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Tag: State Bank of Pakistan

  • SBP imposes penalty on five banks for violation

    SBP imposes penalty on five banks for violation

    KARACHI: State Bank of Pakistan (SBP) has imposed monetary penalty on five banks including Summit Bank, Habib Metropolitan Bank, MCB Bank, National Bank of Pakistan and Bank Alfalah for violating regulatory environment.

    The central bank on Tuesday issued significant enforcement measures by imposing monetary penalty on banks for violating rules, regulations and other regulatory environment.

    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 six months (July – December) 2019 increased to Rs1,569 million.

    According to the highlights of significant enforcement actions by the SBP during December 2019, the central bank imposed Rs219.138 million as monetary penalties.

    The central bank on December 11, 2019 imposed penalty amount of Rs17.422 million on Summit Bank Limited for procedural violations in the area of foreign exchange operations.

    “Monetary penalty was imposed on deficiencies in the area of foreign trade operations,” the SBP said.

    The central bank on December 11, 2019 imposed an amount of Rs34.578 million on Habib Metropolitan Bank Limited for violating CDD/KYC.

    “In addition to penal action, the bank has been advised timelines to bring improvements in its systems/controls to avoid recurrence of such violations in future.”

    The SBP on December 12, 2019 imposed penalty of Rs49.499 million on MCB Bank Limited for procedural violations in the area of foreign exchange operation.

    “Monetary penalty was imposed on deficiencies in the area of foreign trade operations.”

    The SBP on December 18, 2019 imposed monetary penalty of Rs21.544 million on National Bank of Pakistan for violating CDD/KYC.

    “In addition to penal action, the bank has been advised timelines to bring improvements in its systems/controls to avoid recurrence of such violations in future.”

    The SBP on December 23, 2019 imposed monetary penalty of Rs96.095 million on Bank Alfalah Limited for violating KYC/CFT.

    “In addition to penal action, the bank has been advised to conduct an internal inquiry on certain breaches/violation of regulatory requirements. Further, the bank has been advised to strengthen its process related to KYC/CDD, in order to avoid recurrence of such violations in future.”

  • Rs40,000 bearer prize bonds allowed conversion up to March 31

    Rs40,000 bearer prize bonds allowed conversion up to March 31

    KARACHI: People can surrender Rs40,000 denomination bearer prize bonds by March 31, 2020 and exchange the amount with registered bonds or other given options.

    The SBP stopped the issuance of Rs40,000 denomination prize bonds on June 24, 2019 and given deadline of March 31, 2020 for exchange the such denomination with other registered mode of investment.

    Since the announcement of the central bank, the holders of bearer bonds had surrendered around Rs238 billion till November 2019.

    The total investment Rs40,000 denomination bearer bonds peaked at Rs258 billion by May 2019, which reduced to around Rs20 billion by November 2019.

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

    The SBP in a notification issued in June 2019 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:

    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 copy 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.

  • Overseas Pakistanis send $11.4 billion during first half

    Overseas Pakistanis send $11.4 billion during first half

    KARACHI: Overseas Pakistanis have sent $11.4 billion during first half (July – December) 2019/2020, which is 3.31 percent higher than remittances received in the same period of the last fiscal year, State Bank of Pakistan (SBP) said on Saturday.

    The central bank said that overseas Pakistani workers remitted $11.4 billion in the first half (July to December) of FY20, showing a growth of 3.31 percent compared with $11.03 billion received during the same period in the preceding year.

    During December 2019, the inflow of workers’ remittances amounted to $ 2097.23 million, which is 15.25 percent higher than November 2019 and 20 percent higher than December 2018.

    The country wise details for the month of December 2019 show that inflows from Saudi Arabia, UAE, USA, UK, GCC countries (including Bahrain, Kuwait, Qatar and Oman) and EU countries amounted to $ 472.94 million, $ 427.56 million, $ 357.45 million, $ 324.57 million, $ 205.73 million and $ 56.42 million respectively compared with the inflow of $ 414.59 million, $ 351.19 million, $ 276.29 million, $ 267.79 million, $ 174.42 million and $ 47.48 million respectively in December 2018.

    Remittances received from Malaysia, Norway, Switzerland, Australia, Canada, Japan and other countries during December 2019 amounted to $ 252.56 million together as against $ 216.35 million received in December 2018.

  • Banks sign pact for setting up restructure company

    Banks sign pact for setting up restructure company

    KARACHI: About 10 banks have signed an agreement on Friday to establish Pakistan Corporate Restructuring Company Limited (PCRCL).

