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  • Government to borrow Rs6,300 billion through auction of Market Treasury Bills in first quarter

    Government to borrow Rs6,300 billion through auction of Market Treasury Bills in first quarter

    KARACHI: The government likely to borrow an amount of Rs6,300 billion from commercial banks through auction of market treasury bills (MTBs) during first quarter (July – September) of current fiscal year.

    According to auction target for MTBs issued by State Bank of Pakistan (SBP), the amount would be raised through seven auctions during the period.

    The government borrows from commercial banks through sale of commercial papers for budget financing.

    The details of auctions showed the government would borrow primarily to repay the matured amount. The details further showed that out of Rs6,300 billion, an amount of Rs5,065 billion would be spent on repayment against matured amount.

    The remaining amount of Rs1,234.55 billion would be utilized for budget financing.

    Banking analysts said that the government had decided to change the borrowing pattern. During the past fiscal year most of the borrowings were made through central bank. However, the government under IMF loan program agreed not to borrow from the SBP.

    The auction target showed that an amount of Rs300 billion would be raised through sale of Pakistan Investment Bonds (PIBs) of fixed rates.

    While, an amount of Rs400 billion would be raised through sale of PIB (floating rates).

    Analysts said that the banks were taking more interest in government maturities due to frequent increase in policy rate by the SBP. The banking sector is anticipating more hike in interest rate by the SBP during remaining months of current year.

  • Pakistan’s foreign exchange reserves increase to $14.443 billion

    Pakistan’s foreign exchange reserves increase to $14.443 billion

    KARACHI: The total foreign exchange reserves of Pakistan increased by $92 million to $14.443 billion by week ended June 28, 2019 as compared with $14.351 billion in the previous week, the State Bank of Pakistan (SBP) said on Thursday.

    The SBP said that during the week ending June 28, 2019, it received inflow of $500 million from Qatar as placement of funds. After taking into account outflows relating to external debt and other official payments, SBP reserves decreased by $9 million during the week, it added.

    The reserves held by commercial banks increased by $101 million to $7.17 billion as compared with $7.069 billion.

  • Finance Act 2019: SBP to assist Customs against illegal fund transfers

    Finance Act 2019: SBP to assist Customs against illegal fund transfers

    ISLAMABAD: State Bank of Pakistan (SBP) will assist customs authorities in prevention of illegal inward or outward transfers of funds.

    According to Finance Act, 2019 a new Section 32C has been inserted to Customs Act, 1969, which stated:

    “32C. Mis-declaration of value for illegal transfer of funds into or out of Pakistan.- (1) Without prejudice to any action that may be taken under this Act or any other law, for the time being in force, if any person overstates the value of imported goods or understates the value of exported goods or vice versa, or using other means including short-shipment, over-shipment, with a view to illegally transferring funds into or out of Pakistan, such person shall be served with a notice to show cause within a period of two years from the date of detection of such mis-declaration as to why penal action shall not be initiated:

    Provided that if goods have not been cleared from customs, such goods shall also be liable to be seized:

    Provided further that a team consisting of Additional Collector, duly assisted by an expert in the relevant field and an officer of State Bank of Pakistan (SBP) as specified, shall submit a report in writing with evidence for the Chief Collector. The said report shall also be furnished to the SBP for action, if any, under the law regulated by SBP.

    (2) Any proceedings under this section shall not be initiated without the explicit approval of the Board.”

    The Finance Act, 2019 also mentioned penalty for such offence:

    “Such person shall be liable to penalty not exceeding two hundred thousand rupees or three times the value of goods in respect of which such offence is committed whichever is greater; and such goods shall also be liable to confiscation; and upon conviction by a special judge he shall further be liable to imprisonment for a term not exceeding five years and to a fine which may extend upto one million rupees.”

  • Bank holiday

    Bank holiday

    KARACHI: The banks will remain close for public dealing on July 01, 2019, which will be observed as bank holiday on Monday.

    A notification issued on Thursday the SBP said that it will remain closed for public dealings on July 1, 2019 (Monday) which will be observed as Bank Holiday.

    All banks / Development Financial Institutions/ Microfinance Banks (MFBs) shall, therefore, remain closed for public dealings on the aforesaid date.

