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Showing posts with label SBP. Show all posts
Showing posts with label SBP. Show all posts

Sunday, March 29, 2020

Pakistan’s banks to facilitate customers to combat COVID-19

By Syed Sajid Aziz
(Pakistan News & Features Services)

The banks operating in Pakistan have been allowed to facilitate their customers in the wake of Coronavirus (COVID-19) pandemic, having rocked the world. The circular in this regard was issued by the country’s central bank on March 28. 

The State Bank of Pakistan (SBP), in an attempt to combat the potential spread of the pandemic, has advised for limiting person-to-person interactions and to provide ease of services to the customers of the various banks. 

Now Direct Cheque Deposit Facility is being introduced under which a crossed cheque may be presented by payee/beneficiary directly into the paying/drawee bank instead of their bank branches as per the existing practice. 

Doorstep Cheque Collection Facility has also been launched in which Banks/MFBs may make arrangements to collect cheque from registered addresses of their customers upon their request. 

Drop box Cheque Collection Facility, under which customers may drop their cheques in drop boxes of their banks, will be installed in selected branches while the banks have also be authorized to allow their Corporates/Priority customers to send them the scanned image of the cheque along with relevant details of the Beneficiary either through registered emails or through mobile Apps of their banks to push funds from their accounts to the payee bank. 

The banks are being encouraged to implement additional risk mitigating measures as per their internal policies while offering these services to their customers. 

Further, in order to minimize person-to-person interaction, Banks/MFBs may also make arrangements with the Clearing House (NIFT) for clearing their cheques through Image Based Clearing (IBC) functionality as per the agreed SOPs between NIFT and banks.

Thursday, March 5, 2020

SBP Governor foresees better economic future


By Abdul Qadir Qureshi
(Pakistan News & Features Services)

The State Bank of Pakistan (SBP) Governor, Dr Raza Baqir, assured the members of the English Speaking Union of Pakistan (ESUP) as well as others attending the meeting at Beach Luxury Hotel, Karachi, on March 2 that the economic conditions of the country were far better off in many areas as compared to the past.

While the audience, having gathered much before the arrival of the chief guest, stood divided in believing the contents of the speech, the SBP Governor didn’t mind replying to tough questions in the interactive session. 

Aziz Memon, the livewire President of the ESUP, showered Dr Raza Baqir with praise while introducing him formally before inviting the distinguished speaker to deliver the keynote address. At the end of the session, the SBP Governor was presented a shield by the ESUP officials.

Dr Raza Baqir, having worked at key positions in the past, including a stint with the International Monetary Fund (IMF), described the functions of the SBP, clarifying that the collection of taxes was not its responsibility. He had taken over as the Governor of the SBP last year. 

“We regulate banks in order to minimize the incidents of bad debts and write-offs. We oversee the safety of the payments, which means looking after the transactions between banks and parties. Besides overseeing the foreign exchange market, we also oversee Pakistan’s foreign reserves and set the policy rate of the SBP, which in turn helps to set market rates,” he informed. 

The SBP Governor reminded the audience that the country’s exchange rate and reserves were falling alarmingly last year but the situation was brought under control by implementing some tough measures. 

“The reserves were down to $7 billion at which point we decided to change the exchange rate system and let the market decide the exchange rate. It’s a concept that many emerging markets have been using for years but it was new for Pakistan. There were a lot of apprehensions and criticism when we adopted market-based exchange rate. But those critics and experts who predicted dollar to go sky high have become silent,” Dr Raza Baqir shared.

Quoting facts and figures, he was of the opinion that the country’s economy could have been in shambles if, the difficult reforms had not been undertaken. 

He highlighted the importance of foreign exchange reserves, reckoning that it was the single most important determinant of a country’s economic sovereignty. 

The SBP Governor stated that the monetary policy committee of the central bank had to increase the interest rates because the rise in inflation was rising. 

“One of the factors of the increasing inflation was also the pressure on rupee, the depreciation of the rupee that had occurred over the preceding months had caused the prices to rise. The last rate increase was done in July when the inflation was around 8 to 9 percent. The inflation has now gone upto 12 percent but we haven’t increased the interest rates since July last,”he added. 

Dr Raza Baqir announced that the SBP, working on reducing the reliance on printed currency notes, will soon be launching a couple of innovative products to facilitate digital transactions on a massive scale.

