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Tag: State Bank of Pakistan

  • Banks asked to use income estimation model for low cost housing finance

    Banks asked to use income estimation model for low cost housing finance

    KARACHI: State Bank of Pakistan (SBP) on Thursday directed the banks to use a newly developed model for income estimation for extension of low cost housing finance.

    The SBP said in order to facilitate low cost housing finance applicants with informal income, the central bank asked banks to develop and deploy income estimation model for extension of low cost housing finance to such applicants.

    This measure is expected to ease difficulties being faced by general public in availing housing finance under Government’s Markup Subsidy Scheme (G-MSS), commonly known as Mera Pakistan Mera Ghar.

    The SBP said the Pakistan Banks’ Association (PBA), through a consultative process, has developed and circulated among banks a baseline income estimation model. The purpose of this model is to assess income and repayment capacity on the basis of routine expenditures like house rents, utility bills and educational expenses etc. of a potential borrower who earns from informal sources.

    The SBP asked the banks to use PBA’s baseline model, customize the same, or develop their own income estimation model.

    Banks are required to confirm within 4 weeks that they have made their informal income proxy models operational, the SBP said. The availability of these models is expected to greatly enhance prospects of informal income applicants to secure housing finance from the banks, it added.

    With this move, it is expected that financially excluded segment will be able to avail financing under G-MSS. On the other hand, this tool will enable banks to expand their outreach and cater to the financing needs of people having informal sources of income.

    It is worth mentioning here that the SBP, with the support of banking industry, is working to reduce the hurdles being faced by the general public to availing housing finance under G-MSS.

    A number of steps have already been taken to make this facility available to general public, especially low cost housing finance applicants.

    These steps include relaxation of debt burden ratio, extension of housing finance against personal guarantee, development of online complaint resolution portal and establishment of banks’ joint call center to address queries.

    Further, standardization and simplification of i) loan application form ii) facility offer letter and iii) documentary requirements for approval and disbursement are also proving beneficial for the applicants under G-MSS. As of June 15, 2021, banks have received applications of around Rs. 90 billion against which an amount of around Rs. 30 billion has already been approved whereas banks are processing rest of the applications.

  • KIBOR rates on June 17

    KIBOR rates on June 17

    KARACHI: The State Bank of Pakistan (SBP) issued Karachi Interbank Offered Rates (KIBOR) as on Thursday, June 17, 2021.

    Following are the KIBOR rates as on June 17, 2021.

     TenorBIDOFFER
    1 – Week6.927.42
    2 – Week6.967.46
    1 – Month7.017.51
    3 – Month7.227.47
    6 – Month7.447.69
    9 – Month7.508.00
    1 – Year7.588.08
  • SBP allows banks to charge fee on high value transactions

    SBP allows banks to charge fee on high value transactions

    KARACHI: State Bank of Pakistan (SBP) on Wednesday allowed banks to charge a minimal fee on high-value transactions of Interbank Fund Transfer (IBFT).

    The central bank in a statement said that the new instructions allow banks and other service providers to charge a minimal fee on high-value transactions while protecting and encouraging the low-income segments of population to continue using digital transactions free of cost.

    The SBP directed banks to provide free of cost digital fund transfer services to individual customers up to, at least, a minimum aggregate sending limit of Rs25,000 per month per account/wallet. However, banks may choose to set this aggregate limit at a higher amount as well.

    This would allow individual customers to make as many free fund transfer transactions remaining within their aggregate monthly limit of free transfers.

    For transactions above the aggregate limit of Rs25,000 per account in a month, banks may charge individual customers, a transaction fee of no more than 0.1% of the transaction amount or Rs200, whichever is lower.

    This will enable service providers to recover part of costs they incur on providing inter-bank fund transfer service and build sustainable and innovative business models.

    Nevertheless, the new instructions encourage banks to provide free of cost digital fund transfer services to their customers to promote adoption of digital payments in the country.

