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Tag: State Bank of Pakistan

  • State Bank clears air surrounding forthcoming legislation; no, it won’t bankrupt Pakistan

    State Bank clears air surrounding forthcoming legislation; no, it won’t bankrupt Pakistan

    Deputy governor of the State Bank of Pakistan (SBP) Dr Murtaza Syed has clarified that repayment of loans isn’t a priority on the list of objectives the central bank plans to achieve if it is granted autonomy under forthcoming legislation.

    He was responding to The Current’s query during a meeting of SBP bigwigs, including Governor Dr Reza Baqir, with digital broadcasters amid widespread rumours about a future with an autonomous central bank in Pakistan.

    Besides opposition members, renowned Economist Dr Kaiser Bengali had earlier warned that “the SBP ordinance, which is likely to be introduced soon, is anti-national and could lead to no accountability of central bank officials besides ultimately resulting in the collapse of the country”.

    “Our objectives are controlling inflation, ensuring financial stability and promoting the government’s policies of development and growth,” he said.

    Earlier, SBP Governor Baqir also clarified the air surrounding what he said was not an ordinance but a bill to be presented before the parliament for discussion.

    He said that it wasn’t the first time that amendments to the SBP Act will be discussed.

    “The SBP Act was previously amended in 1994, 1997, 2012 and 2015. Changing the Act does not mean that it cannot be changed again and the parliament has the power to withdraw amendments to the SBP Act,” the SBP governor said.

    However, he added, that clarity in the bill to avoid any sort of troubles in the future was important.

    “The aim of the proposed law is to limit interference in the operations of the SBP. In turn, the bank will be asked what it did to achieve its objectives. Accountability would not be possible if the goals remain unclear. Excess currency printing and lending to the government causes inflation. With the amendments to the Act, this will not be allowed to happen.”

    He said that discipline would have to be exercised to end borrowing, adding that it was easier to ask the SBP to print more money instead of raising taxes.

    “Relying on the SBP does not solve the government’s problems. In the last year and a half, the government has not taken any loan from the SBP. A country that repays loans by printing notes witnesses increased inflation,” he reiterated.

    The SBP governor said that in the past, governments had repeatedly printed excess money, the effects of which are still seen today. The current inflation is not due to monetary policy, but because of administrative shortcomings.

    “If the current government had made the SBP print more money, inflation would have been even higher.”

    Addressing concerns that under the new law authorities won’t be able to hold SBP officials accountable, Dr Murtaza clarified the only difference would be that anti-graft bodies would require permission from the bank’s board beforehand to proceed on allegations.

    He also vowed that the bank would ensure complete transparency in any such instance, which he maintained was also a common practice across the globe.

    SBP members, including Dr Inayat Hussain and Abid Qamar, as well as Information Ministry officials were also present during the session.

  • Surprisingly high profitability in corporate sector despite pandemic

    Surprisingly high profitability in corporate sector despite pandemic

    The results for corporate profitability are pleasantly surprising as the aggregate profitability shown by listed companies amounted to Rs 213.9 billion.

    The year-on-year growth rate for the recent quarter is 38 per cent. In sector-wise profitability: commercial banks have contributed to the highest sum of Rs48 billion earning in the quarter.

    The oil and gas exploration and production sector also yields the highest profits and contributed Rs41bn tax for the quarter.

    Furthermore, the sector that has reported surprising growth in profit is technology and communications. Put together the total earnings are Rs5.9bn, which is 27.6 times higher from Rs207m in the same quarter of 2019.

    Software companies like Avanceon Ltd, Systems Ltd, TRG Pakistan and Netsol Technologies saw their share prices grow during the year.

    TRG Pakistan shares were at Rs12.87 on March 25, 2020. It is now trading at Rs143, which is 11 times higher in one year. Netsol Technologies surged from Rs27.16 a share to Rs285, up ten times in one year.

    Analysts said that technology companies even in the United States (US) challenged the worst economic downturn and reported robust financial growth during the pandemic.

    Engineering sectors mainly comprising steel companies also outperformed most sectors with earnings of Rs5.1bn, recording a growth of 18.7 times from Rs257m a year ago.

    The Cement sector has benefitted from the government’s great incentives to the construction industry. They have reported 570 per cent growth, a total profit of Rs11.7bn which was Rs1.7bn in 2019.

    “The strong corporate profitability provides strong support to the market and should be a key driver for the KSE-100 index once political noise dies down,” said Raza Jafri, head of equities at Intermarket Securities.

    The food sector’s earnings were satisfactory but were dragged down by the poor profitability of FrieslandCampina Engro.

