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  • Banking deposits hit all-time high on attractive policy rate

    Banking deposits hit all-time high on attractive policy rate

    KARACHI: The deposits of banking system hit all-time high of Rs14.672 trillion by end of January 2020 owing to higher returns on attractive interest rates.

    According to State Bank of Pakistan (SBP), the deposits of banking system grew by 12.36 percent to Rs14.672 trillion by January 2020 as compared with Rs13.057 trillion in the same month of the last year.

    The banking deposits were previously hit all-time high of Rs14.632 trillion by end of December 2019.

    Analysts said that the higher interest rate attracted the investors to keep their money in banking system for higher returns.

    The SBP kept the policy rate unchanged at 13.25 percent in the last monetary policy on January 28, 2020.

    The analysts also believed that the slowdown in economy also discouraged new investment in the industrial and other avenues. Therefore, profit through banking deposits has become prime option.

    The higher deposits also provided room for banks to invest in government papers. The higher investment in government securities resulted in significant profitability of the banks.

    Analysts said that the year 2019 was an exceptional year for the banking sector with profitability increasing by 20 percent or Rs30 billion to reach Rs177 billion, in spite of economic slowdown.

    The primary driver this year has been the net interest income which has increased by 27 percent from Rs486 billion to Rs620 billion, which is mainly due to higher interest rates.

    Weighted average policy rate in 2019 remained 12.2 percent compared to 7.2 percent in 2018.

    In absolute terms, the highest yearly profit was earned by MCB bank (Rs23.8 billion) followed by UBL (Rs19 billion) and NBP (Rs16.6 billion). However in terms of earnings growth BIPL came out on top with 247 percent growth followed by MEBL with 73 percent and AKBL with 58 percent growth, said analysts at Arif Habib Limited.

    As mentioned Net Interest Income (NII) of the banks remained major earnings driver in 2019. In Pakistan rising interest rates bodes well for banks as around 34 percent of deposits are non-remunerative (Current Deposits on which banks give no return) that leads to a higher spread. Top banks with the highest growth in NII are BIPL (78 percent), MEBL (65 percent) and SCBPL (50 percent).

  • Pakistan’s foreign exchange reserves flat at $18.743 billion

    Pakistan’s foreign exchange reserves flat at $18.743 billion

    KARACHI: Pakistan’s liquid foreign exchange reserves were flat at $18.743 billion by week ended February 21, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $18.747 billion by week ended on February 14, 2020.

    The official reserves of the central bank increased by $87 million to $12.592 billion by week ended February 21, 2020 as compared with $12.505 billion a week ago.

    However, reserves held by commercial banks fell by $91 million to $6.151 billion by week ended February 21, 2020 as compared with $6.242 billion a week ago.

  • SBP directs banks to collect Hajj applications on coming weekly holidays

    SBP directs banks to collect Hajj applications on coming weekly holidays

    KARACHI: State Bank of Pakistan (SBP) on Monday directed banks to collect Hajj applications and other dues on coming weekly holidays on Saturday February 29 and Sunday March 01.

    A statement issued by the SBP stated that in order to facilitate the intending pilgrims to deposit application forms along with dues for Hajj 2020, 13 authorized banks had been directed to keep all their designated branches open from 10:00 a.m. to 2:30 p.m. on Saturday and Sunday (i.e. 29-02-2020 and 01-03-2020) throughout the country.

    Earlier, in terms of Hajj Policy 2020, the Ministry of Religious Affairs & Interfaith Harmony has authorized 13 banks (viz. National Bank of Pakistan, Habib Bank, United Bank, MCB Bank, Allied Bank, Bank of Punjab, Bank Alfalah, Zarai Taraqiati Bank, Faysal Bank, Askari Bank, Bank Al-Habib, Habib Metropolitan Bank and Meezan Bank) to collect application forms along with dues from intending pilgrims for Hajj 2020 w.e.f. February 25, 2020 till March 06, 2020 throughout the country.

  • Bearer Prize Bonds of Rs40,000 not to be encashed after March 31

    Bearer Prize Bonds of Rs40,000 not to be encashed after March 31

    KARACHI: State Bank of Pakistan (SBP) has said that people can encashed Rs40,000 bearer prize bonds on or before March 31, 2020 and after that the financial instruments cannot be redeemed.

