Pkrevenue.com

Tag: SBP

  • SBP issues procedure for opening bank accounts of politically exposed persons

    SBP issues procedure for opening bank accounts of politically exposed persons

    KARACHI: State Bank of Pakistan (SBP) has issued procedure for opening bank accounts of Politically Exposed Persons (PEPs) and instructed banks to facilitate such persons without compromising due diligence process under anti-money laundering (AML) and counter financing of terrorism (CFT).

    The central bank on Wednesday said that in order to ensure fair and equitable treatment of bank’s customers referred to as Politically Exposed Persons (PEPs), it had devised the following Standard Operating Procedures (SOPs) to facilitate and streamline account opening process without compromising due diligence requirements prescribed under AML / CFT regime:

    (i) The bank upon receiving account opening request from PEP shall ensure that the basic requirements like Account Opening Form/Specimen Signature Card and Biometric Verification of the customer are completed on the same day;

    (ii) on the same day, the person shall be guided regarding specific requirements / formalities required for opening of an account. Further, the concerned branch shall report the details of the request made by PEP to the focal person nominated by the bank in line with instructions of BPRD Circular Letter No. 27 of 2015;

    (iii) within two working days of receipt of documents from PEP, the bank shall inform him / her in writing, the deficiencies, if any, in the documents or further clarifications required;

    (iv) once the deficiencies have been removed by PEP and all due diligence requirements have been satisfactorily completed, the account shall be opened by the bank within two working days;

    (v) in case the bank decides to refuse any request for account opening, within two working days, the reasons of refusal shall be conveyed in writing to the applicant in line with the instructions of BPRD Circular Letter No. 14 of 2017;

    (vi) in line with abovementioned Circular, the bank shall maintain separate files of all approved and rejected cases of PEPs. SBP inspection team during inspection of the bank may review the record especially the rejected cases;

    (vii) the bank shall report the following details of rejected cases of PEPs to the Director, Banking Conduct & Consumer Protection Department of SBP on monthly basis within 7 days of the close of every month;

    Details of Banking Services / Facilities Refused to PEPs (Politicians only) during the month:

    Name & Position of PEP (Politicians Only)Type of Banking Service / Facility Requested along with the DateReasons for Refusal along with the Date of Letter
       

    B. Details of Banking Services / Facilities Refused to PEPs (Other than Politicians) during the month:

    Name & Position of PEP (Other than Politicians)Type of Banking Service / Facility Requested along with the DateReasons for Refusal along with the Date of Letter
       

    (viii) Any PEP having grievance / disagreement with bank’s decision may contact the bank’s focal person nominated for the purpose. Banks have already been advised to prominently display the contact details of their and SBP’s focal person for PEP’s at their branches.

    (ix) The focal person shall guide PEP and ensure early resolution of the issue in light of applicable policies, rules & regulations.

    (x) If the grievance of PEP is not resolved within 15 days after registration of his / her complaint with bank’s focal person or if he / she is not satisfied with the conclusion, then he / she may directly contact the focal person appointed by SBP.

    (xi) The bank’s focal person shall maintain a proper MIS for all requests/grievances received from PEPs (allocating unique diary number) in order to monitor its progress at different stages.

    (xii) The focal person shall be responsible to facilitate PEPs and monitor the progress of their request.

    (xiii) The bank shall provide special assistance to PEPs and treat them with respect and due care during the account opening process.

    The SBP advised the banks to immediately disseminate the abovementioned instructions down the line to all of their branches and business locations to ensure compliance of the same in letter and spirit.

    Any non-compliance would be strictly dealt with penal provisions of Banking Companies Ordinance, 1962.

  • SBP revises ‘blocked accounts’ of non-resident Pakistanis under Foreign Exchange Manual

    SBP revises ‘blocked accounts’ of non-resident Pakistanis under Foreign Exchange Manual

    KARACHI: State Bank of Pakistan (SBP) has revised blocked accounts of non-resident Pakistanis under Foreign Exchange Manual and laid down procedure for investment of amount from such blocked account.