    The Presidents and representatives of Habib Bank, National Bank of Pakistan, United Bank, MCB Bank, Allied Bank, Meezan Bank, Bank Al-falah, Bank Al-Habib, Habib Metropolitan Bank and Faysal Bank signed today the shareholders’ agreement for the establishment of Pakistan Corporate Restructuring Company Limited (PCRCL) at State Bank of Pakistan (SBP), Karachi in the presence of Governor, SBP.

    Under the provisions of Corporate Restructuring Companies Act 2016 and with an initial Paid-up Capital of Rs500 million, the above banks have decided to establish the Corporate Restructuring Company (CRC), which is first such type of company in Pakistan.

    The objectives of the CRC are aligned with the initiatives of the Government of Pakistan to revive the sick industrial units.

    It would be pertinent to mention here that the CRCs, under CRC Act 2016, are empowered to acquire, restructure and resolve the Non-Performing Assets (NPAs) of financial institutions and thereby reorganize and revive the commercially or financially distressed companies.

    The CRCs are specialized institutions with skillset in NPL resolution and corporate restructuring.

    These companies through aggregation of NPLs, will be well positioned to negotiate with the sick units and finalize the restructuring of loans vis-à-vis multiple lenders negotiating simultaneously with the borrower.

    It is expected that CRCs will evolve as vibrant economic agent, contributing towards the revival of sick industrial units and generating employment opportunities.

    Total Non-Performing Loans of the banking industry stand at Rs758 billion as of September 30, 2019. Total NPL amount includes the loans against such sick industrial units, which can be revived and rehabilitated, provided the NPLs are restructured promptly and the sponsors of the sick units also inject the fresh equity to demonstrate their willingness and commitment in the rehabilitation of sick units.

    The Securities and Exchange Commission of Pakistan (SECP) has granted the license to PCRCL on December 31, 2019. State Bank of Pakistan appreciates the initiative of above banks and the supportive role of the SECP in incorporation and licensing of PCRCL.

    SBP is also engaged with the Federal Government to introduce amendments in the relevant laws and to strengthen the Banking Courts in order to take forward Government’s agenda of institutional reforms.

  • Exchange rate determines by market forces: SBP

    Exchange rate determines by market forces: SBP

    KARACHI: State Bank of Pakistan (SBP) on Friday said that exchange rate has been determined by market forces on the basis of demand and supply.

    In a tweet message the central bank said that exchange rate is determined by market forces of demand and supply and is a reflection of existing BOP position. Forward exchange rates are determined by the existing spot rates and #Interest rate differentials of the relevant period i.e. time value of money.

    “Forward exchange rates (ER) are not a forecast of future exchange rates.”

    IMF Report on Pakistan includes ER assumptions which are not predictions. Under the IMF-supported program there is no agreed target level for exchange rate. The exchange rate is market determined, the SBP said.

    The IMF had earlier tweeted about the inclusion of exchange rate assumption in its published Staff Report on #Pakistan.

  • Bank deposits increase to record high of Rs14.63 trillion

    Bank deposits increase to record high of Rs14.63 trillion

    KARACHI: The deposits of banking system have increased to all time high of Rs14.63 trillion by December 2019, according to data released by State Bank of Pakistan (SBP).

    The deposits have increased by 9.58 percent to Rs14.63 trillion by December 2019 as compared with Rs13.35 trillion in the same month of the last year.

    Analysts at Topline Securities on Friday said that the deposit growth came in better than last year’s growth of 8 percent, however remained lower than the 5-year average growth of 12 percent.

    Banks’ focus for deposit mobilization remained more towards investments compared to advances during the year given the high yields on government papers. As a result, investments grew by 16 percent to Rs8.8 trillion in 2019, with IDR increasing to 60 percent in 2019 from 57 percent in 2018.

    On the other hand, advances grew by just 3 percent in 2019 hindered by high interest rates and slowdown in overall economic activity. Over the past 3-years, advances have grown at an average of 19 percent.

    Interestingly to note, advances growth remained more subdued in 9M2019 with growth of just 1 percent YTD, however somewhat picked up in the last quarter to close at Rs8.80 trillion, they said.

    As a result, ADR dropped to 56 percent in 2019 from 59 percent in 2018.

    Sector-wise, Textiles (12.5 percent), Energy (17 percent), Individuals (8.8 percent) and Agribusiness (8.1 percent) accounted for 46 percent of total advances.