    The central bank issued frequently asked questions (FAQs) related to the withdrawal of Rs. 40,000/- National Prize Bonds (Bearer) from Circulation to facilitate general public and investors.

    Q: Have National Prize Bonds (Bearer) of Rs.40,000/- denomination been withdrawn from circulation?

    A: Yes. The Finance Division (Budget Wing), Government of Pakistan vide Notification No. F.16(3)GSI/2014-1072 dated June 24, 2019 has restricted the sale of National Prize Bonds (Bearer) of Rs.40,000/-denomination after June 24, 2019.

    Q: Is there a time limit for conversion/encashment of my National Prize Bonds (Bearer) of Rs.40,000/- denomination?

    A: Yes. As per aforementioned Notification from the Government of Pakistan, National Prize Bonds (Bearer) of Rs. 40,000/- denomination can be encashed/redeemed upto March 31, 2020, after which they would not be encashed / redeemed.

    Q: How can I encash/redeem my National Prize Bonds (Bearer) of Rs.40,000/- denomination?

    A: The National Prize Bonds (Bearer) of Rs.40,000/- denomination can be encashed using the following options:

    1. Conversion to Premium Prize Bonds (Registered)

    2. Replacement with Special Savings Certificate (SSC) / Defence Savings Certificate (DSC)

    3. Encashment through Bank Account

    Q: How can I convert my National Prize Bonds (Bearer) of Rs.40,000/- denomination to Premium Prize Bonds (Registered)?

    A: The National Prize Bonds (Bearer) of Rs.40,000/- denomination can be converted to Premium Prize Bonds (Registered) through the 16 field offices of SBP Banking Services Corporation, and six commercial banks i.e. National Bank of Pakistan, Habib Bank Limited, United Bank Limited, MCB Bank Limited, Allied Bank Limited and Bank Alfalah Limited. The documentary requirements for the purchase of Premium Prize Bonds (Registered) are available at: http://www.sbp.org.pk/sbp_bsc/PrizeBond/premium/FAQs.pdf

    Q: How can I replace my National Prize Bonds (Bearer) of Rs.40,000/- denomination with Special Savings Certificates (SSC) / Defence Saving Certificates (DSC)?

    A: The National Prize Bonds (Bearer) of Rs.40,000/- denomination can be replaced with SSC / DSC through the 16 field offices of SBP Banking Services Corporation, Authorized Commercial banks and National Savings Centers.

    Q: How can I encash my National Prize Bonds (Bearer) of Rs.40,000/- denomination through bank account?

    A: On submission of request on the prescribed application form (details at Q7 below) at 16 field offices of SBP Banking Services Corporation or Commercial Banks, the proceeds of encashment shall be credited to the bond-holder’s bank account.

    Q: What information/documents are required to convert/redeem/encash my National Prize Bonds (Bearer) of Rs.40,000/- denomination?

    A: Request for conversion/encashment of Rs.40,000/- National Prize Bonds (Bearer) shall be submitted on prescribed application form which is available at the following weblink:

    http://www.sbp.org.pk/sbp_bsc/BSC/CMD/Circulars/2019/C1-Annex-A-Application-Form.pdf.

    The requisite information/documents required for each encashment option is as follows:

    1. Conversion to Premium Prize Bonds (Registered): Legible copy of valid CNIC / SNIC, Account

    Maintenance Certificate (not older than one month from application date), Valid IBAN number

    2. Replacement with Special Savings Certificate (SSC) / Defence Savings Certificate (DSC): Legible Withdrawal of Rs. 40,000/- National Prize Bonds (Bearer) from Circulation copy of valid CNIC / SNIC

    3. Encashment through Bank Account: Valid IBAN number

    Q: Can I receive cash against my National Prize Bonds (Bearer) of Rs.40,000/- denomination?

    A: No. The National Prize Bonds (Bearer) of Rs.40,000/- denomination can only be encashed using the following options:

    1. Conversion to Premium Prize Bonds (Registered)

    2. Replacement with Special Savings Certificate (SSC) / Defence Savings Certificate (DSC)

    3. Encashment through Bank Account

    Q: Is there any tax / deduction against the conversion/encashment of National Prize Bonds (Bearer) of Rs.40,000/- denomination ?

