Banking Industries Updates

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Public debt, as a percentage of Gross Domestic Product (GDP), decreased to 72 percent during the fiscal year 2021, from 76.6 percent in FY 2020, finance ministry said here Friday while rebutting an article published in a section of press.

According to the latest published data, public debt to GDP is estimated to have declined further to 67% of GDP as of December 2021, said a press statement issued by the finance ministry.

In real terms, the increase in public debt during the 2018-2022 period is around 3.3% of GDP, which is less than the debt accumulated during 2013 to 2018 period of 8.2% of GDP, it said.

The article on ‘Public debt soars by Rs18 trillion’ “published by Express Tribune in its edition on April 6, 2022 is misleading and the author’s comparison of the 2008 to 2022 period fails to take into account the significant changes in the size of the economy,” the statement added.
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The current account maintained a high deficit of $13.12 billion in the first nine months of the financial year 2021-22 due to the exorbitant cost of imports of petroleum products and various essential commodities during the period.

According to the State Bank of Pakistan (SBP), the current account deficit in March 2022 has been recorded at $1.028 billion which is almost double in value of $519 million seen in February 2022. Last year, the deficit stood surprisingly low at $275 million.

Despite high global commodity prices, the turnaround in the current account continues, with a deficit of $1 billion in March, $500 million lower than the average during FY22. Moreover, the non-oil balance remained in surplus for the 2nd consecutive month, the SBP commented

 

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Overseas thieves have managed to rob a leading bank in Pakistan through internet banking, as they used compromised data of a number of debit cards to conduct fraudulent financial transactions in foreign currencies.

The event made the financial institution suspend the services of international financial transactions through debit cards of almost all the customers.

“The fraudulent transactions were conducted in dollar denominations (instead of Pakistani rupees).”

“We are under no cyber-attack. No data breach or hacking has happened,” a United Bank Limited (UBL) high official confirmed to The Express Tribune.

“But, yes, we have received complaints from some of our customers for fraudulent transactions through their debit cards,” he said, adding most of the fraudulent transactions happen after customers unintentionally share their secrets including passwords and PIN codes with unknowns.

“Those customers who lost money not because of their fault would get their money back (as per prevailing banking and insurance laws).”

Another official of UBL said the fraudulent transactions took place last week. “Most of the debit cards running to MasterCard networks were subject to the fraudulent transactions.”

Now, anyone who would like to use a debit card for internet banking purposes will have to get the service switch-on first. Otherwise, they will be denied due to suspension of the service for safety purposes.

“Multiple fraudulent transactions of small amounts from several accounts took place,” an official of the bank was quoted saying at an analysts briefing on financial results on Monday.

It, however, remained unknown as to how much money from how many bank accounts was robbed by the cyber criminals operating from abroad.

Earlier, the Federal Investigation Agency (FIA) initially reported that it had received complaints of fraudulent financial transactions from customers of three private commercial banks operating in Pakistan.

Later on, industry officials, however, only named UBL as an affected bank by the cyber criminals.

Cyber criminals hatched frauds through Google search engine.

“My UBL Mastercard got hacked on April 19, 2022 and $65 were deducted out of the blue before Iftar time,” Sohaib Irfan said on a social media platform.

“I immediately transferred all the money to a friend’s account and registered a complaint with UBL customer support and they blocked my card temporarily.”

“I am still getting texts of failed transactions due to blocked cards like someone is trying over and over again.”

“I have filed the dispute on April 20, I want you to reverse the unauthorised transaction. I have noticed many other users facing the same issue within the past week so it would be better if we report this to the FIA.”

Shuah Mir said “yeah we will trust (the bank) when we get our money back, instead of using delay tactics UBL should reverse those unauthorised transactions which took place due to data breach by UBL”.

Khan Sher Ali Khan said “excellent good job UBL staff!”

This was not the first time a bank operating in Pakistan became subject to cyber-crime.

Earlier, the same bank and others including state-owned National Bank of Pakistan (NBP), Habib Bank Limited (HBL) and BankIslami in the private sector became subject to cyber-attack or fraudulent financial transactions through different means.

Published in The Express Tribune, April 26th, 2022.

 

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SBP allows Exchange Cos to maintain separate foreign currency account for MTOs​

• Remittances are a crucial source of foreign exchange reserves for cash-strapped Pakistan

BR Web Desk
30 Apr, 2022

In its bid to promote remittances, the State Bank of Pakistan (SBP) has decided to allow Exchange Companies (ECs) to maintain separate foreign currency account for each Money Transfer Operator (MTO).

