SBP – Page 10 – AsiaNet-Pakistan

January 10, 2020

Banking industry join hands to create Pakistan Corporate Restructuring Company Limited

Karachi, January 10, 2020 (PPI-OT): 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.

For more information, contact:
Chief Spokesman,
State Bank of Pakistan (SBP)
Central Directorate
I.I. Chundrigar Road, Karachi, Pakistan
Tel: +92-21-111-727-111
Tel: +92-21-39212562
Fax: +92-21-39212433 – 39212436
Email: chief.spokesperson@sbp.org.pk
Website: www.sbp.org.pk

January 7, 2020

Banks to electronically submit foreign exchange related cases through SBP Online Portal

Karachi, January 07, 2020 (PPI-OT): Two core departments of State Bank of Pakistan (SBP) related to forex operations i.e. Exchange Policy Department (EPD) and Foreign Exchange Operations Department (FEOD) have recently arranged series of detailed presentation on foreign exchange operations and ‘SBP Online Portal’. After its formal launch this month, banks will electronically submit foreign exchange related cases to SBP. During the presentation, the stakeholders were given an overview about working of the online portal. In order to keep the clients apprised about the status of cases submitted to SBP, an email containing system-generated unique case number will be sent to the clients on the email address provided by banks at the time of case submission.

Furthermore, the updated position of their case can also be accessed on SBP website through unique case number assigned to each case. Managing Director, SBP Banking Services Corporation (BSC), Mr. Muhammad Ashraf Khan in his welcome address underlined the importance and key role of business sector in economic revival and future growth of the country. He also highlighted the key initiatives taken by SBP to digitalize the processes and move towards paperless environment, which will ultimately benefit the businesses of the country.

Director, EPD informed the participants about recent policy measures taken by SBP to promote the business sentiments in the country. He explained that current measures are in continuation of SBP’s efforts to ease the earlier restrictions as well as to facilitate and support ease of doing business in view of the improved economic outlook. It may be mentioned here that in order to create awareness among the business community about the foreign exchange operations and to apprise them about the key developments at State Bank of Pakistan (SBP) related to digitalization and ease of doing business, awareness sessions were conducted by SBP at Lahore, Faisalabad, Gujranwala and Sialkot.

The subject sessions were attended by more than 150 officials from different companies nominated by various chambers and associations including Pakistan Business Council, Overseas Chamber of Commerce and Industry and local chamber of commerce and industry of respective cities. The presentation was followed by interactive question and answer sessions.

Participants raised queries related to various aspects of foreign exchange operations including exchange rate stability, SBP’s guidelines regarding trade based money laundering (TBML) and government subsidy schemes for exporter, which were answered by the SBP management.

At the conclusion of the session, Managing Director, SBP BSC thanked the participants for their concrete and specific suggestions which would help further improve the ‘SBP Online Portal’. Previously, an awareness session was also conducted in Karachi. Furthermore, similar sessions have also been planned for other cities in coming weeks.

January 6, 2020

State Bank of Pakistan releases First Quarterly Report on the State of Economy

Karachi, January 06, 2020 (PPI-OT): The State Bank of Pakistan today released its First Quarterly Report on the State of Pakistan’s Economy for FY20. According to the report, Pakistan’s economy moved progressively along the adjustment path during the first quarter of FY20. The macroeconomic stabilization process picked up momentum with the initiation of the IMF’s Extended Fund Facility program: the SBP continued to keep the monetary policy consistent with the medium-term inflation target; whereas, consolidation efforts were visible on the fiscal front. Furthermore, a market-based exchange rate system was implemented, to which the interbank foreign exchange market adjusted relatively well. Notably, the government avoided deficit monetization, including rollover of SBP debt and actively pursued documentation efforts.

According to the report, the payoff from ongoing stabilization efforts has become visible in the form of declining twin deficits. The current account deficit in Q1-FY20 fell to less than half of last year’s level, primarily on the back of significant import compression. Owing to low unit prices, exports growth remained low. However, in volumetric terms exports witnessed noticeable growth. On the fiscal front, the overall deficit remained lower as compared to the same period last year, and the primary balance recorded a surplus for the first time in 7 quarters. This improvement was made possible through both revenue enhancing and expenditure control measures. Importantly, development expenditures witnessed a sharp growth of 30.5 percent during the quarter.

In case of GDP, the report noted that the revised estimates for the kharif season suggest that the production of important crops is likely to fall short of target for FY20. The large-scale manufacturing sector witnessed a decline of 5.9 percent in Q1-FY20 on YoY basis. This contraction was broad-based, as construction-allied industries, petroleum and automobile industries continued on downward path. In contrast, previous corrections in the exchange rate helped the export-oriented industries, as reflected in the relatively better performance of textiles and leather. On balance, however, achieving the real GDP growth target of 4 percent appears unlikely.

The report further highlighted that the average headline CPI inflation reached 11.5 percent in Q1-FY20, extending the steep upward trend persistent since the beginning of FY19. Not only this level was double the inflation observed in the same quarter last year, it was also the highest level of quarterly inflation since Q4- FY12. This outcome was attributed to the lagged pass-through of the exchange rate depreciation towards the end of FY19; rationalization of energy tariffs; and revenue-led fiscal measures taken in the budget 2019-20, which included the imposition of federal excise duty on a number of consumer items, and the ending of the zero-rating regime for export-oriented sectors and of the reduced GST regime on sugar.