    SBP has also advised banks that all digital fund transfer transactions between different accounts within the same bank (intra-bank fund transfers) shall remain free. Further, incoming interbank fund transfer transactions shall also remain free. SBP has further directed banks to ensure proper disclosure of charged and free IBFT amounts along with applicable fees to their customers by sending regular notifications through SMS, apps and email. After every digital transaction, banks are required to send free of charge SMS to their customers on their registered mobile numbers intimating them about the transaction amount and the charges being recovered.

    In order to provide seamless digital banking services to the public, SBP has further advised banks to remove any limits on the number of fund transfer transactions on their customer accounts/wallets unless there are genuine concerns related to AML/CFT or frauds.

    To cope with the extraordinary situation of lockdowns amid Covid-19 Pandemic in 2020, SBP advised banks and other service providers in March 2020 to offer free of cost Inter Bank Fund Transfer (IBFT) services to all their customers regardless of the size of transaction.  The objective was to facilitate bank customers to meet their banking services needs through online services during exceptionally difficult times and to avoid in person interaction to curb the spread of COVID. This step resulted in an overwhelming response by customers, with internet and mobile banking transactions more than doubling in Q2FY21 over the last year.

    The SBP appreciates the support of all service providers for this initiative by allowing free of cost interbank fund transfer services to the public without recovering their operational cost and incurring substantial revenue losses.

    It is encouraging that the Covid-19 situation has improved significantly and despite fluctuating number of cases the overall conditions now allow relaxations in mobility restrictions while following proper SOPs.  In this backdrop, SBP reviewed the current IBFT pricing mechanism and has made some changes to ensure that free of charge IBFT services are provided by banks and other financial institutions on a sustainable basis.

  • State Bank renews credit rating agencies status

    State Bank renews credit rating agencies status

    KARACHI: The State Bank of Pakistan (SBP) on Tuesday renewed the status of both credit rating agencies operating in Pakistan namely ‘VIS Credit Rating Company Limited (VIS)’ and ‘The Pakistan Credit Rating Agency Limited (PACRA)’ as eligible / recognized External Credit Assessment Institutions (ECAIs) for the calendar year 2021. 

    Banks and DFIs using the standardized approach of Basel framework are allowed to use credit ratings assigned by VIS and PACRA for CAR calculation purposes, the central bank added.

  • Foreign investors praise State Bank for facilitating remittances

    Foreign investors praise State Bank for facilitating remittances

    KARACHI: Foreign investors operating in the country have appreciated the significant improvement in the foreign exchange remittance processing time and in growing engagement of the State Bank of Pakistan (SBP) leadership with the key stakeholders.

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  • SBP makes changes for facilitating trade through online marketplace

    SBP makes changes for facilitating trade through online marketplace

    KARACHI: State Bank of Pakistan (SBP) on Monday proposed amendments to foreign exchange manual to facilitate Pakistani exporters to sell their products though online marketplace such as Amazon, e-Bay, Ali Baba etc.

    The SBP said that continuing with the agenda of modernizing foreign exchange regulations, State Bank of Pakistan has proposed changes in its regulatory instructions for exports of goods from Pakistan.

    These changes aim at promoting ease of doing business by simplifying the existing instructions. The key amendments proposed include framework for facilitating Pakistani exporters to sell their products through international digital marketplaces including Amazon, e-Bay, Ali Baba under Business to Business to Consumer (B2B2C) e-Commerce model.

    Amendments required in export regulations to implement Pakistan Single Window Project, which would eliminate the requirement of Electronic Form-E, are also part of revised draft. Likewise, in some other areas, regulatory approvals required from SBP have been proposed to be delegated to banks to facilitate the business community.

    The proposed changes are a part of SBP’s broader agenda to revise the existing foreign exchange regulations to align them with the changing market dynamics, business needs and global trade practices.

    As a part of this process, 11 chapters (out of 22) of the Foreign Exchange Manual have already been revised through a consultative process with the banking industry and the business community.

    The latest amendments in foreign exchange instructions pertaining to Exports are provided in Chapter 12 of the Foreign Exchange Manual. The document has been placed at SBP’s website inviting feedback/comments from the stakeholders and can be accessed at the following link:

    https://www.sbp.org.pk/epd/Draft-Chapter-12-Exports.pdf

    State Bank encourages and welcomes feedback/suggestions from the business community, banking industry and other stakeholders, on the revised draft of Chapter-12 (Exports) of FE Manual, for any further value addition/ improvement. The feedback/ suggestions may please be shared at [email protected]latest by Sunday, June 20, 2021.

