State Bank of Pakistan allowed to ink deal with Iran bank

[BHarwana]

LAHORE: State Bank of Pakistan (SBP) Governor Ashraf Mahmood Wathra has said that Cabinet Committee has allowed the SBP to enter into a deal with Central Bank of Iran on currency exchange to enhance two-way trade.

Moreover, the agreement would allow Pakistani and Iranian exporters to settle their claims through State Bank of Pakistan and Central Bank of Iran respectively. He was speaking at the Lahore Chamber of Commerce & Industry on Friday. “Trade with Iran is very close to my heart. I am pursuing since my appointment without wasting any moment”, the SBP Governor said.

He said that the agreement between State Bank of Pakistan and Central Bank of Iran would help boost mutual trade volume. He said that in Pakistan and India, credit to GDP ratio is correlated to tax-to-GDP ratio that is around 11 percent and 26 percent in Pakistan and India respectively.

On a question, Wathra said that issue of charity collection by Islamic banks would be monitored. He said that restriction of cash margin has been imposed on selected consumer items and the country is spending around $ 8.5 billion on the import of consumer items out of which a number of merchandise are unnecessary and being produced locally. He said that late payment limit of 90 days for the industries is limited to information only, not for sticking the label of defaulter. He said that law for establishment of credit bureaus has been approved that would help transmission of loans.

He said that economy has turned the corner because of supportive macroeconomic policies, successful completion of IMF programme, sharp fall in oil prices and improvement in energy supplies. He said that markup and inflation are at the lowest, real GDP growth rate is at 4.7 percent in FY 2016 that was only 2.8 percent during FY 2009-13, remittances have been grown to 19.9 percent in 2016 from 11 percent in during 2009-13 and budget deficit has been reduced to 4.6 percent in 2016 as compared to 8.2 percent during 2009-13.

On the occasion, LCCI President Abdul Basit said that access of private sector to the credit should be easy and credit to GDP ratio should be enhanced. He said that credit to GDP ratio in New Zealand, China, India and Pakistan is 146 percent, 141 percent, 51 percent and 15 percent respectively. Banks should be directed to allocate a specific part of loan portfolio for the SME sector and lending to SME is nominal. He said that only one organisation is working for industry’s credit rating. There should be a separate agency for credit rating of SMEs. He said that banks should be given access to the database of Securities & Exchange Commission of Pakistan and Land Record Management Information System for online verifications.

The LCCI president called for establishment of banking channels between Pakistan and Iran and Pakistan and African countries to ensure documented trade. Basit said that establishment of EXIM bank was need of the hour. There must be representation of the Lahore chamber in the Board of Directors of the bank. He said that advance payment limit for importers should be enhance to $100,000 from existing $10,000. He said that limit of late payment for industries should be enhanced to 180 days from existing 90 days.

http://nation.com.pk/business/04-Mar-2017/sbp-allowed-to-ink-deal-with-iran-bank

 

[ABCharlie]

Good step. Things slowly taking shape.