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Tag: State Bank of Pakistan

  • SBP allocates additional Rs190 billion refinancing to facilitate exporters

    SBP allocates additional Rs190 billion refinancing to facilitate exporters

    KARACHI: The State Bank of Pakistan (SBP) has allocated an additional amount of Rs190 billion under refinancing schemes for exporters during fiscal year 2020/2021, a statement said on Wednesday.

    In order to further facilitate the exporters, SBP enhanced the limit of refinancing provided to the banks under Exports Finance Scheme (EFS) by Rs100 billion.

    Hence, banks will now have overall limits of Rs700 billion for the exporters for 2020/2021.

    Moreover, to promote export-oriented investment, Rs90 billion have also been allocated under Long Term Financing Facility (LTFF) for the FY 21.

    This amount is in addition to limit of Rs100 billion already allocated to banks/DFIs under Temporary Economic Relief Facility (TERF) – a concessionary refinance scheme for setting up of industrial units, the SBP said.

    Export Finance Scheme and Long Term Financing Facility are two of the oldest schemes of SBP under which concessionary financing is provided to the exporters.

    EFS is operational since 1973 to meet short-term financing needs of exporters, while LTFF has been available 2008. For both the schemes, their Shariah compliant versions are also available.

    Since the emergence of Covid-19, SBP has taken several measures to counter its impact on the economy and safeguarding country’s exports has been a key priority. SBP has provided a number of relaxations under EFS and LTFF since March 2020 including:

    Additional period of six months for making shipment against loans availed under EFS Part-I.

    Additional period of six months for meeting required export performance against loans availed under EFS Part-II.

    The export performance of this extended period will also be considered for calculating the entitlement limit for 2020/2021.

    Reduction in showing export performance from 2 times to 1.5 times against financing availed during FY20 and FY21.

    Relaxation in the eligibility criteria for availing finance under LTFF.

    Allowing deferment of principal amount for one year and/or rescheduling/restructuring of loans under LTFF.

    It is expected that with the above already provided relaxations, which were widely appreciated by business community; above enhancement of around Rs190 billion in limits will cater to exporters’ cheaper liquidity requirement. SBP is closely monitoring the situation and is ready to take any further actions required to support the export sector.

  • Govt. to generate funds by issuing new Sukuk

    Govt. to generate funds by issuing new Sukuk

    KARACHI: The government has decided to generate funds through Islamic mode by reopening of Sukuk and in this regard the State Bank of Pakistan (SBP) on Tuesday issued necessary instructions and guidelines.

    The SBP said that subsequent to the issuance of first Ijarah Sukuk issue if the government is in need of additional funds and instead of issuance of a new Sukuk wishes to raise new funds by way of re-opening, then the State Bank of Pakistan will conduct an auction for reopening of the existing Sukuk Issue.

    In the Islamic context the steps of reopening of existing Sukuk is similar as that of issuance of a completely new Sukuk i.e. at the time of reopening of Sukuk the transaction is concluded by purchasing additional share in the identified asset on Musha basis which is then given on rent/ Ijarah and a separate Ijarah Agreement is executed.

    However, since the underlying asset, maturity date, rental rate and rental payout frequency is kept same as the initial issue, therefore the new issue would be called re-opening of Sukuk instead of a new Sukuk issuance.

    The transaction flow for the re-opening of Sukuk would be same as that of an approved structure of the fresh Issue which is re-defined briefly in the following few lines:

    At the time of reopening of Sukuk, a fresh Purchase Agreement would be executed between Pakistan Domestic Sukuk Company Limited (PDSCL) (on behalf of Investors) and GOP at an agreed purchase price for the purchase of a new/additional share in the asset.

    Subsequently PDSCL (on behalf of Investors) and GoP would enter into an Ijarah Agreement wherein the new / additional assets would be leased to GoP for a fixed period which would be ending on the scheduled maturity date of the first issue.

    The other agreements as mentioned in the Shariah Structure of first issue would also be executed simultaneously.

    However, the structure of reopening of Sukuk might differ from the structure of the first issue in ways as elaborated below.