The SBP in a notification on Saturday also informed that ECs can use such accounts to receive home remittances related to commission/ fee or exchange gains subject to the condition that all such funds are surrendered to the inter-bank market on the same day.

“However, incentive under this scheme will be provided only on the foreign exchange generated through home remittances,” read the notification.

Despite the resumption of international travel amid ease in Covid-19 restrictions, inflows of workers’ remittances have managed to grow, surging to $23 billion in the first nine months of this fiscal year (FY22), a year-on-year growth of 7%.

Remittances from overseas workers are a crucial source of foreign exchange reserves for Pakistan that has been in talks with the International Monetary Fund (IMF) over resumption of its bailout package. Lack of foreign exchange has also put pressure on the country’s currency that has depreciated around 17% in the last 12 months.

Despite the increase in remittances, foreign exchange reserves held by the central bank have been declining, and reached $10.558 billion, due to external debt and other payments, revealed the latest data.

 

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F.P. Report
KARACHI: United Bank Limited (UBL) and Pakistan Freelancers’ Association (PAFLA) recently signed a Memorandum of Understanding (MOU) to formalize a mutually beneficial partnership to facilitate Freelancers in Pakistan.

The ceremony was held at the UBL Head Office in Karachi and was attended by Shazad G. Dada, President & CEO UBL and Kazi Rahat Ali, Secretary General PAFLA and Presidential Initiative for Artificial Intelligence & Computing and Ibrahim Amin, Executive Vice President – PAFLA, along with senior executives from both institutions.

This strategic partnership aims to facilitate the proliferation of Pakistan Freelance market with the provision of a tailored value proposition that is attuned to financially empower freelancers through multiple spheres of their journey as remote income earners. Both organizations are looking forward towards mutual cooperation in the future.

 

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Pakistan Stock Exchange (PSX) on Friday has released the performance report for the first nine months of the current fiscal year 2021-22.

As per the report, the companies registered in the PSX made a record profit of Rs822 billion in the first nine months of the current fiscal. The earned profit is 23pc higher as compared to last fiscal year.

The report further said that the companies registered a profit of Rs320 billion during the first three months (Jan-March) of the fiscal year.
The profit is 33.7 per cent higher as compared to last same period of the last corresponding year.

Meanwhile, the State Bank of Pakistan’s (SBP) foreign exchange reserves fell by $328 million to $10.558 billion during the week that ended on April 23, data released by the central bank showed on Thursday.

The total foreign reserves held by the country, including net reserves of commercial banks, stood at $16.668 billion as of April 23.

 

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Dr Murtaza Syed will assume charge of acting governor, State Bank of Pakistan (SBP), if the federal government didn’t grant extension to present governor Dr Reza Baqir.

Dr Reza Baqir was appointed as governor of the SBP on May 4, 2019 for a period of 3 years from the day he assumed the office of the Governor. Baqir assumed his responsibilities on May 5, 2019 and his three-year tenure is being completed on May 4, 2022. He had replaced Tariq Bajwa who resigned from the top slot of the SBP.

Sources told Business Recorder on Monday that the present coalition government is not willing to reappoint Dr. Reza Baqir as governor SBP after expiry of his three-year tenure. Two weeks earlier, a federal minister also hinted that governor SBP Dr. Reza Baqir will retire on schedule, and the government has no intention to retain him.

According to the SBP Act, at any time when the office of governor is vacant or the governor is incapacitated, the senior most deputy governor shall be the acting governor, until the governor is appointed. Whenever, the governor is on leave or travelling abroad, he may designate in writing one of the deputy governors as acting governor who, while chairing the Board meetings in the absence of governor, shall in case of equality of votes have casting vote.

Presently, there are three Deputy Governors SBP including Dr. Murtaza Syed (Policy), Sima Kamil (Financial Inclusion, Digital Financial Services & IT) and Dr. Inayat Hussain Banking & FMRM.

If the federal government does not reappoint Dr. Reza Baqir for next term, which is now five-year as per SBP Amendment Act 2021, the most senior Deputy Governor Dr Murtaza Syed will automatically become acting governor of SBP until the appointment of a governor.

As the Eid vacations have started from May 2 to May 5, the federal government is likely to take a decision on appointment of Governor SBP slot after the Eid vacations.

As per the SBP Act 2021, the President of Pakistan will appoint the Governor on the recommendation of the government. The Governor and the non-executive Directors shall be appointed by the President, upon the recommendation of the Federal Government taking into account the eligibility and disqualification criteria laid down in the SBP Act.