    However, all employees of the banks / DFIs / MFBs will attend the office as usual, the SBP said.

  • Pakistan’s forex reserves deplete by $288 million

    Pakistan’s forex reserves deplete by $288 million

    KARACHI: The liquid foreign exchange reserves of Pakistan fell by $288 million to $14.351 billion by week ended June 21 as against $14.639 billion a week ago, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves held by the central bank were depleted by $322 million to $7.282 billion as compared with $7.604 billion a week ago.

    The SBP said that its official reserves were declined due to external debt servicing and other official payments.

    The foreign exchange reserves held by commercial banks witnessed increase of $35 million to $7.069 billion from previous week’s level of $7.034 billion.

  • SBP relaxes tax non-filer condition

    SBP relaxes tax non-filer condition

    KARACHI: The State Bank of Pakistan (SBP) on Wednesday relaxed non-filer condition for depositing into to foreign currency accounts in order to facilitate declarants of tax amnesty scheme 2019.

    Referring Assets Declaration Ordinance, 2019 (ADO), the central bank said that the Ordinance had been promulgated with a view to provide for voluntary declaration of undisclosed assets, sales and expenditures, for the purposes of allowing the non-documented economy’s inclusion in the taxation system and economic revival and growth by encouraging a tax compliant economy/ culture.

    In terms of Section 8 of the ADO, the declaration made shall be valid if the foreign currency held in Pakistan declared under Section 3 is deposited into declarant’s own foreign currency bank account at the time of declaration and is retained in such account till 30th June, 2019.

    “It is clarified that notwithstanding any instructions to the contrary contained in the Foreign Exchange Manual, a declarant, including a non-filer can deposit foreign currency in cash into his/her bank account under the ADO.”

    Similarly, the provision of Foreign Exchange Manual, Chapter 6, para 1(vi) regarding deposit of foreign currency notes in foreign currency accounts exceeding USD 10,000/- (or equivalent in other currencies) in a single day, shall not be applicable to such deposits made under the ADO.

    However, the banks while accepting such deposits under the ADO shall obtain a copy of the declaration filed with the Federal Board of Revenue (FBR) by the declarant and accept the deposit only if the amount being deposited is equivalent to the amount declared in the declaration filed with FBR.

    The banks shall ensure the confidentiality and secrecy of the information contained in the declaration submitted to them by declarants along-with deposit request.

    The banks shall submit to the State Bank of Pakistan (SBP) a statement as annexed hereto, within 7 (seven) days of close of the scheme.

  • Rs260 billion to be documented through withdrawal of Rs40,000 bearer bonds in first phase

    Rs260 billion to be documented through withdrawal of Rs40,000 bearer bonds in first phase

    KARACHI: The government will document an amount of Rs260 billion in first phase by withdrawing Rs40,000 denomination bonds.

    The government has announced to stop circulation of high denomination bearer bonds in order to curb the black economy.

    Till February 2019 the central directorate of national savings issued Rs259.22 billion bonds of Rs40,000.

    On Jane 24, 2019 State Bank of Pakistan (SBP) issued instructions to commercial banks for not selling Rs40,000 Prize Bonds. The SBP also issued procedure for exchanging the bonds with premium bonds or documented saving certificates by March 2020.

    According to Economic Survey of Pakistan 2018-2019 the CDNS had planned to convert all bearer bonds into documented securities.

    A staggering amount of Rs939 billion has been invested in bearer bonds up to February 2019.

    Market sources said the holders of bearer bonds worth Rs40,000 were desperate to exchange and were even offering to exchange much lower rates in order to avoid questioning.

    The sources further said that many of those holders were desperate to exchange with US dollar and other foreign currencies, which put pressure on the local currency.

    The rupee hit all time low at Rs165 to a dollar in Interbank Foreign Exchange Market on Wednesday.

    On the other hand the FBR is also planning to question the persons exchanging the bearer bonds regarding source of investment.

  • SBP stops banks selling Rs40,000 prize bonds, issues procedure for conversion into registered bonds

    SBP stops banks selling Rs40,000 prize bonds, issues procedure for conversion into registered bonds

    KARACHI: State Bank of Pakistan (SBP) has stopped banks from issuing prize bond denomination of Rs40,000 with immediate effect and also issued instructions regarding conversion into registered bonds and encashment.