  • Here is why some banks are charging Rs2.50 at ATM withdrawals

    Here is why some banks are charging Rs2.50 at ATM withdrawals

    Many people have been charged Rs2.50 at Automated Teller Machines (ATM), creating buzz on social media. But what is it all about?

    As per details of the new charges, the State Bank of Pakistan (SBP) has not issued any directives to commercial banks to charge against the service of transaction receipts.

    But one of the largest banks in the country, Habib Bank Limited (HBL), confirmed that the initiative is part of a “GO GREEN” exercise by 1Link to urge customers to avoid unnecessary use of paper and keep the environment clean.

    1Link, which provides ATM services to the banks in Pakistan, came up with a unique justification in their official statement.

    Ther payment switch operator stated that the SMS Service is free and could be used as an alternative. Many banks charge an amount ranging from Rs50 to 75 + tax on a monthly basis. Notwithstanding, the central bank directed them to make SMS services free.

    The fee of Rs2.5 on printing receipts has been implemented by some banks. One after another, banks will likely impose the charges on the customers.

    Some banks might use it as a marketing strategy to their advantage and refrain from this practice.

    What are your views on this? Share with us in the comments below.

  • Expats remitting around $7m per day, PM told

    Expats remitting around $7m per day, PM told

    Prime Minister (PM) Imran Khan said that 82,728 Roshan Digital Accounts (RDA) opened so far in 97 countries of different continents by the overseas Pakistanis.

    $436 million through these facilities have been remitted in digital accounts. On average, Pakistani expatriates are remitting around $6 to $7 million every day.

    The prime minister was presiding over a meeting to review the progress of the facilities made available for the overseas Pakistanis under the Roshan Digital Account.

    The facility was introduced under the vision of PM Imran and received encouraging response from overseas Pakistanis.

    The expatriates from Saudi Arabia (KSA), The United Arab Emirates (UAE), United Kingdom (UK), and the United States of America (USA) had taken lead in utilising the facility.

    The participants were apprised of the cooperation of ministries of Foreign Affairs and Finance, Overseas Pakistanis and Human Resource Development as well as the Federal Board of Revenue (FBR) in the success of Roshan Digital Account.

    The Roshan Digital Account (RDA) is the brainchild of the government of Pakistan and has been initiated by the State Bank of Pakistan.

    The RDA initiative aims at connecting the diaspora with Pakistan financially by facilitating their remittances and will operate in collaboration with eight leading commercial banks operating in Pakistan.

    The eight leading banks have been providing innovative banking solutions for millions so that they can open an account in any bank through an entirely digital and online process; without visiting a bank branch, embassy or consulate. All they need to do is submit the basic set of information and documents.

  • Auto loans in Pakistan increased by Rs41 billion in Dec 2020

    Following a decrease in the interest rates and the revival of business after the pandemic-induced lockdown, auto loans increased by 19 per cent, reaching Rs41 billion in December 2020.

    The figures issued by the State Bank of Pakistan show that the car loans in December 2019 were recorded at Rs219 billion, which increased to Rs256 billion during the corresponding period in 2020.

    It is also reported that the growing demand for 1300cc passenger vehicles is the key factor behind the surge in these loans.

    According to media reports, the newly launched Toyota Yaris is responsible for the surge in car loans. Toyota Yaris has outsold Honda City and Civic combined.

    Another key driver of the increase in loans is the lowered interest rates. The State Bank of Pakistan had reduced the interest rates by 625 basis points to 7 per cent in 2020. Additionally, a decrease in the rates of soft interests meant lesser instalments for car financing programmes.

    It seems like a car price hikes by the automakers in 2020 had the least impact on the rising demand for cars. With new players entering the market before the expiration of the Auto Development Policy (ADP) 2016-2021, the demand for cars is likely to surge even more.

  • Has State Bank really restricted ATM withdrawal limit to Rs1,000?

    Has State Bank really restricted ATM withdrawal limit to Rs1,000?

    People are receiving an alleged message from the State Bank of Pakistan about restrictions on ATM cash withdrawals till the end of the month.

    The peculiar message that you may receive from ‘8182’ or ‘8832’ will read: “Dear Customer, as per State Bank of Pakistan directions, ATM cash withdrawal limit is restricted to 1000 PKR ” till Jan 31.

    However, the central bank has distanced itself from these messages. It said the decision to set withdrawal limit is taken by the banks, not the SBP.

    Meanwhile, the SBP also sent a message to the banks, asking them to “send appropriately worded messages” to their consumers to curb the flow of misinformation.

    In a the message to the banks, the SBP said that it has received “multiple reports…that customers are receiving messages with the context that SBP has put some kind of restrictions on ATM cash withdrawals”.

