefore, the compliance of the same shall not absolve ADs from their legal and regulatory obligations under prevailing AML/CFT laws/rules and regulations or any other relevant law in force.

    ADs are also advised to educate their clients about their obligation of ensuring (a) correct declaration of particulars on the prescribed forms, (b) utilization of foreign exchange for the exact purpose for which it is acquired by them and (c) repatriation of foreign exchange that represents the full export value of goods.

    In the event, it is found that material information required to be submitted on the prescribed forms has been omitted or suppressed, foreign exchange is misutilized by a client of an AD or export proceeds repatriated by a client does not represent the full export value of goods, SBP shall initiate penal action against such delinquent parties under relevant provisions of the Foreign Exchange Regulation Act, 1947 (FERA).

    Further, the matter shall also be reported to relevant stakeholders for necessary action under the laws being administered by them.

    Failure to comply with the instructions on the subject and the regulatory obligations of AML/CFT may attract action against ADs under the FERA and other relevant laws.

  • Pakistan’s foreign exchange reserves at $14.993 billion

    Pakistan’s foreign exchange reserves at $14.993 billion

    KARACHI: The total liquid foreign exchange reserves of Pakistan declined nominally by $11 million to $14.993 billion by week ended October 04, 2019 as compared with $15.003 billion a week ago, State Bank of Pakistan (SBP) said on Thursday.

    The reserves held by SBP increased by $16 million to $7.757 billion by week ended October 04, 2019 as compared with $7.771 billion a week ago.

    The foreign exchange reserves held by commercial banks declined by 27 million to $7.235 billion as compared with $7.262 billion a week ago.

  • Overseas Pakistanis remit $5.478 billion in July – September

    Overseas Pakistanis remit $5.478 billion in July – September

    KARACHI: The overseas workers have sent $5.478 billion during first quarter (July – September) of current fiscal year, which is 1.43 percent down when compared with $5.557 billion in the corresponding period of the last fiscal year, according to data released by State Bank of Pakistan (SBP) on Thursday.

    However, inflows of workers’ remittances witnessed 17.59 percent growth to $1.747 billion in the month of September 2019 when compared with $1.486 billion in the same month of the last year.

    Saudi Arab was the major destination from where Pakistanis sent remittances to homeland. The inflows of remittances from Saudi Arabia were $1.269 billion during first quarter of current fiscal year as compared with $1.263 billion in the same quarter of the last fiscal year, showing growth of 0.49 percent.

    The country received $911 million as workers’ remittances from the US during first quarter of the current fiscal year as compared with $862.76 million in the corresponding quarter of the last fiscal year, showing 5.67 percent growth.

    The third major destination for workers’ remittances was the UK from where the country received $814.37 million during July –September 2019 as compared with $810 million in the same period of the last fiscal year.

    The combined inflows from United Arab Emirates (UAE) were $1.139 billion during first quarter of current fiscal year as compared with $1.227 billion in the same quarter of the last fiscal year, registering 7.19 percent decline.

    The inflows from other GCC countries were at $519.43 million during July – September 2019 as compared with $526.96 million in the same period of the last fiscal year, showing 1.43 percent decline.