On the external front, the balance of payments continued to improve during Q1-FY20. Beside significant improvement in trade deficit, and with the receipt of the first EFF tranche from the IMF and increase in foreign portfolio investment, the current account gap was plugged by the available financial flows. These inflows also helped the SBP to increase its foreign exchange reserves by US$ 656.2 million and reduce its net forward liabilities by US$ 1.3 billion during the quarter.

Going forward, the report emphasizes, it is vital that the government continues to address the underlying structural vulnerabilities and put the economy on a balanced and sustainable growth trajectory. Furthermore, there is a need to build on gains on the ease of doing business front. Side by side, it is equally important for firms to leverage on the facilitative policies, particularly the export-promotion incentives, and gain a foothold in the global value chains (GVCs). As mentioned in a separate special section in the report, increased participation in the GVCs would not only align the country’s product mix with trends in global demand, but also put the exports on a sustainable growth path.

December 28, 2019

State Bank of Pakistan abolished the Fee on Payment of Government Taxes through ADCs and OTC

Karachi, December 28, 2019 (PPI-OT): The State Bank of Pakistan (SBP) has announced to abolish the fee on payment of government taxes and duties through Alternate Delivery Channels (ADCs) and Over-the-Counter (OTC) from January 1, 2020. Presently, the taxpayers pay Rs.10 to Rs.50 per transaction for payment of taxes through ADCs depending on the amount of tax paid, and Rs.50 per transaction for the payments through OTC. This fee will be borne by SBP instead of taxpayers from January 1, 2020. The change has been notified through SBP FD Circular No.4 of 2019 dated December 27, 2019.

The decision is part of SBP efforts to promote digital payments and is likely to attract larger number of taxpayers towards digital payment of government taxes and duties. The mechanism for online collection of taxes and duties was introduced in March 2018 in collaboration with Federal Board of revenue (FBR) with the primary objective of taxpayers’ facilitation.

The tax payers can pay their taxes from the convenience of their homes or offices using internet/mobile banking facilities, through 14000 plus ATMs or any of the 15000 plus branches of commercial banks across the country. So far Rs.346 billion has been collected through this mechanism. The collections through the ADCs/OTC modes are likely to grow exponentially as the awareness about the mechanism improves.

SBP is also running an awareness campaign to familiarize the taxpayers, tax bar associations, chambers of commerce, clearing and forwarding agents and business community at large about the ADC and OTC payment mechanisms. Seminars and awareness sessions are being arranged across the country through the field offices of SBP Banking Services Corporation.

The first such seminar was held in Karachi on December 26, 2019, which was attended by corporate taxpayers, representatives from chamber of commerce, trade associations, commercial banks, tax bars and audit firms. The participants appreciated SBP efforts for promotion of digital payments and said that such sessions are critically important for enhancing public awareness and allaying their fears and apprehensions about digital payments.

December 27, 2019

Opening of Branches to facilitate the collection of Government Receipts / Duties / Taxes on December 31, 2019

Karachi, December 27, 2019 (PPI-OT): In order to facilitate the collection of Government receipts / duties / taxes, it has been decided that authorized branches of National Bank of Pakistan (NBP) as well as field offices of SBP Banking Services Corporation (SBP-BSC) will observe extended banking hours upto 9:00 P.M. on December 31, 2019 (Tuesday).

Accordingly, NBP branches will settle their transactions with respective SBP-BSC field offices on the same day i.e. December 31, 2019 for which purpose a special clearing has been arranged at 7:00 P.M. by the NIFT. All banks are, therefore, advised to keep their concerned branches open on December 31, 2019 (Tuesday) till such time that is necessary to facilitate the special clearing for Government transactions.

December 26, 2019

SBP hosted SAARC Seminar on “Emerging Trends in Good Governance of Banking Sector in SAARC Region”

Karachi, December 26, 2019 (PPI-OT): Dr. Reza Baqir, Governor, State Bank of Pakistan during his inaugural address in a seminar on “Emerging Trends in Good Governance of Banking Sector” in SAARC countries highlighted the importance of efficient and robust governance structure in the banking industry for sustainable economic growth of a country. Besides Pakistan, the captioned seminar was attended by delegates from Afghanistan, Bangladesh, Bhutan, Sri Lanka and Nepal. While addressing to the participants from SAARC member countries at National Institute of Banking and Finance (NIBAF), Islamabad, Dr. Baqir said that corporate governance is corner stone for the success of any business entity.

However, for financial institutions, the importance of corporate governance becomes even more critical as banks are highly leveraged entities facing a wide range of risks in their day-to-day operations. Therefore, the scope and approach to banks’ corporate governance requires a different and specific regulatory framework not only because of their leveraged business model but also due to diverse ownership and group structure.