    A: No. There is no tax / deduction for any of the approved conversion/encashment options.

    Q: For encashment of National Prize Bonds (Bearer) of Rs.40,000/- denomination through bank account, can I visit any Commercial Bank, or do I have to visit the Commercial Bank in which my account is maintained ?

    A: The National Prize Bonds (Bearer) of Rs.40,000/- denomination bonds can be encashed at any branch of the Commercial Bank in which bondholder maintains an “individual” account.

    Q: What is the timeline for credit of Face Value into my bank account?

    A: The Face Value shall be credited to the bank account on the same day, subject to provision of required information.

    Q: National Prize Bonds (Bearer) of Rs.40,000/- denomination are being encashed against cash at a discount rate. Is it allowed?

    A: As per Rule 3(2) of Prize Bonds Rules 1999, only Offices of the State Bank of Pakistan Banking Services Corporation, Commercial Banks authorized in this behalf by SBP, and National Savings Centers are authorized to carry out business of National Prize Bonds (Bearer). Further, the Rule 3(3) of the said Rules restricts any other office, body or institution other than the office, body or institutions specified in Rule 3(2) of Prize Bonds Rules, 1999 from conducting any business relating to National Prize Bonds (Bearer).

    The SBP said that the bondholders receive full amount (without any deduction) for any of the approved conversion/encashment options.

    Q: Will there be any further prize money draws for National Prize Bonds (Bearer) of Rs.40,000/- denomination?

    A: No. The last draw (78th draw) for Rs.40,000/- denomination National Prize Bonds (Bearer) was conducted on June 3, 2019. As per the Notification from Finance Division (Budget Wing) Government of Pakistan, no further prize money draws shall be conducted for National Prize Bonds (Bearer) of Rs.40,000/- denomination.

    Q: I have a prize-winning National Prize Bond (Bearer) of Rs.40,000/- denomination. What is the time limit for claiming my prize ?

    A: Under the governing rules, the prize money may be claimed by the holder of the prize bond at any time within a period of six years from the date of draw.

    Q: Can I encash damaged National Prize Bond (Bearer) of Rs.40,000/- denomination?

    A: Yes. Damaged National Prize Bonds (Bearer) of Rs.40,000/- denomination can be encashed at the 16 field offices of SBP Banking Services Corporation. However, it is pertinent to note that all such claims shall Withdrawal of Rs. 40,000/- National Prize Bonds (Bearer) from Circulation be decided by the authorized officials in light of relevant regulations.

  • Foreign exchange reserves up by $12 million

    Foreign exchange reserves up by $12 million

    KARACHI: The liquid foreign exchange reserves of the country increased by $12 million to $18.747 billion by week ended February 14, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves were at $18.735 billion by week ended February 7, 2020.

    The official foreign exchange reserves of the SBP increased by $74 million to $12.505 billion by week ended February 14, 2020 as against $12.431 billion a week ago.

    The foreign exchange reserves held by commercial banks however fell by $62 million to $6.242 billion by week ended February 14, 2020 as against $6.304 billion a week ago.

  • SBP imposes penalty of Rs12.8 million on HBL

    SBP imposes penalty of Rs12.8 million on HBL

    KARACHI: State Bank of Pakistan (SBP) has imposed monetary penalty of Rs12.8 million on Habib Bank Limited (HBL) for procedural violations in the area of Customers Due Diligence (CDD) and Know Your Customer (KYC).

    The SBP on Tuesday said that it had imposed monetary penalty on HBL under significant enforcement actions during January 2020.

    The central bank directed HBL to improve the areas of CDD and KYC.

    The SBP imposed Rs219.138 million as penalty on five banks during the month of December 2019 for violating mainly regulations related to foreign trade operations, Customers Due Diligence (CDD) and Know Your Customer (KYC).

    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

    With the latest penal action the total amount of penalty during first seven months (July – January) 2019/2020 increased to Rs1,581.8 million.