Dr. Murtaza Syed was appointed as Deputy Governor of the State Bank of Pakistan by the Federal Government for a period of three years, in pursuance of Section 10(4) of the State Bank of Pakistan Act 1956 (amended) on Jan 21, 2020. He assumed his responsibilities on January 27, 2020.

Dr. Syed has more than 20 years of experience in macroeconomic research and policy making. He worked with the IMF for 16 years before resigning to join the State Bank of Pakistan. Most recently, he served as Advisor in the IMF’s Institute for Capacity Development, overseeing the planning and implementation of IMF training and technical assistance programs around the world.

Dr. Reza Baqir during his tenure took a number of measures to strengthen Pakistan’s financial sector. These include an aggressive and timely economic support package of over Rs 1.5 trillion in response to COVID-19 to support the economic growth. Roshan Digital Account initiative to digitally onboard Pakistan’s diaspora into Pakistan’s banking system and provide incentives to use formal channels to remit and implementation of the National Payments Strategy to promote the digitization of financial services in Pakistan were also launched during his tenure.

Copyright Business Recorder, 2022

 

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The Bank of Credit and Commerce International (BCCI) was an international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier.
The Bank was registered in Luxembourg with head offices in Karachi and London. A decade after opening, BCCI had over 400 branches in 78 countries and assets in excess of US$20 billion, making it the seventh largest private bank in the world.

Founder Agha Hasan Abedi and his team in 1980's

 

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Finance Minister Miftah Ismail has praised the Pakistan Tehreek-e-Insaf (PTI) government’s steps for revenue collection and said that the Federal Board of Revenue (FBR) data showed the net revenues of Rs4,858 billion during the first ten months of the current fiscal year.

Miftah Ismail said in a Twitter thread, “FBR has collected Rs 5122 billion in current FY (Jul 21- Apr 22) up from Rs 3981 billion during Jul 20-April 21, registering 28.7% growth. Refunds of Rs 264 b disbursed during Jul 21-Apr 22 compared to Rs 203 b paid last year, up by 30.1%. The FBR team deserves appreciation.”

He added, “A big factor in the increase however was increased imports. For instance, sales tax at import stage grew by 58% while it declined by 2% for local goods. With the right mix of policies and tools I am sure this team will perform even better & to the expectations of the nation.”

 

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Pakistan Stock Exchange (PSX) on Friday has released the performance report for the first nine months of the current fiscal year 2021-22.

As per the report, the companies registered in the PSX made a record profit of Rs822 billion in the first nine months of the current fiscal. The earned profit is 23pc higher as compared to last fiscal year.

The report further said that the companies registered a profit of Rs320 billion during the first three months (Jan-March) of the fiscal year.

The profit is 33.7 per cent higher as compared to last same period of the last corresponding year.
Meanwhile, the State Bank of Pakistan’s (SBP) foreign exchange reserves fell by $328 million to $10.558 billion during the week that ended on April 23, data released by the central bank showed on Thursday.

The total foreign reserves held by the country, including net reserves of commercial banks, stood at $16.668 billion as of April 23.

 

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The Federal Board of Revenue (FBR) has collected Rs4.86 trillion in taxes during the first 10 months of current fiscal year, leaving itself with a task to collect another Rs1.24 trillion in just two months to achieve the revised annual target.

According to the provisional information, the FBR generated Rs4.86 trillion in taxes during July-April of current financial year (2021-22), showing an increase of nearly 29% over the collection made during the same period of previous fiscal year.

 

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KSE100

 

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Loans on collateral basis: NBP starts facilitating farmers through ‘EWRF’ system​

• EWRF system aims to make farmers’ journey easy and profitable from crop cultivation to sale

Recorder Report
05 Jun, 2022


KARACHI: National Bank of Pakistan (NBP) has started facilitating farmers through Electronic Warehouse Receipt Financing.

The NBP is now facilitating farmers in acquiring loans through Electronic Warehouse Receipt Financing (EWRF). The simple process will allow farmers to open their accounts, provide collateral and receive a loan up to 70 percent of the collateral’s price.

EWRF system aims to make farmers’ journey easy and profitable from crop cultivation to sale. The loan facility can be obtained for a period of up to 6 months by securing an electronic warehouse receipt as collateral.

To open an account in the electronic warehouse receipt the farmers can contact the warehouse operator of Naymat Collateral Company Management with their CNIC and photo.