    As per the available 9M2019 numbers, advances to textile sector declined the most by 6.5 percent (Rs75 billion), while advances to the energy, individuals and agribusiness sectors increased by Rs34 billion, Rs19 billion and Rs4 billion, respectively.

    The Currency in Circulation (CIC) in 2019 registered an increase of 19 percent to Rs5.39 trillion. Additionally, CIC as a percentage of M2 clocked in at 29 percent above the historic 5-year average of 27 percent.

    Going forward, we see deposit growth in the range of 10-12 percent and advances growth of 11-13 percent in 2020 at the behest of economic recovery and an expected decline in interest rates.

    We are presently Market-Weight on the banking sector with Meezan Bank (MEBL) our top pick. We also like Habib Bank (HBL) and Bank Al Falah (BAFL).

  • Foreign exchange reserves flat at $18.084 billion

    Foreign exchange reserves flat at $18.084 billion

    KARACHI: The liquid foreign exchange reserves of the country was flat at $18.084 billion by week ended January 03, 2020 as compared with $18.081 billion a week ago, the State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves held by the central bank increased by $14.3 million to $11.503 billion by week ended January 03, 2020 as compared with $11.489 billion by week ended December 27, 2019.

    The reserves held by commercial banks however declined by $10.9 million to$6.581 billion by week ended January 03, 2020 as compared with $6.592 billion a week ago.

  • Higher inflation jacks FBR’s revenue collection up: SBP

    Higher inflation jacks FBR’s revenue collection up: SBP

    KARACHI: Higher inflation has jacked up the revenue collection for Federal Board of Revenue (FBR) besides other factors including increase in tax rates and reinstatement of tax on telecom services, State Bank of Pakistan (SBP) said on Monday.

    The SBP in its quarterly report on state of economy for July – September 2019/2020 said that the overall FBR taxes grew 15.2 percent in first quarter of 2019/2020, compared to the 8.8 percent rise noted in the same quarter of the last fiscal year.

    This higher growth can be attributed to: (i) an increase in sales tax rates; (ii) reinstatement of taxes on telecom services; (iii) an upward revision of tax rates on various salary slabs; (iv) increase in interest rates and higher tax on profit on debt;3 (v) upward revision in the federal excise duty (FED) rates; and (vi) the abolishment of the zero rating regime on five export-oriented sectors.

    “In addition to these measures, the impact of higher inflation also boosted revenue mobilization.”

    For 2019/2020, the SBP’s projections at the start of the year (July 2019) clocked in at an elevated range of 11-12 percent. Not only was this range higher than previously projected, but it was also in excess of the medium-term target of 5-7 percent.

    Despite this improvement, the FBR managed to achieve only 17.3 percent of the annual target of Rs 5,555.0 billion for 2019/2020. “This means that tax revenues would require a substantially higher growth in the remaining 9 months of the year to achieve the full year target.”

    Moreover, import-related taxes, representing nearly half of FBR taxes, would remain under stress due to the ongoing declining trend in imports. Dutiable imports, in particular, declined sharply in the first quarter of 2019/2020.

    Encouragingly, the fiscal authorities have introduced some initiatives to facilitate business and individual tax payers and to broaden the tax base.

    For instance, in order to provide hassle-free refunds to exporters, the FBR has introduced the Fully Automated Sales Tax e-Refund (FASTER) system for tackling refund claims within 72 hours.

    The FBR has also launched a mobile application, “FBR Tax Asaan,” to facilitate taxpayers in paying sales tax and claiming refunds.

    In addition, video tutorials are prepared and uploaded online to guide taxpayers in filing their income tax returns.

    These efforts to simplify and streamline the taxation mechanism have also contributed to the improvement in Pakistan’s ranking in the World Bank’s Ease of Doing Business: the digitization of tax collecting procedures was cited as one of the drivers of the improvement in the country’s ranking. In addition, the government has continued its drive to increase documentation in the economy.

    However, businesses are resisting some of these documentation measures, such as the CNIC condition on business-to-business (B2B) and business-to-consumer (B2C) transactions.

  • Achieving 4% GDP growth target unlikely: SBP

    Achieving 4% GDP growth target unlikely: SBP

    The State Bank of Pakistan (SBP) issued a cautionary statement on Monday, stating that achieving the targeted 4 percent GDP growth for the current fiscal year is unlikely.

    (more…)