    The SBP on Monday issued the following instructions regarding handling of Rs.40,000/- denomination National Prize Bonds are issued herewith for information, guidance and meticulous compliance:

    a) National Prize Bonds of Rs.40,000/- denomination shall not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020.

    b) No further draws of Rs.40,000/-denomination National Prize Bonds shall be held.

    c) Cash payment for encashments of bonds is not allowed. However, the bond holder (s) shall have the following options to replace / encash these bonds:

    1. Conversion of premium prize bonds (registered)

    2. Replacement with special saving certificate (SSC)/Defence Saving Certificate (DSC)

    3. Encashment at face value.

    d) Appended below is the SOP for processing requests under the aforementioned options for compliance by all banks:

    1. Conversion to Premium Prize Bonds (Registered)

    i. The bonds can be converted to premium prize bonds (registered) through the 16 field offices of SBP Banking Services Corporation, and authorized branches of six commercial banks i.e. National Bank of Pakistan (NBP), Habib Bank Limited (HBL), United Bank Limited (UBL), MCB Bank Limited (MCB), Allied Bank Limited (ABL) and Bank Alflah Limited (BAFL).

    ii. The bond holder shall be required to submit a written request for conversion of bearer bonds to premium prize bonds (registered) to be registered in his (her) name on the prescribed application.

    iii. The bond holder shall also be required to submit prescribed applications forms for registrations / purchase of premium prize bond as per the procedure in vogue.

    Replacement with the Special Saving Certificate (SSC)/Defence Saving Certificate (DSC)

    i. The bonds can be replaced with SSC / DSC through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks and National Savings Centers.

    ii. All authorized commercial banks shall, therefore, accept requests for replacement of bearer bonds with SSC or DSC on the prescribed application form.

    iii. The bondholder shall also be required to submit application form for purchase of SSC/DSC (SC-1) as per the prescribed procedure.

    Encashment at Face Value:

    i. The bonds will only be encashed by transferring the proceeds to the bond holder’s bank account through the 16 field offices of SBP Banking Services Corporation as well as the authorized commercial bank branches.

    ii. All commercial banks shall receive requests for encashment of bearer bonds on the prescribed application form.

    A cop of the application form, duly signed and stamped, shall be provided to the bondholder as an acknowledgement receipt.

    The SBP said that it is needless to mention that the National Prize Bonds of Rs40,000 denomination tendered at the counters of banks shall be subject to through scrutiny to ascertain their genuineness. In this regard, details regarding the security features in Rs40,000 denomination National Prize Bonds are available online.

    Moreover, the prize bonds encashed / replaced by general public may be surrendered to concerned SBP BSC office through respective regional office of the commercial banks. For the purpose, the regional office may intimate the SBP BSC office three days in advance so that necessary arrangements for receipt of the bonds can be made.

    It is imperative to mention that a notice regarding the above / mentioned facilities must be displayed at prominent places within branch premises for awareness and information of general public.

  • Foreign exchange reserves decline to $14.64 billion

    Foreign exchange reserves decline to $14.64 billion

    KARACHI: The foreign exchange reserves of the country have declined by $188 million to $14.639 billion by week ended June 14, 2019 as compared with $14.826 billion by June 03, 2019, State Bank of Pakistan (SBP) said on Thursday.

    The official reserves of the central bank declined by $203 million to $7.604 billion by week ended June 14, 2019 as compared with $7.807 billion as of June 03, 2019.

    The SBP said that the official reserves had been declined due to external debt servicing and other official payments.

    The foreign exchange reserves held by commercial banks increased by $15 million to $7.034 billion as compared with previous level of $7.02 billion.

  • SBP issues procedure for repatriation of foreign shares of Pakistan companies under asset declaration scheme

    SBP issues procedure for repatriation of foreign shares of Pakistan companies under asset declaration scheme

    KARACHI: State Bank of Pakistan (SBP) on Thursday issued procedure for repatriation of foreign assets held in the form of shares of a company incorporated in Pakistan, under Asset Declaration (Procedure & Conditions) Rules, 2019.