    The distinguishing features of the re-opening structure are as follows:

    • For the first rental period the rental amount of the reopened Sukuk in absolute terms would be the same as the first issue. However, for subsequent period, the Rental Rate for the reopened Sukuk would be same as that of the first issue. Similarly, the maturity of the re-opened Sukuk would also be same as the first issue

    • For the determination of the Bid Price the Investors at the time of re-opening would take into consideration the known Rental Rate (in terms of benchmark), the remaining tenor of the issue and the higher first rental amount. The Purchase Price (at which settlement will take place) would have the following three components which can be referred to individually or collectively for the reporting purpose:

    i. Face value of Sukuk

    ii. Market premium/ discount

    iii. Price premium due to higher first rental

    The component (iii) mentioned above is based on the rental rate determined in the fresh auction and/or start of last rental period; hence will be known to the investor.

    The investors would bid in the auction on the price for re-opening of the Sukuk, which may be at premium or discount based on market conditions, considering component (i) and (ii) mentioned above.

    The component (iii) will be added to the Cut-off Bid Price (as per auction result) for determining purchase price at which settlement will take place.

    • On completion of the bidding, the Purchase Agreement for the purchase of new/additional asset between PDSCL (on behalf of the Investors) and GoP would be executed at purchase price.

    • The Sukuk would be recorded in the books of accounts at Absolute Auction Price i.e. the purchase price without any adjustment. ‘However, for reporting purpose the above identified 3 components of the Purchase Price may be recorded separately or collectively as required.

    • In case the date of Ijarah Agreement lies in between the two rental payment dates of the original issue, then the first rental period would be of a period less than 6 months. In this case the first rental amount for the reopened sukuk would be communicated to the lessee in absolute terms. This rental amount would be equal in absolute terms with the corresponding 6-month rental of the first/ previous issue.

    • The full amount of first rental of the re-opened sukuk would be booked as rental income by the Investors without adjustment.

    • On the expiry of the first lease period subsequent to re-opening of Sukuk an Asset Comingling Declaration’ shall be executed by PDSCL (as trustee and agent of investors) on the last day of first rental period to inform GoP about the combined proportionate share of investors in the underlying asset.

    • Subsequently, a single rental notice referring to Comingled Assets shall be executed for subsequent lease periods.

  • Women entrepreneurs to get loan up to Rs5 million: SBP

    Women entrepreneurs to get loan up to Rs5 million: SBP

    KARACHI: The State Bank of Pakistan (SBP) has decided to enhance the limit of loan for women entrepreneurs up to Rs5 million from Rs1.5 million in order to encourage women participation in the economy.

    In a statement issued on Tuesday the central bank said that it had enhanced the financing limit under its Refinance and Credit Guarantee Scheme for Women Entrepreneurs from Rs1.5 million to Rs5 million.

    The decision has been taken in light of feedback received from various stakeholders about current financing limit being insufficient to cover the financing needs of women entrepreneurs, the SBP said.

    This decision is in line with the government policy to support and revive economic activities in the country and SBP’s key objective of improving access to finance for priority segments including women entrepreneurs.

    Initially in August 2017, State Bank had introduced Refinance and Credit Guarantee Scheme for Women Entrepreneurs in underserved areas to promote financial inclusion and access to finance for women entrepreneurs in the country.

    Subsequently, the scope of scheme was enhanced to cover whole of Pakistan.

    Under this scheme, SBP provides refinance to participating financial institutions at 0 percent on their financing to women entrepreneurs at maximum end user rate of 5 percent. Moreover, 60 percent risk coverage is also available to the participating institutions.

    The enhancement in financing limit under SBP scheme is expected to increase financial inclusion of women since more women entrepreneurs are likely to be attracted for setting up of new businesses or for expanding the scope of their existing businesses by availing concessional financing under SBP scheme.

  • Remittances hit monthly record high: SBP

    Remittances hit monthly record high: SBP

    KARACHI: The inflow of workers’ remittances hit monthly record high of $2.77 billion in July 2020, State Bank of Pakistan (SBP) said on Monday.

    In July, workers’ remittances rose to US $ 2.768 billion. “This is the highest ever level of remittances in a single month in Pakistan,” the SBP said.

    In terms of growth, remittances increased by 36.5 percent over July 2019 (y/y) and 12.2 percent over June 2020 (m/m). Given the impact of Covid-19 globally, this increase in worker’s remittances is encouraging.

    In July, sizeable amounts of workers’ remittances were received from Saudi Arabia (US $ 821.6 million), UAE (US $ 538.2 million), UK (US $ 393.9 million) and USA (US $ 250.6 million).

