News Monitor

SBP launches Pilot Project Phase II to increase agri financing outreach

KARACHI: The State Bank of Pakistan (SBP), in collaboration with the provincial governments, recently launched Pilot Project Phase II from the current Rabi season 2009-10 for enhancing outreach of agricultural financing in the underserved districts of the country.
Under the Phase II of the project, 14 districts of Punjab (Jhang, Kasur, Toba Tek Singh, Pakpattan, Khanewal, Bahawalpur, Vehari, Sialkot, Faisalabad, Sahiwal, Gujranwala, Sargodha, Okara and Sheikhupura), 9 districts of Sindh (Hyderabad, Mirpur Khas, Tando Allahyar, Sanghar, Nawabshah, Khairpur, Larkana, Noushehro Feroz and Matiari), 3 districts of North West Frontier Province (Mardan, Swabi and Mansehra ) and 2 districts in Balochistan (Jafarabad and Nasirabad ) have been identified based on the experience of phase I of the project and in consultation with banks.
The project will help increase the flow of institutional credit on fast-track basis to underserved agri.-intensive areas of Punjab, Sindh NWFP and Balochistan.
To increase awareness about the project, State Bank is also arranging several workshops for various stakeholders including regional business chiefs & regional agri. managers of participating banks, officials of revenue departments, post offices & agri. extension departments and SBP-BSC offices to discuss the modalities on the implementation of the project, One Window Operation, data reporting, monitoring, etc. These workshops will be held in Multan, Bahawalpur, Lahore, Gujranwala, Sialkot, Faisalabad, Rawalpindi and Peshawar.
SBP mentioned that phase I of the project was launched in 7 districts of Sindh from the last Kharif season 2009. Under the project, it was mandatory for agri. lending banks operating in the concerned districts to post at least one dedicated Agri. Financing Officer/Agri. Credit Officer in their agri. designated branches. These banks were assigned specific targets for disbursement, growth in outstanding portfolio & number of borrowers to each of its branches and the concerned Branch Manager and Area Manager were responsible for implementation of the project under the overall supervision of banks’ agri. heads. SBP Banking Services Corporation through its units in respective field offices closely monitored and supervised the implementation of the project at branch level and also made necessary arrangements in consultation with banks for mass awareness of the project through print and electronic media.
Under phase I of the project, banks disbursed a total of Rs3.9 billion during the last Kharif crop 2009. In addition to disbursements to existing borrowers, more than 13,000 new agri. borrows were also tapped by banks under the project. The overall objectives of the project to stimulate and synergize banks’ agri. financing activities for improving farmers’ access to finance on fast track basis have largely been achieved. The project provided learning opportunities to stakeholders to align their lending policies and practices according to local requirements, repayment behavior, crops/farming patterns, etc.


CA deficit narrows to $462 million

KARACHI: The Current Account deficit in the first three months of the 2009/10 fiscal year was a provisional $462 million compared with a deficit of $4.26 billion in the same period last year.
Pakistan recorded a provisional current account surplus of $174 million in September, compared with a revised current account deficit of $19 million the previous month, the State Bank of Pakistan said.
Analysts said that the reason for the narrowing of the deficit is a combination of a lower trade deficit and higher remittances.
The trade deficit narrowed to $897 million in September compared with $2.03 billion in September last year. The deficit was $1.04 billion in August.
Pakistan entered a $7.6 billion emergency International Monetary Fund (IMF) program last November to avert a balance of payments crisis. The loan was increased to $11.3 billion in July, of which the IMF has disbursed more than $5 billion.
Analysts said foreign buying of Pakistani shares in recent weeks, as well as record remittances in September, were indications of an improving economy.


No plans for load shedding, closure of CNG stations in winter season: CSOAP

KARACHI: Malik Khuda Baksh, Chairman of CNG Station Owners Association of Pakistan (CSOAP), on his return from Islamabad, recently stated that the Ministry of Petroleum & Natural Resources has decided that there will be no increase in CNG prices, no load shedding of gas and no closure of CNG station during winter season.
During his visit to Islamabad, Malik Khuda Baksh, in various meetings with Secretary Petroleum, Director General Gas and Managing Director, and Sui Northern Gas Pipelines Limited, informed them about the aftermaths of price increase, closure of CNG station and load shedding of gas on CNG industry and the likely impact common man.
He said that the concerned authorities considered the genuine problems while taking the decision to keep the CNG Stations functional.
Malik Khuda Baksh welcomed the decision and expressed his gratitude to Prime Minister of Pakistan, Minister of Petroleum & Natural Resources. He said that the decision will be warmly welcomed by people from all walks of life and it will also help in encouraging the investors.