    The central bank said that in terms of Sub-Rule 6 of Rule 4 of the Assets Declaration (Procedure and Conditions) Rules 2019, issued by Federal Board of Revenue (FBR) vide S.R.O. 578(I)/2019 dated May 25, 2019, where foreign assets are shares of a company incorporated in Pakistan held by a declarant, whether beneficially or otherwise, it may be declared, in terms of Assets Declaration Ordinance 2019, subject to their repatriation into Pakistan and conversion into non-repatriable basis.

    In order to facilitate the declaration of shares of a company incorporated in Pakistan, under clause 4(6) of the above mentioned Rules, held by the declarant, whether beneficially or otherwise, on repatriable basis, the SBP allowed these shares to be repatriated into Pakistan and also notify the following procedure for conversion of these shares from repatriable basis to non-repatriable basis and transfer in the name of the declarant:

    Shares registered with SBP on repatriable basis:

    i. The owner of shares (i.e. the person in whose name the shares are already registered with SBP) will submit its application, duly forwarded by the respective company (the company whose shares are held by the non-resident on repatriable basis) through the AD (bank), to SBP for cancellation of registration of shares.

    ii. The application shall explicitly state that the shares are beneficially owned by the declarant (Name, Father Name, Residential Address, CNIC/Passport No.) who wants to declare them under the Assets Declaration Ordinance 2019.

    iii. The application shall also state that the request has been made to the company/company registrar/Central Depository Company of Pakistan Limited (CDC), as the case may be, for transfer of these shares in the name of the declarant on non-repatriable basis after cancellation of the registration by SBP, with an advice to confirm SBP upon transfer of these shares.

    iv. The application will be submitted along with following original documents:

    A. Original shares registration letter(s), earlier issued by SBP on registration of shares of the company in favor of the applicant on repatriable basis.

    B. A clear undertaking from the applicant that no repatriation of capital and profit/dividend accruing thereon will be claimed at any stage.

    C. Letter from company secretary, confirming that:

    a. Underlying shares (the shares whose registration is to be cancelled) are still held by the applicant.

    b. Applicant has requested to the company/company registrar/CDC for transfer of the shares in the name of the declarant on non-repatriable basis after cancellation of the registration by SBP.

    v. Upon receiving such request through AD, SBP will cancel the registration letter and inform the AD and the company along with an endorsement to FBR.

    vi. Upon transfer of shares in the name of declarant, the company/company registrar or CDC, as the case may be, will confirm SBP that the shares have been transferred in the name of declarant on non-repatriable basis.

    Shares acquired through Special Convertible Rupee Accounts (SCRA) under Para 9 of Chapter 20 of Foreign Exchange Manual:

    i. The legal owner (i.e. Foreign Portfolio Investor in whose name the Unique Identification Number has been registered) of the shares shall approach the AD (SCRA maintaining bank) with the request on the format attached as Form-I, that the shares are beneficially owned by the declarant i.e. natural person(s) (Name, Father Name, Residential Address, CNIC /Passport No.) who wants to declare them under the Assets Declaration Ordinance 2019.

    ii. The request shall also state to transfer the shares from the depository (CDC) account of legal owner to depository (CDC) account in the name of the declarant as a local/domestic shareholder (local securities account details will be provided) and delink the said holdings from SCRA in banks’ books. This will be applicable only to shares of Foreign Portfolio Investors, which are currently safe kept under the participant ID of the AD. The said transfer between the two accounts should be in accordance with the procedure prescribed by CDC for this purpose.

    iii. The AD will issue a certificate to SBP on the format attached as Form-II, that shares have been transferred to the declarant CDC sub-account in line with the instruction received from the client, excluding it from SCRA regime with copy to CDC and FBR for their information and necessary action. CDC will also confirm that consequent upon the request of the legal owner, the shares have been transferred in the name of declarant on non-repatriable basis.

    All procedural aspects in respect of above declaration including, but not limited to, (i) conversion of shares from repatriable basis to non-repatriable basis whether with CDC or otherwise and (ii) transfer and registration of shares from the name of present legal owner to the declarant shall be completed on or before June 30, 2019; and the declarant shall disclose the details of such shares, including name and number of such shares and their face value in his/her asset declaration under Assets Declaration Ordinance, 2019, the SBP said.