  • Foreign direct investment increases by 66% in July – January

    Foreign direct investment increases by 66% in July – January

    KARACHI: The inflows of foreign direct investment (FDI) into Pakistan has increased by 66 percent during first seven months (July – January) of 2019/2020, State Bank of Pakistan (SBP) said on Tuesday.

    The inflows of FDI during the period under review increased to $1.56 billion as compared with $944 million in the corresponding period of the last fiscal year.

    The total foreign private investment during July – January 2019/2020 registered 196 percent growth. The foreign private investment increased to $1.58 billion as compared with $535 million in the same period of the last fiscal year.

    The flow of portfolio investment into the capital market increased by 105 percent during the period under review. The capital market witnessed inflows of $21.5 million during July – January 2019/2020 as compared with outflow of $409 million in the corresponding period of the last fiscal year.

    The total inflows of foreign investment has been recorded at $3.42 billion during the period under review. The main source of this investment can be attributed to foreign investment in debt securities.

    The inflow of debt securities during first seven months of current fiscal year was at $1.84 billion.

  • Fiscal reforms to help Pakistan generate funding to meet SDGs targets: IMF official

    Fiscal reforms to help Pakistan generate funding to meet SDGs targets: IMF official

    KARACHI: The ongoing fiscal reform in Pakistan will help the country to generate funding to meet Sustainable Development Goals (SDGs) targets under the UN 2030 agenda, said Athanasios Arvanitis, Deputy Director of the International Monetary Fund (IMF).

    Referring to the IMF program with Pakistan, Arvanitis remarked that it is important for the government to focus on meeting the Sustainable Development Goals (SDGs) under the UN’s 2030 Agenda.

    He noted that ongoing fiscal reforms will not only put Pakistan’s public debt path on a sustainable footing but also build the foundation for providing crucial funding to meet these targets.

    He was addressing a seminar on ‘Managing Crises in Emerging Markets’ hosted by State Bank of Pakistan (SBP) a day earlier, a press statement issued on Saturday.

    Athanasios Arvanitis highlighted some of the main similarities of crises across emerging markets, notably the role typically played by elevated levels of debt, high public and external deficits, inflexible exchange rates, lack of competitiveness, low saving and investment, and maturity and currency mismatches.

    Despite these similarities, he emphasized that there was no one-size-fits-all model for managing crises. Instead, the IMF focuses on different dimensions while assisting a country in developing a homegrown stabilization program.

    The approach emphasizes the need to diagnose the roots of a country’s crisis, trends and developments in the balance sheets of various economic agents and their interconnectedness, and country-specific dynamics that affect the political economy of reforms. In terms of designing stabilization programs, Arvanitis stressed the importance of country ownership and measures to provide support for vulnerable segments of the population.

    He also drew parallels for Pakistan from the experiences of managing crises in other emerging countries.

    Referring to the IMF program with Pakistan, Arvanitis remarked that it is important for the government to focus on meeting the Sustainable Development Goals (SDGs) under the UN’s 2030 Agenda. He noted that ongoing fiscal reforms will not only put Pakistan’s public debt path on a sustainable footing but also build the foundation for providing crucial funding to meet these targets.

    In his welcoming remarks, the Governor SBP, Dr. Reza Baqir, stated that the objective of holding the seminar was two-fold. First, to demonstrate that, in addition to its mandate of formulating monetary, exchange rate and financial stability policies, SBP endeavors to facilitate constructive debate on economic issues and is open to diverse points of view. Second, to highlight that Pakistan is not unique and there are many other emerging economies that have also faced economic crises and undergone difficult adjustments.

  • Pakistan’s forex reserves increase by $91 million

    Pakistan’s forex reserves increase by $91 million

    KARACHI: Pakistan’s liquid foreign exchange reserves have increased by $91 million to $18.735 billion by week ended February 07, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves were at $18.644 billion by week ended January 31, 2020.

    The foreign exchange reserves of the central bank increased by $157 million to $12.431 billion by week ended February 07, 2020 as compared with $12.274 billion a week ago.

    However, the foreign exchange reserves held by commercial banks fell by $66 million to $6.304 billion by week ended February 07, 2020 as compared with $6.37 billion a week ago.