Dr. Baqir emphasized that boards of the banks with more gender diversity or female representatives and diversified experience in the fields of IT, risk management, finance and economics can play a more effective role in achieving the organization’s overall strategic objectives. He also highlighted that concentration of banks’ shareholding to a few families and their nominees on the Boards is against the good governance practices and may adversely impact the effectiveness of the Board. Dr. Baqir further added that independent directors play an important role in banks by exercising their independent judgement and protect the interest of minority shareholders.

He also mentioned that corporate governance practices in public sector banks are generally weak and less transparent due to likely political intervention in the affairs of these banks. Therefore, there is a need to rationalize the shareholding structure of these banks to minimize the undesirable role of governments in their affairs. Remuneration practices of Board members and compliance of AML/ CFT regime are also significantly important areas where the Boards need to assume enhanced responsibilities to meet the international best practices.

He also cited few of SBP’s efforts such as Guidelines on Performance Evaluation of Board of Directors, Enterprise Technology Governance and Risk Management Framework, Governance Framework for Banks’ Overseas Operations, Compliance Risk Management and Internal Audit Function Guidelines and Streamlining the existing regulatory requirements on remuneration of Boards and management. In his closing remarks, he suggested that Terms of reference (ToRs) of SAARCFINANCE network may be revisited to align the same with emerging challenges being faced by central banks in the region.

He further added that expanding business arenas, globalization of financial activities, emergence of new financial products and increased level of competition have not only opened up opportunities but also increased the potential risks from such developments. Therefore, such regional forums are very helpful in facilitating knowledge exchange and ongoing collaboration for resolution of region specific issues posing potential risks to the banking sectors in SAARC countries.

The event was also attended by Dr. Ishrat Husain, Adviser to Prime Minister on Institutional reforms and Austerity and Ms. Tania Adruis, Head of Digital Pakistan Initiative. Both the keynote speakers emphasized upon further strengthening the culture of good corporate governance to achieve the desired strategic objectives. The second day of the seminar largely focused on governance practices in the SAARC region wherein foreign delegates and SBP presented their respective country practices in the subject area.

December 23, 2019

State Bank of Pakistan grants approval to NIFT’s e-Commerce Payment Gateway “NIFT ePay” for Pilot Launch

Karachi, December 23, 2019 (PPI-OT): The State Bank of Pakistan (SBP) has recently granted approval for commencement of pilot operations of NIFT’s (National Institutional Facilitation Technologies) e-Commerce Payment Gateway called “NIFT ePay”. This makes NIFT, the first domestic and account-based “e-Commerce Payment Gateway” to get an approval for the pilot launch under the PSO/PSP rules.

NIFT ePay’s primary focus is to execute interoperable and secure digital commerce payments in Pakistan using details of bank account or wallet. This provides an opportunity for the customers who don’t have conventional instruments for digital payments such as Debit or Credit Card to conduct e-commerce transactions directly through their transactional accounts and wallets. These customers may maintain their account/wallets with any member financial institutions connected to NIFT ePay which gives these financial institutions an opportunity to offer an interoperable digital payments platform for all their collection mandates through an account-based local payment gateway.

NIFT is an existing Payment System Operator/Provider (PSO/PSP) offering nation-wide cheque clearing services to financial organizations across Pakistan. NIFT has been providing consistent services to the financial industry over the past two decades and it’s now creating reliable, secure, and interoperable payments systems that enable different digital payments use cases in Pakistan. For this purpose, NIFT ePay envisions to enhance its gateway to digitize payments for corporates and governments through its “Contextual Funds Transfer (CFT)” and create interoperability for many other use-cases, while aligning itself with the ‘Digital Pakistan’ program by Government of Pakistan and the ‘National Payment Systems Strategy’ and ‘MPG’ initiatives being undertaken by State Bank of Pakistan.

NIFT has collaborated with TPS for implementing the NIFT ePay’s complete technology stack. TPS is a leading payments technology company fostering the financial technology ecosystem in the country for accelerating innovation in the financial service landscape. NIFT ePay’s launch is the first step towards creating an inclusive environment which will not only offer fully agnostic aggregation of digital payments methods but will also provide a secure and open access to start-ups, fintechs, retailers, large scale corporates, SMEs and Government Institutions to digitize their collections use-case, disrupting the digital financial services play in the country

Speaking on this milestone, Mr. Haider Wahab, CEO NIFT remarked,

I would like to extend our sincere thanks for the continuous support provided by the SBP throughout our efforts for promoting digital financial services in Pakistan through NIFT ePay. I believe that this approval serves as a key step towards the promotion of new payments-related use cases resulting in uptake of digital commerce payments in Pakistan. Enabling interoperable payment use cases of PSOs and PSPs will further streamline the digital payments landscape in Pakistan. NIFT looks forward to playing a contributory role in digitizing payments and digital financial services in Pakistan.

Mr. Shahzad Shahid CEO TPS also shared his views on this approval and said,

Digital Pakistan can be built on digital railroads that allow secure, contextual, and cost-effective payments by individuals and businesses directly from the account and digital wallets for e-commerce purchases, Government services, and all other payment needs. TPS is proud to be part of this strategic initiative of NIFT and we aim to contribute to developing a paperless economy through digital payments.