    “The SBP has not given any such instructions to the financial institutions,” the statement clarified.

    “In this regard, kindly make sure to send appropriately worded messages to your customers on urgent basis, reassuring them regarding this false spread of messages,” the SBP clarification read.

  • Foreign investment falls by 30%

    Foreign investment falls by 30%

    Foreign direct investment (FDI) fell by 30 per cent in the first half of the current fiscal year (H1FY21), according to data released by the State Bank of Pakistan (SBP).

    According to a report based on the data compiled by a local media outlet, Pakistan received $952 million in foreign investment during July-December FY21 compared to $1.357 billion in the corresponding period last year.

    In addition to the damage done by the pandemic, the impact of heavy outflow from the portfolio also played a key role in making the balance sheet poorer in the first half of FY21. The data shows that the outflow during July-December was $244m compared to a net inflow of $18.8m in the same period last year.

    The breakup further shows that China made 38pc contribution to the overall $952m FDI the country received in July-December period of FY21. However, the FDI inflows from China also contracted to $359m in the period under review compared to $396m in the same period of last fiscal year.

    The other significant contributions were from the United States and UK at $65m and $63m, respectively, both improved from $44m and $58m in the same period of last fiscal year. The United Arab Emirates (UAE) has started disinvesting; however, in July-December FY21, the inflow was $16.3m.

    The country received the highest foreign investment of $261m in electricity, gas, steam and air conditioning supply sectors. While an inflow of $137m was noted in financial and insurance sectors.

  • SBP reserves jump $261m to $13.4bn

    SBP reserves jump $261m to $13.4bn

    The State Bank of Pakistan has witnessed a 1.98 per cent increase in its foreign exchange reserves after an influx of $261 million during the week ending on December 31, 2020.

    According to the data issued by the central bank on Thursday, the current exchange reserves stand at $13.4 billion as of now. The state-run news agency, APP, reported that overall liquid foreign currency reserves, including net reserves held by the banks, SBP excluded, stood at $20,512.1 million.

    Net foreign reserves held by commercial banks clocked in at $7.09 billion. According to the State Bank, the increase came on the back of official inflows of the government.

    On Wednesday, the Pakistan Stock Exchange (PSX) gained over 500 points to cross the 45,000-point threshold for the first time since May 2018. According to the reports, “Exploration & production and oil & gas marketing sectors rebounded strongly, whereas cement and fertilizer sectors continued with previous day’s positive momentum.”

    “International crude oil prices jumped significantly on the conclusion of agreement among OPEC+ countries, which became the basis for an uptick in E&P stocks. Cement sector leaped on the expectation of an increase in cement price in the northern region, while banking sector contributed positively in anticipation of annual results.”

  • Sixth consecutive month: Remittances remain over $2 billion

    Sixth consecutive month: Remittances remain over $2 billion

    Pakistan has maintained a strong momentum in workers’ remittance for the sixth consecutive month in November with over $2 billion, the State Bank of Pakistan (SBP) has reported.

    Workers’ remittance increased 28.4% year-on-year in November 2020, pushing the cumulative flows to $11.8 billion during the July-November FY21 with a rise of 26.9% compared to same period last year.

    “This significant growth reflects continued government and SBP efforts to formalise remittances under Pakistan Remittances Initiative (PRI), growing use of digital channels amid limited international travel, orderly exchange market conditions and improved global economic activity,” said the central bank.

    The top four countries that contributed to the highest inflows are Saudi Arabia ($3.3 billion), United Arab Emirates ($2.4 billion), United Kingdom ($1.6 billion) and the United States ($1 billion).

  • Remittances rise to record single month high of $2.77 billion in Pakistan

    Remittances rise to record single month high of $2.77 billion in Pakistan

    Remittances rose to $2.77 billion in July, which is the highest ever level of remittances in a single month in Pakistan, according to data released by the State Bank of Pakistan (SBP) on Monday.

    That represents a year-on-year growth of 36.5pc when compared with July 2019, and 12.2pc when compared to June 2020. Last month, remittances were recorded at $2.47 billion, which the SBP had dubbed as ‘historic’ at the time.

    Most of the remittances in July were received from Saudi Arabia, at $821.6 million; followed by UAE, at $538.2 million; UK, at $393.9 million; and the US, at $250.6 million.

    The central bank also noted that 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.

    “Given the impact of COVID-19 globally, this increase in worker’s remittances is encouraging,” the SBP said.

    Overall, there are two main factors that explain the rise in remittances, along with some minor reasons.

    The first is that it seems the use of official channels to send remittances has increased, and there has been a decline in traditional hawala and hundi methods of sending cash home.