Saturday, June 22, 2013

State Bank reduces policy rate by 50 basis points to nine percent

Yaseen Anwar, SBP Chief
By Mohammad Nazakat Ali
(Pakistan News & Features Services)

The State Bank of Pakistan (SBP) has decided to reduce the policy rate by 50 basis points to bring it down to 9 percent with effect from June 24, 2013.
This was decided by the Central Board of Directors of the State Bank of Pakistan at its meeting held under the chairmanship of SBP Governor, Yaseen Anwar, in Karachi on June 21.
According to the Monetary Policy Decision, the SBP has decided to place a higher weight to declining inflation and low private sector credit relative to risks to the balance of payments position.
Following is the complete text of the Monetary Policy decision:
“There has been a discernible positive change in sentiments post May 2013 elections because of clarity on the political front. The change in the behavior of banks in auctions of government securities and reaction of stock market are two examples. Importantly, there has been a considerable improvement in SBP conducted surveys of consumer confidence, expected economic conditions, and inflation expectations. The absence of foreign financial inflows and high fiscal borrowings from the banking system, however, remain formidable economic challenges, especially for monetary policy. Similarly, power shortages and security conditions continue to be strong impediments to growth.”
“An almost continuous and broad based deceleration in inflation over the last year has had a favorable impact on inflation outlook – a key variable in monetary policy decisions.  In May 2013, the year-on-year CPI inflation was 5.1 percent while trimmed measure of core inflation was 6.7 percent; the lowest levels since October 2009. The average CPI inflation for FY13 is expected to be at least two percentage points below the target of 9.5 percent.”
“However, in the latest budget the government has announced an increase of 1 percentage point in the General Sales Tax (GST), from 16 percent to 17 percent, and changes in the tax structure for some goods and services. In addition, the government is considering a phase-wise upward adjustment in electricity tariff. The exact magnitude and timing of this adjustment is yet to be decided. Therefore, there is a risk that average inflation for FY14 could exceed the announced target of 8 percent for the year. However, aggregate demand in the economy is expected to remain moderate, which could have a dampening effect on inflation.”
“A reflection of the current declining trend in inflation can be seen in the muted real economic activity, especially private investment expenditures. Beset by energy shortages and law and order conditions, the GDP growth has struggled to ameliorate in the last few years and this year was no exception. The provisional estimate of GDP growth for FY13 is 3.6 percent, which is lower than the 4.3 percent target for the year. Similarly, private fixed capital formation has decreased by 1.8 percent – the fifth consecutive year of a declining trend. Although there has been an encouraging uptick in the growth of Large Scale Manufacturing (LSM) sector, 4.8 percent in April 2013, it is too early to term it as an emerging trend.”
“A declining inflation trend and below potential GDP growth make a case for further reduction in the policy rate. The argument is twofold. First, the SBP has been giving a relatively high priority to inflation in its monetary policy decisions over the last few years. Thus, continuing to do so would indicate consistency in the monetary policy stance. Second, without further reduction in the policy rate, the real interest rate – policy rate minus expected inflation – would increase due to declining inflation. High real interest rates are not helpful for supporting private investment in the economy.”
“However, as indicated in the last monetary policy decision, the current balance of payments position and a structural imbalance in fiscal accounts suggest vigilance. The stress in the balance of payments position was a prime consideration in maintaining the policy rate at 9.5 percent in the last two monetary policy decisions. The basic argument has been that the return on rupee denominated assets needs to be sufficiently attractive to discourage speculative demand for dollars.”
“There is no significant revision in the assessment of the balance of payments position since the last monetary policy decision. The external current account deficit is expected to remain manageable, around 1 percent of GDP for FY13, signifying very low risk from this source for the external accounts. The real challenge continues to emanate from the lack of financial inflows. Let alone finance the small current account deficit, there has been a cumulative net capital and financial outflow of $143 million during the first eleven months of the current fiscal year. Add to this the on-going payments of IMF loans and it becomes clear that the pressure on foreign exchange reserves has not abated. As of 14th June 2013, SBP’s foreign exchange reserves stand at $6.2 billion.”
“There are two developments, however, that are worth highlighting. First, there has been a noticeable change in sentiments, as highlighted above, that can potentially have a favorable influence on private financial inflows. Other than the overall economic outlook, investment decisions do take into account the relative political certainty that determines the continuation of economic policies for some time in the future. Second, declining inflation has increased the relative real return on rupee denominated assets. This could provide some room for downward adjustment in nominal returns to cater to broad macroeconomic considerations despite external account concerns.”
“In this context, a lot depends on the fiscal outlook. The fiscal deficit for FY13 has been estimated to reach 8.8 percent of GDP, which is considerably higher than earlier projections. The source of deviation is structural and well known – low tax revenues due to absence of meaningful tax reforms and continuation of untargeted subsidies without comprehensively addressing the energy sector problems. For FY14, the federal government has announced a provisional estimate of 6.3 percent of GDP. “
“From the monetary policy perspective, it is the financing pressure of the fiscal position that is the source of stress. Due to almost zero net external financing in FY13, the burden of financing the sizeable deficit of 8.8 percent has fallen disproportionately on domestic sources, in particular the banking system. During 1st July – 7th June, FY13, fiscal borrowings from the banking system for budgetary support were Rs1230 billion, including Rs413 billion from the SBP. The high level of these borrowings has kept an upward pressure on the system’s liquidity and thus short term market interest rates and is restraining growth in the private sector credit.”
“If the economy is to reap the benefits of evolving positive sentiments and lure the domestic as well as foreign investors then implementation of a reform oriented and credible medium term fiscal outlook is essential. On its part, the Central Board of Directors of SBP has decided to place a higher weight to declining inflation and low private sector credit relative to risks to the balance of payments position. Therefore, the policy rate is being reduced by 50 basis points, to 9 percent, with effect from 24th June 2013.”