    The growth rate in remittances compared to the same month in the previous year is around twice as high as the Eid-ul-Adha related seasonality typically experienced over the last decade.

    Several factors have likely supported the growth in remittances to date, including orderly exchange rate conditions and policy steps taken by the State Bank and the Federal Government under the Pakistan Remittance Initiative. These steps include reducing the threshold for eligible transactions from USD 200 to USD 100 under the Reimbursement of Telegraphic Transfer (TT) Charges Scheme, an increased push towards adoption of digital channels, and targeted marketing campaigns to promote formal channels for sending remittances.

    To improve data quality and better capture the source country of the remitter, the compilation methodology for ‘country wise’ workers’ remittances has been strengthened from this month. Therefore, country-by-country trends will be available on a consistent basis from August 2020 onwards.

    Importantly, the new data collection method does not affect the reporting of the level of remittances arriving into Pakistan.

    Importantly, the revised country shares under the improved data do not necessarily imply that remittances from one country have increased over another. Instead they demonstrate that the source country of remittances is being recorded more accurately now.

  • Foreign exchange reserves eases to $19.518 billion

    Foreign exchange reserves eases to $19.518 billion

    KARACHI: The liquid foreign exchange reserves of the country have declined by $45 million to $19.518 billion by week ended August 07, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $19.563 billion by week ended July 30, 2020.

    The official reserves of the SBP slipped by $73 million to $12.469 billion by week ended August 07, 2020 as compared with $12.542 billion a week ago.

    The central bank attributed the decline in foreign exchange reserves to scheduled payment of external debt.

    However, the foreign exchange reserves held by commercial banks increased by $28 million to $7.049 billion by week ended August 07, 2020 as compared with $7.021 billion a week ago.

  • Bank holiday announced

    Bank holiday announced

    KARACHI: State Bank of Pakistan (SBP) on Tuesday announced that the central bank will remain closed on Friday August 14, 2020 on account of Independence Day as declared by the government.

    In a circular issued to the presidents and chief executives of all banks, development financial institutions and microfinance banks, the SBP informed about the bank holiday.

  • Pakistan’s foreign exchange reserves up by $651 million

    Pakistan’s foreign exchange reserves up by $651 million

    KARACHI: The liquid foreign exchange reserves of the country increased by $651 million by week ended July 30, 2020 owing to foreign inflows, State Bank of Pakistan (SBP) said on Thursday.

    The total foreign exchange reserves of the country increased by $651 million to $19.563 billion by week ended July 30, 2020 as compared with $18.912 billion a week ago.

    The official foreign exchange reserves of the SBP increased by $566 million to $12.542 billion by week ended July 20, 2020 as compared with $11.976 billion a week ago.

    The SBP attributed the increase to the inflows from multilateral and bilateral agencies including US$ 505.5 million received from World Bank.

    The foreign exchange reserves held by commercial banks registered $85 million increase to $7.021 billion by week ended July 30, 2020 as compared with $6.936 billion a week ago.

  • SBP allows opening foreign currency accounts on declared assets abroad

    SBP allows opening foreign currency accounts on declared assets abroad

    KARACHI: The State Bank of Pakistan (SBP) on Thursday introduced a separate category of foreign currency account for non-resident and resident Pakistanis, who have assets abroad and declared with the tax authorities.

    The SBP in a circular said that in order to facilitate the non-resident Pakistanis as well as resident Pakistanis, who have assets abroad duly declared with Federal Board of Revenue (FBR), for investment in foreign currency denominated government registered debt securities on repatriable basis, it has been decided to introduce a separate category of foreign currency account.

    The SBP amended foreign exchange manual to introduce the new facilitation.

    According to the amendment:

    8A. Foreign Currency Value Account (FCVA)

    (i)   Authorized Dealers [banks, financial institutions] may open ‘ Foreign Currency Value Account’ of the following:

    a)  A non-resident individual Pakistani;

    b)  A resident individual Pakistani who has duly declared assets held abroad, as per wealth statement declared in latest tax return with Federal Board of Revenue (FBR).

    Operations of Foreign Currency Value Account shall be governed by the regulations set out below:

    ii) General Operations

    ADs shall clearly mark the account as resident or non-resident at the time of account opening.

    ADs shall allow operations in the account through the digital channels e.g. internet/mobile banking, ATM/ Debit cards. The ADs may also issue cheque book to the account holder, if required.