    The SBP on Wednesday issued revised chapters of Foreign Exchange Manual and said that balances held in blocked accounts may be invested in approved government debt securities” expressed to be payable in Rupees or in fixed deposit with the bank in which the account is held subject to the prior approval of the State Bank.

    Such investment must be made through the bank with whom the blocked account is kept and registered in the name of the non-resident account holder or his/her nominee(s) in Pakistan.

    “The securities should not be held in bearer form and should not be sold or transferred without the permission of the State Bank. The income generated through investments in securities and sale proceeds of such securities must only be credited to the blocked account of the respective non-resident,” the SBP said.

    The SBP said that section 6 of the Foreign Exchange Regulation Act, 1947 empowers the State Bank to block the accounts in Pakistan of any person resident outside Pakistan and direct that payment of any sums due to that person shall only be made to a blocked account.

    In other words, amounts due to a person resident outside Pakistan, to whom remittances cannot be allowed, shall be credited to the blocked accounts of that person to ensure that the funds are not directly remitted or otherwise used in a manner contrary to the provisions of the Act.

    The SBP defined as a “blocked account” means an account opened as a blocked account at any office or branch in Pakistan of a bank authorized in this behalf by the State Bank or an account blocked by the order of the State Bank.

    All Authorized Dealers are permitted to open and maintain blocked accounts subject to the conditions laid down in subsequent paragraphs of this chapter. In certain cases, banks other than the Authorized Dealers may also be authorized by the State Bank to open and maintain blocked accounts.

    The State Bank may direct an authorized dealer to open a new or designate an existing account as “Blocked Account”. A blocked account may also be opened as a joint account in the name of a resident and a non-resident. No blocked account may be un-blocked or an existing ‘free’ account may be blocked by an Authorized Dealer except under the directions from the State Bank.

    Sub-section (1)(b) of Section 6 of the Act provides that where the State Bank has directed that any payment due to a non-resident may be made to a blocked account in his name with a bank in Pakistan, the crediting of the sum to the blocked account shall, to the extent of the sum credited, be a good discharge to the person making the payment.

    The central bank said that the State Bank may not approve certain remittances in settlement of liabilities to a particular person resident outside Pakistan. Payments in discharge of such liabilities to such person may be allowed to be made to a blocked account subject to such terms and conditions as may be specified by the State Bank.

    Where the State Bank directs that a payment be made to a blocked account, it may be made either:

    (i) by a banker’s payment order/cheque marked ‘payable to blocked account of ____________________only’ or

    (ii) by a crossed cheque or warrant drawn in favour of the beneficiary and marked with the words “Payable to blocked account of payee only.”

    (iii) Where such a cheque or warrant is sent to the payee, it is desirable that the payee should arrange for the opening of a blocked account with an Authorized Dealer in Pakistan before forwarding the instrument to that bank for collection. Application mentioning the name of the payee as the transferee and clearly marked ‘Blocked Account’ must be submitted to the State Bank for prior approval. The collecting bank must endorse cheques, warrants or drafts so marked “received for the credit of blocked account at ………………………… (Bank and Branch)” before presenting them for payment. The paying bank shall not pay such instruments, unless they are approved by the State Bank for payment to a blocked account. After payment has been made, the bank must endorse the instrument as “Payment made to blocked account at ………………………… (Bank and Branch)”. The amount which the State Bank has directed to be credited to a blocked account, must be immobilized pending the opening of the account and may not be used for any other purpose except with the prior approval of the State Bank.

    The State Bank may issue special instructions regarding operations on blocked accounts. In the absence of any such special instructions, no payments into or withdrawal from blocked accounts may be made unless prior approval of the State Bank has been obtained.

  • SBP increases key policy rate by 100bps to 13.25 percent

    SBP increases key policy rate by 100bps to 13.25 percent

    KARACHI: The State Bank of Pakistan (SBP) on Tuesday increased key policy rate by 100 basis points to 13.25 percent for next two months.