  • FBR, SBP to make procedure for tax payment on export of services

    FBR, SBP to make procedure for tax payment on export of services

    ISLAMABAD: The government has imposed income tax on export of services and in this regard Federal Board of Revenue (FBR) and State Bank of Pakistan (SBP) will make procedure for payment of tax.

    According to budget 2021/2022 documents, the Finance Bill 2021 proposed a new section 154A for imposition of income tax on export of services.

    The proposed new section is as follow:

    “154A. Export of Services.– (1) Every authorized dealer in foreign exchange shall, at the time of realization of foreign exchange proceeds on account of the following, deduct tax from the proceeds at the rates specified in Division IVA of Part III of the First Schedule –

    (a) exports of computer software or IT services or IT enabled services in case tax credit under section 65F is not available;

    (b) services or technical services rendered outside Pakistan or exported from Pakistan;

    (c) royalty, commission or fees derived by a resident company from a foreign enterprise in consideration for the use outside Pakistan of any patent, invention, model, design, secret process or formula or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided to such enterprise;

    (d) construction contracts executed outside Pakistan; and

    (e) other services rendered outside Pakistan as notified by the Board from time to time;

    (2) The tax deductible under this section shall be a final tax on the income arising from the transactions referred to in this section, upon fulfilment of the following conditions –

    (a) return has been filed;

    (b) withholding tax statements for the relevant tax year have been filed; and

    (c) sales tax returns under Federal or Provincial laws have been filed, if required under the law;

    (d) no credit for foreign taxes paid shall be allowed.

    (3) The provisions of sub-section (2) shall not apply to a person who does not fulfill the specified conditions or who opts not to be subject to final taxation:

    Provided that the option shall be exercised every year at the time of filing of return under section 114.

    (4) Where a taxpayer, while explaining the nature and source of any amount, investment, money, valuable article, expenditure, referred to in section 111, takes into account any source of income which is subject to final tax in accordance with the provisions of this section, he shall not be entitled to take credit of a sum that can be reasonably attributed to the business activity or activities mentioned in sub-section (1).

    (5) The Board in consultation with State Bank of Pakistan shall prescribe mode, manner and procedure of payment of tax under this section.

    (6) The Board shall have power to include or exclude certain services for applicability of provisions of this section.”

  • SBP issues Rs70 coin to commemorate Pak-China relationship

    SBP issues Rs70 coin to commemorate Pak-China relationship

    KARACHI: State Bank of Pakistan (SBP) on Thursday issued Rs70 coin to commemorate the diplomatic relationship between Pakistan and China that were established on May 21, 1951.

    To mark the occasion of 70th anniversary of Pakistan-China Diplomatic relations, the government of Pakistan decided to issue a commemorative coin of Rs.70.

    The SBP launched the commemorative coin in an event held in Islamabad. Foreign Minister Makhdoom Shah Mahmood Qureshi was the as chief guest of the event. It was also attended by NongRong, Ambassador of China as the Guest of Honor.

    In his welcome address, the Governor State Bank of Pakistan (SBP) Dr. Reza Baqir thanked both the foreign Minister Makhdom Shah Mahmood Qureshi and the Ambassador of China NongRong for their participation in the event.

    He said that it is an honor for State Bank to be part of the tribute being paid by the Government of Pakistan by issuing this commemorative coin to celebrate the diplomatic relationship of the two countries.

    He added that both China and Pakistan are cooperating with each other on various fronts for the common good of people of the brotherly countries. He recalled that SBP had issued commemorative coins on founding anniversary of People’s Republic of China, establishment of diplomatic relations between the two countries and on the occasion to mark Pakistan-China Year of Friendship.

    Foreign Minister Shah Mahmood Qureshi in his address termed the friendship between Pakistan and China a role model for the rest of the world.