    ADs may issue supplementary ATM/Debit cards as per applicable laws /regulations.

    The resident individual desirous to open FCVA shall have to provide the declaration of his/her assets held abroad, including latest wealth tax statement filed with the FBR.

    The ADs are encouraged to provide online real time convertibility from FCY to PKR based on the request made by the account holder digitally for the eligible debits from the account. For the sake of transparency, the ADs shall indicate the exchange rate applicable to the transaction.

    ADs may allow non-resident Pakistanis to open the account jointly with other residents/non-residents, as per applicable laws/banking practices. These accounts should, however, be treated as non-resident accounts. However, a resident Pakistani, having foreign assets declared with FBR, may be allowed to open the account jointly with a resident only.

    In case the account becomes dormant due to non-operation, ADs shall devise a mechanism, aligned with applicable regulations, to reactivate the account digitally, in case of non-resident account. However, for resident FCVA, the ADs may reactivate the account digitally or otherwise in compliance with the applicable regulations and their own policy.

    Authorized Dealers will ensure ongoing monitoring of these accounts to mitigate ML/FT risk.

    iii)   Credits to the Foreign Currency Value Account.

    Remittances received from abroad through banking channels.

    Transfer of funds from his/her own NRP Rupee Value Account (NRVA) with the same AD.

    Profit/interest on the permissible investments made from the account

    Dis-investment proceeds from the permissible investments made from the account.

    Reversal of any incorrect debit in the account.

    iv)  Debits to the Foreign Currency Value Account.

    Investment in permissible securities, provided that the relevant laws/regulations permit such investment, as under:

    1. Government of Pakistan’s registered debt securities denominated in FCY only.

    2. Term deposit/remunerative product scheme, denominated in FCY, of the same AD.

    The funds for the above investments shall be transferred by the ADs only in the eligible products, through the instructions received from the account holder in this behalf.

    Transfer of funds to account holder’s own NRP Rupee Value Account (NRVA) with the same AD.

    Transfer to other FCY, PKR account and non-resident Rupee account – non-repatriable with any bank in Pakistan.

    Remittances and payments outside Pakistan to the extent of balances available in the account, without any prior approval from the bank or the State Bank.

    Cash withdrawal in foreign currency and equivalent local currency.

    Any payment in PKR to any person resident in Pakistan. However, any amount so paid shall not be allowed to be credited back into the account.

    Reversal of any incorrect /wrong credit entry.

    ADs shall submit a consolidated monthly statement of transaction(s) executed from FCVA on the attached format (Annexure-A) to [email protected] through their head/principle office by 7th of the ensuing month for each reference month.

    The ADs are encouraged to make necessary arrangement in their system to facilitate non-resident Pakistanis in opening and operating this account remotely through digital channels.

    ADs shall comply with all other applicable rules and regulations.

    ADs are advised to bring the above instructions to the knowledge of all their constituents for meticulous compliance.

  • Banks to observe normal working hours from August 03

    Banks to observe normal working hours from August 03

    KARACHI: State Bank of Pakistan (SBP) has said that the banks will observe normal working hours from August 03, 2020.

    In a statement issued a day earlier, the central bank said that the SBP will revert to normal office timings from Monday, August 03, 2020.

    The timings shall be:

    Monday to Thursday: 09:00am to 05:30pm (with prayer/lunch break from 01:30pm to 02:15pm)

    Friday: 09:00am to 06:00 pm (with prayer / lunch from 01:00pm to 2:30pm).

    The SBP directed all banks, development financial institutions (DFIs) and Microfinance Banks to ensure compliance of the above mentioned timings in letter and spirit.

    The bank timings were reduced due to coronavirus pandemic. However, shrinking number of infections in the country the official timings are reverting to normal.

  • Country foreign exchange reserves eases to $18.912 billion

    Country foreign exchange reserves eases to $18.912 billion

    KARACHI: The liquid foreign exchange reserves of the country eased by $135 million to $18.912 billion by week ended July 23, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves were at $19.047 billion by week ended July 17, 2020.

    The foreign exchange reserves held by the central bank also fell by $146 million to $11.975 billion by week ended July 23, 2020 as compared with $12.122 billion a week ago.

    The SBP attributed the decline in reserves to government payment for external sector.

    The reserves held by commercial banks witnessed meager increase of $12 million to $6.937 billion by week ended July 23 as against $6.925 billion a week ago.