    The policy rate was announced by SBP governor Reza Baqir at a press conference here on Tuesday.

    The governor said that the monetary policy is announced in the month of July. He said that Monetary Policy Committee (MPC) is an independent body to decide the policy rate.

    The governor said that the increase in utility prices would have inflationary pressure. The average inflation during the current fiscal year may increase to 11 to 12 percent. However, the pace of inflation will ease down during third and fourth quarter, he added.

    He said that hike in utility prices would inflate the prices of essential items. It may hurt the purchase power of common men. Considering these elements the committee decided to increase the discount rate, he added.

    The governor said that the policy rate would be eased if indicators showed improvements in coming months.

    The SBP later in its press release issued the following statement:

    There have been three key developments since the last MPC meeting.

    First, the Government of Pakistan has passed a FY20 budget that seeks to credibly improve fiscal sustainability by focusing on revenue measures to widen the tax base.

    Adjustments in utility prices and other measures in the budget are expected to lead to a one-time considerable increase in prices in the first half of FY20.

    On the other hand, the government has also committed to cease borrowing from the State Bank that would qualitatively improve the inflation outlook.

    Second, the outlook for external financing has further strengthened with the disbursement of the first tranche associated with the IMF Extended Fund Facility, activation of the Saudi oil facility, and other commitments of support from multilateral and bilateral partners.

    The current account deficit has also continued to fall suggesting that external pressures continue to decline. On the other hand, the depreciation in the exchange rate since the last MPC has added to inflationary pressures.

    Finally, on the international front, the sentiment towards emerging markets has improved with greater expectations of a policy rate cut in the United States.

    The SBP said that domestic demand is estimated to moderate to about 3 percent in FY19 and GDP growth to 3.3 percent.

    While current high frequency indicators point to a slowing in economic activity, this is expected to turn around in the course of the year on the back of improved market sentiments in the context of IMF supported program, a rebound in the agriculture sector and the gradual impact of government incentives for export-oriented industries. Conditional upon the latest available information, SBP expect the real GDP growth of around 3.5 percent in FY20.

    External conditions show continued steady improvement with a sizeable reduction in the current account deficit which fell by 29.3 percent to US$ 12.7 billion in Jul-May FY19 as compared to US$ 17.9 billion during the same period last year.

    This improvement was primarily driven by import compression and healthy growth in workers’ remittances. Export volumes have been growing even though export values have remained subdued due to a fall in unit prices as also experienced by competitor exporting countries.

    Future developments in export performance will also depend on growth rates of our trading partners and progress in alleviating domestic structural impediments.

    SBP’s foreign exchange reserves have risen to about US$8 billion on 12th July 2019 with the disbursement of the first tranche of the IMF’s Extended Fund Facility.

    Reserves are expected to rise further in FY20 on account of additional financial inflows from other international creditors including those related to the Saudi oil facility and continued improvement in current account deficit.

    The bulk of the needed adjustment in the real effective exchange rate to address the past overhang of overvaluation has been completed with the recent deprecation of the exchange rate.

    While the exchange rate is flexible and market determined the SBP stands ready to take action to address disorderly market conditions in the foreign exchange market.

    Led by substantial shortfall in revenue collection, higher than budgeted interest payments and security related expenditures, both the overall fiscal and primary deficits deteriorated in FY19.

    The FY20 budget seeks to credibly reverse the recent trend of fiscal deterioration by addressing long-standing weaknesses in the taxation system and to enhance documentation of economic activities.

    On the back of an ambitious target for tax collection and tight control over expenditures, the budget envisaged a sizable reduction in primary deficit. This fiscal consolidation would support SBP’s stabilization policies already in place.

    From a monetary policy perspective, the government’s strong commitment to end its borrowing from the SBP, and the implementation of liability management operation to restructure the outstanding debt held by SBP, would positively contribute towards monetary policy transmission while credibly anchor markets’ inflation expectations going forward.

    Reflecting the impact of stabilization measures, private sector credit (PSC) growth has started to decelerate. PSC expanded 11.4 percent during 1st Jul – 28th Jun FY19 as compared to 14.8 percent during the same period last year.