After account opening, farmers can store their products in the relevant warehouse, where after confirming the quality and quantity, the warehouse receipt will be issued. Farmers can use this receipt to obtain the loan from the bank where required support will be extended to complete the documentation process to avail loan facility as per needs.

EWRF also facilitate the applicant to pay back the dues when the farmers have a fair price for crops, thus giving them the advantage to have a return on their harvest after paying warehouse rent and Naymat collateral fee.

Copyright Business Recorder, 2022

 

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The State Bank of Pakistan (SBP) looks set to raise its key policy rate by 125 basis points at its review on Thursday, as it attempts to tackle 13-year high inflation, according to the median estimate in a snap poll of 10 economists and market watchers.

The economists, analysts and senior professors surveyed were widely split on the quantum of increase by the SBP, with views ranging from 50 to 200 basis points. Two respondents did not see a need for a rate increase.

The central bank raised the benchmark interest rate by 150 bps in May, taking the total increase to 400 bps so far this year to counter rising inflation.

Pakistan is wrestling with economic turmoil, a fall in reserves and a weakening currency. Data on Friday showed consumer prices in June soared to 21.3 per cent from a year earlier, largely on account of a 90pc spike in fuel prices since the end of May after the government scrapped costly fuel subsidies. With the current policy rate at 13.75pc and inflation running well above, real interest rates in the economy have turned sharply negative.

“The last monetary policy committee statement is proof that the State Bank of Pakistan is way behind the curve on anticipating inflation,” said Yousuf Nazar, an economist formerly with Citigroup, who writes for various publications.

“Another hike would increase government debt servicing costs as well as hurt industries. It is not going to have much of an impact on exchange rate or overall demand,” he added.

Most believed a hike was inevitable, given persistently high global energy prices, the abrupt ending of fuel subsidies as well as the need to control demand after SBP said in its last policy statement the economy had rebounded much more strongly than anticipated.

“The overall policy mix is geared towards stabilisation and demand management,” CEO of Macro Economic Insights, Sakib Sherani, said, adding that this will induce a sharp slowdown in the economy, possibly a recession, in the short run.

But Fahad Rauf, head of research at Ismail Iqbal Securities, said he does not see the need to increase rates further. “The economy is already slowing down. The layoffs have started and are expected to increase further. Further cost pressures would only enhance the burden on industries and workers,” Rauf said.

“The fiscal arm is working now, tough measures have been taken. SBP needs to wait for the results before further tightening,” he added.

 

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SBP raises policy rate by 125bps to 15pc​

Dawn.com
July 7, 2022

The State Bank of Pakistan announced on Thursday that it had increased the interest rate by 125 basis points (bps) to 15 per cent.

In a press conference after the monetary policy committee (MPC) met to decide on the policy rate, the central bank’s Acting Governor Dr Murtaza Syed said the “most important” objective behind the move was to control spiraling inflation.

He attributed the rise in inflation to global reasons, such as the Russia-Ukraine war, and domestic developments, including a “very high economic growth”.

Syed said that while a high economic growth rate was usually a good development, Pakistan’s economy was structured in a way that it would start facing problems if the rate was six per cent for two years in a row.

Inflation had risen because of fiscal expansion, he added.

“The environment is very complex and uncertain. We have seen this kind of inflation globally after 50-60 years.”

The acting governor, however, expressed the hope that the country would get past the phase of high inflation in the same way that it had been successful in combatting the coronavirus pandemic.

Syed said that inflation would remain between 18 to 20pc in the current fiscal year, however, the SBP would try to make sure that it did not rise beyond 20pc.

If the SBP had not raised the benchmark policy rate, it could have led to a worse situation — hyperinflation and more pressure on the currency, he said.

The central bank acting chief said economic growth was expected to come in at 3 to 4pc in the current fiscal year, which would reduce the risk of a further rise in inflation.

“The inflation number will remain high but we will try that it does not increase. We will try to control month-on-month [inflation] but the year-on-year [inflation] will unfortunately remain between 18 to 20pc.”

He emphasised the need to control food prices. “While the monetary policy cannot control this, the agricultural output can be increased and bottlenecks in supply distribution can be addressed.”

Meanwhile, SBP Deputy Governor Sima Kamal said the Monetary Policy Committee had decided that the Export Finance Scheme (EFS) and Long-Term Finance Facility (LTFF) rates would be 5pc less compared to the interest rate.

“We want to keep supporting the exporter … this is a very important step,” she said.