Friday, June 22, 2012

JCR-VIS assign IFC strength of AA to PakRe


By Abdul Qadir Qureshi
The JCR-VIS Credit Rating Co. Ltd. (JCR-VIS), approved by the Securities & Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP), has reaffirmed the Insurer Financial Strength (IFS) rating of Pakistan Reinsurance Company Limited (PRCL) at "AA" (Double A) for the year 2012. The outlook on the rating is stable.
The JCR-VIS rating agency, a joint venture between Japan Credit Rating Agency, Ltd. (JCR) - Japan's premier rating agency, Vital Information Services (Pvt.) Limited (VIS) is acclaimed as Pakistan’s only independent financial research organization.
The rating derives strength from the significant holding of Government of Pakistan in the company. Moreover, given that all insurance companies of Pakistan are mandated to offer 35% of their surplus business to PRCL in the form of cession, the company is expected to maintain a sizeable market share in premium ceded by the insurance industry.
The JCR-VIS have taken into account the improvement in underwriting profit of the company on a timeline basis in 2011 on account of lower retrocession.
While overall claims ratio has remained at prior year's level, claims performance in facultative business continues to be superior relative to that of treaty business. In view of this, further growth in the share of treaty business in overall business may result in upward pressure on net claims ratio, going forward. It observed that overall profitability of the Company receives strong impetus from recurring earnings on investment portfolio.
Even though insurance debt represented more than one-third of gross premium, JCR-VIS have noted that outstanding liabilities are adequately covered by liquid assets. This is the second year running that PakRe has earned this distinction in 2012.
Besides, PakRe has been acclaimed the best Non-Life Reinsurance Company by Management Association of Pakistan (MAP) for 2011 for Corporate Governance Excellence Award-2011 which the Chairman PakRe, Munawwar Opel, received from the Federal Minister, Dr Abdul Hafeez Shaikh, who was the chief guest on the occasion.
 PakRe, the lone reinsurer in Pakistan is a public sector enterprise, has earned Rs.900.00 Million after tax profit announced and distributed 30% dividend to its shareholders (51% - Federal Government, 24% -SLIC and rest minority including staff of PakRe) amounting to Rs.900 Million, and six bonuses to its employees.
Its role in the economic development of Pakistan has been significant. The progress so far made signifies consolidation of our position, both at home and abroad and encourages further expansion.
Munawwar Opel was elevated as Federal Secretary in BS-22 and appointed as Chairman, Pakistan Reinsurance Company Limited in April 2012. He has had the distinction of being the Acting Chief Secretary Sindh twice. He also served as KPT’s General Manager, Administration, for almost a year.