    The deceleration in credit was more pronounced in real terms as the increase in PSC was largely driven by higher input prices, which in turn increased the working capital needs of the businesses. This, together with higher budgetary borrowing led to a sharp increase in the net domestic assets (NDA) of the banking system.

    In aggregate, broad money supply (M2) grew by 12.2 percent during 1st Jul – 28th Jun FY19 as compared to 10 percent during the comparable period last year.

    Going forward, the composition of money supply is expected to change as NFA of the banking system is projected to improve, while the growth in NDA is likely to show substantial moderation.

  • Fiscal deficit deteriorates on slowdown in tax collection: SBP

    Fiscal deficit deteriorates on slowdown in tax collection: SBP

    KARACHI: State Bank of Pakistan (SBP) on Monday said that the fiscal deficit was ballooned owing to slowdown in tax revenue collection and fall in non-tax revenue.

    In its third quarterly report on Pakistan Economy, the SBP said that the fiscal deficit deteriorated further, as a steep fall in non-tax revenues and a slowdown in tax revenue led the overall revenue collection to stagnate at last year’s level. On the other hand, expenditure increased sharply during July-March FY19, specifically the current expenditure that more than offset the decline in the development expenditure.

    While Pakistan’s economy moved along the stabilization phase led by demand management policies, vulnerabilities in the external and fiscal sectors persisted during Jul-Mar FY19.

    This implies that the current stabilization agenda needs to be reinforced with deep rooted structural reforms.

    The pace of economic growth slowed down considerably during FY19, mainly in response to policy measures taken to curb the twin deficits.

    These measures affected the performance of the industrial sector and dampened manufacturing activities in the country.

    Meanwhile, water- and weather-related concerns, in tandem with the higher cost of major inputs, took a toll on crop production. The weak showing by the commodity-producing sectors also constrained the output of the services sector.

    According to the report, inflation stubbornly kept an upward trajectory. Despite several rounds of policy rate hike since January 2018, the average CPI inflation during Jul-Mar FY19 exceeded the full year target.

    Although demand-pull pressures lessened in intensity towards the end of FY19, the Non-Food Non-Energy component continued to climb due to second round impact of exchange rate deprecation and increase in energy prices.

    On the external front, the current account deficit (CAD) declined on the back of lower import payments for both goods and services, and a decent growth in workers’ remittances.

    However, given the elevated level of CAD and insufficient foreign investments to fill the financing gap, the country had to resort to bilateral and commercial sources for external financing.
    The report features a special section on power tariffs in Pakistan. The analysis explains the process of power tariff determination in the country and assesses why tariffs have not softened despite the decline in fuel cost. It suggests that capacity payments constitute the bulk of power tariffs in Pakistan, and a sharp increase in these payments in recent years has completely offset gains from declining fuel cost.

    The report also contains another special section on the outlook of food security in Pakistan. The analysis emphasizes the related challenges that the country may face going forward, such as a high population growth and unfavorable water and climatic conditions, unless remedial measures are taken urgently.

  • Foreign direct investment falls by 50 percent in 2018/2019

    Foreign direct investment falls by 50 percent in 2018/2019

    KARACHI: The inflow of foreign direct investment (FDI) to the country has declined by 50 percent to $1.73 billion during fiscal year 2018/2019 as compared with $3.47 billion in the preceding fiscal year, State Bank of Pakistan (SBP) said on Monday.

    The inflows under FDI recorded growth of 24.5 percent to $3.16 billion during last fiscal year as compared with $4.185 billion in the fiscal year 2017/2018. On the other hand the outflows recorded 99 percent increase to $1.422 billion during fiscal year 2018/2019 as compared with $714.2 million in the preceding fiscal year.

    The total foreign private investment into the country fell by 59.10 percent to $1.32 billion in the last fiscal year as compared with $3.23 billion in the preceding fiscal year.