    He said that with strong diplomatic ties both the countries have endureddecades of relationship collectively and stood with each other in the wake of every tribulation. He thanked the visionary leadership of China under President Xi Jinping for conceiving and heavily investing in China Pakistan Economic Corridor (CPEC). He said relations with China has been the cornerstone of Pakistan’s foreign policy.

    Ambassador of China to Pakistan, NongRong, in his address said that both the government and people of China love their Pakistani brethren and desire to see the country making progress in every sphere of life. He said both China and Pakistan share same views on all-important international issues.

    It may be mentioned that it is the fourth coin of its kind on the subject of Pak-China relations. The first coin of Rs.10 denomination was issued in October 2009, celebrating the auspicious occasion of 60th Anniversary of founding of Peoples Republic of China. The second coin of Rs.20 was issued in May 2011 to celebrate 60th Anniversary of establishment of diplomatic relations between Pakistan and China as Year of Pak-China Friendship – 2011. The third coin was issued in 2015 to mark “Pakistan-China Year of Friendly Exchange 2015.

  • Remittances remain above $2 billion for 12th straight month

    Remittances remain above $2 billion for 12th straight month

    KARACHI: The inflow of workers’ remittances continued their exceptional streak in May 2021, remaining above $2 billion for a record 12th straight month, State Bank of Pakistan (SBP) said on Thursday.

    Remittances received during May 2021 amounted to US $ 2.5 billion, 33.5 percent higher than the same month last year. These were also higher than the monthly average of US $ 2.4 billion during July-April FY21.

    On a month-on-month basis, workers’ remittances fell by 10.4 percent in May 2021 compared to April 2021. This fall was expected as remittances usually slow in the post Eid-ul-Fitr period. As Eid fell in mid-May 2021 with markets closed a week earlier, there was some front-loading of remittances in April 2021. However, the seasonal decline in May 2021 was less the half the average decline observed during FY2016-2019. In FY2020, remittances experienced an exceptional rise due to the easing of Covid lockdowns in the post-Eid period in Gulf countries.

    On a cumulative basis, remittances surged to US $ 26.7 billion during July – May FY21, higher by 29.4 percent over the same period last year. Remittances during the first eleven months of FY21 have already crossed the full FY20 level by $3.6 billion.

    Remittance inflows during July-May FY21 were mainly sourced from Saudi Arabia ($7.0 billion), United Arab Emirates ($5.6 billion), United Kingdom ($3.7 billion) and the United States ($2.5 billion).

    Record high inflows of workers’ remittances during FY21 have been driven by proactive policy measures by the Government and SBP to incentivize the use of formal channels, curtailed cross-border travel in the face of COVID-19, altruistic transfers to Pakistan amid the pandemic, and orderly foreign exchange market conditions.

  • SBP allows mentally disordered persons to open bank account

    SBP allows mentally disordered persons to open bank account

    KARACHI: State Bank of Pakistan (SBP) has allowed mentally disordered persons to open bank account through a well-defined account opening process, a statement said on Tuesday.

    The process has been devised after thorough consultation with stakeholders. Now, for the first time in Pakistan, mentally disordered persons will be able to open a bank account under a new category of customers account namely “mentally disordered person account” introduced by SBP in its AML/CFT/CPF regulations.

    State Bank has advised all banks to facilitate the mentally disordered persons by allowing them to open and maintain a bank account with the help of a court appointed manager as per the applicable laws related to mental health.

    Account opening process will include presentation of valid identity documents and biometric verification through NADRA of mentally disordered person and court appointed manager.

    Moreover, bank will verify certified true copy of court order to ensure authenticity of the appointed manager. All CDD requirements should be completed for both persons to meet AML/CFT/CPF Regulations.    

    It may be recalled that SBP has earlier taken several measures and initiatives in consultation with banking industry for Persons with Disabilities like giving special consideration for their employment and improvement in accessibility infrastructure such as ramps and wheelchair facilities in their branches.

    SBP has also made available subsidized financial facilities and credit guarantee schemes for differently abled persons.  All these measures are being undertaken under a broader objective of improving financial inclusion in the country.

    SBP’s current step along-with a new comprehensive financial inclusion policy for Persons with Disabilities to be unveiled shortly by SBP will pave the way for universal financial inclusion including those of marginalized segments.