    The inflows of portfolio investment into the capital market were declined by 72.5 percent during the fiscal year under review. The market witnessed outflows of $415.2 million during the last fiscal year as compared with the outflows of $240.7 million in the preceding fiscal year.

    The total foreign investment including foreign public investment fell by 94.2 percent to $330 million in 2018/2019 as compared with $5.68 billion in the preceding fiscal year.

  • Analysts forecast 100bps increase in policy rate

    Analysts forecast 100bps increase in policy rate

    KARACHI: The State Bank of Pakistan (SBP) is scheduled to announce its monetary policy on July 16, 2019 (Tuesday) and analysts forecast central bank may increase key policy rate by another 100 basis points.

    Analysts at Arif Habib Limited said that the central bank to increase its policy rate by 100bps to 13.25 percent.

    “Primary reason for this increase in policy rate, in our view, is to keep Real Interest Rates positive in light of rising inflation during 1QFY20 on the back of increase in the prices of administered utilities (electricity and gas).”

    Average inflation for 1QFY20 is expected to settle at 12.11 percent, while a policy rate of 12.25 percent would imply a real interest rate of just 14bps.

    The data for the past 48 months exhibits that average real interest rates have remained approx. 2.3 percent, while under the last IMF program (September 2013 to September 2016) real interest rates hovered at an average of 3.1 percent.

    Therefore, it seems unlikely that the central bank would let the real interest rates go negative or below one percent. The staff report document also states that real interest rates would be kept positive to counter inflation.

    On the external front, persistent Current Account Deficit continues to weigh in on the economy despite a substantial decline in imports.

    For May 2019, CAD has declined by 47 percent YoY to USD1.1 billion. However, in terms of GDP it is still high at 5 percent.

    Therefore, in order to reduce this deficit to a sustainable level, the SBP is expected to increase its policy rate to compress demand further.

    In addition, with the advent of market determined exchange rate, a persistent Current Account Deficit might result in further weakness in exchange rate which might induce further inflation.

  • SBP to announce monetary policy on July 16

    SBP to announce monetary policy on July 16

    KARACHI: State Bank of Pakistan (SBP) will announce key policy rate for next two months of July 16, 2019, a statement said on Friday.

    The SBP said that the Monetary Policy Committee of the central bank would meet on Tuesday, July 16, 2019 at SBP Head Office Karachi to decide the policy rate.

    In the previous monetary policy announced on May 20, 2019, the committee decided to increase the policy rate by 150 basis points to 12.25 percent effective from May 21,2019.

    The decision was taken into account the considerations and the evolving macroeconomic situation, the committee noted that further policy measures are required to address underlying inflationary pressures from (i) higher recent month-on-month headline and core inflation outturns; (ii) recent exchange rate depreciation; (iii) an elevated fiscal deficit and its increased monetization, and (iv) potential adjustments in utility tariffs.

    Analysts at Arif Habib Limited said that the SBP would adopt a proactive stance to increase its benchmark policy rate by 100 basis points in July 2019 to address the underlying pressure on the economy.

    In its report issued on June 28, the analysts said that in addition, monetary tightening is expected on the back of i) rising inflationary pressure due to increase in prices of petroleum products, essential food items and price revision of utilities, ii) an elevated fiscal deficit and its increased monetization, and iii) recent exchange rate depreciation.

  • SBP issues procedure for loans under PM’s Kamyab Jawan SME Lending Program

    SBP issues procedure for loans under PM’s Kamyab Jawan SME Lending Program

    KARACHI: The State Bank of Pakistan (SBP) on Thursday announced the official procedure for obtaining a loan under the Prime Minister’s Kamyab Jawan SME Lending Program, a flagship initiative aimed at empowering youth and small enterprises across the country.

    (more…)
  • Foreign remittances grow by 9.68pc to $21.84bn in 2018/2019

    Foreign remittances grow by 9.68pc to $21.84bn in 2018/2019

    Foreign remittances to Pakistan have surged by an impressive 9.68% during the fiscal year 2018/2019, reaching an unprecedented high of $21.84 billion.

    (more…)