Amin Fahim discusses trade promotion opportunities between Pakistan, Cuba

ISLAMABAD: The Ambassador of Cuba, Gustavo recently called on the Federal Minister for Commerce Makhdoom Amin Fahim to invite the Federal Minister for the upcoming International Trade Fair which is going to be held in the capital city of Cuba in the second week of November 2009.
This would provide an opportunity to the Minister to meet his counterparts of other Latin American countries and hold talks on promotion of trade with Pakistan, the Ambassador said.
Federal Minister apprised the Ambassador that the trade volume between the two countries is not satisfactory; therefore they should explore other possibilities to increase trade volume. The Minister expressed that they must stay in touch to work out various options for trade promotion.
The Ambassador of Cuba expressed interest in Pakistani rice and textile. Pakistan has a great opportunity to export rice to Cuba. Both sides agreed to remove bottlenecks in their relations. For the promotion of trade, adequate means of communications are essential, which are to be addressed, the Minister maintained.


FBR realizes over Rs3.9 billion Income Tax

ISLAMABAD: The Federal Board of Revenue (FBR) recently said that it has collected 1,282,118 Income Tax returns till October 20, 2009 and realized Rs.3962 million (over Rs.3.9 billion), registering an increase of 58 percent as compared to same the period last year.
"Last year the FBR collected Income Tax returns of 1,072,743 and fetched a revenue of Rs.2506 million (over Rs.2.5 billion) during the same period of last year", Member Direct Tax and Spokesman FBR Asrar Raouf said.
He attributed the 58 percent enhancement in Income Tax to the campaign of the FBR by establishing Kiosks and mobile tax awareness teams in the big cities across the country.
It may be mentioned here that the Federal Board of Revenue extended the date for filing/ e-filing income tax on the request of taxpayers, the date for filing returns up to October 20 to facilitate them.
In its earlier notification, the FBR had reiterated that in the cases where income tax returns could not be e-filed for any reasons, hard copies of income tax returns could be filed by extended dates i.e. October 22, 2009.
However, this would be subject to the condition that in such cases returns or e-filed latest by November 30, 2009 otherwise the hard copies filed by the tax payers would not be treated as valid return of income.


Salim Raza underscores need for effective regulation of world’s financial system

KARACHI: Syed Salim Raza, Governor State Bank of Pakistan has observed that effective regulation is the preferred way forward for central banks responsible for safeguarding both monetary and financial stability.
Delivering a keynote address on ‘Current Crisis and the Future of Financial Regulation’ at the 59th Annual General Meeting of the Institute of Bankers, Pakistan recently, Raza said that in the context of recent experiences of the global economy, the way forward for the financial sector is to maintain both the simplicity and transparency of product structures and a gradual pace of implementation of financial liberalization to enable the financial sector in meeting the needs of the real economy and to expand further in an efficient manner.
Raza dwelt at length on some of the issues arising out of the current global crisis and shared his perspective on various aspects of financial sector reforms, which are also pertinent to Pakistan.
SBP Governor said that recent global crisis is unique in the sense that it was caused by an unfettered parallel financial system which was driven by the excessive pace of financial innovation and deregulation in advanced economies. It is to be noted that the emphasis of the various working groups and committees is on fixing the financial regulation framework in the leading developed economies.
While fora like the G-20 now also carry the representation of emerging economies such as China, Indonesia and India, financial regulation in emerging and developing economies is still progressing, given that the evolution of the financial sector and the associated regulatory framework is shaped by the need to extend the outreach of financial services and increasing financial depth, rather than putting aside the basic function of financial intermediation to engage in financial engineering focused on profiteering.
“As we move forward to make the financial system in Pakistan less prone to crisis, we would have to bear these various issues in mind,” he added.
Raza pointed out that the world’s financial system before the recent crisis was ill-managed, irresponsible, highly concentrated and undercapitalized, ridden with conflicts of interest and benefiting from implicit state guarantees.
He said that as one contemplates the lessons of the crisis, and the reasons for the prolonged period of financial instability, the foremost thing that comes to mind is the role of central banks in safeguarding and maintaining financial stability, in addition to their primary objective of ensuring price stability.
“Central banks, whether or not responsible for the regulation of any component of the financial sector, nevertheless have a crucial role in safeguarding financial stability given that monetary and financial stability are closely linked, not in the least through the lender of last resort function,” he said and added that rapid succession of bank failures during the crisis reinforced the realization that there is no institution, besides the central bank, that can create liquidity quickly in a crisis, and with an eye on both monetary and financial stability, can take necessary actions to preempt and prevent systemic risk.
Raza opined that the ‘light touch’ model of financial regulation in vogue in advanced economies is seen to be one of the key reasons for the magnitude and protracted duration of the crisis.
He said the regulatory framework in Pakistan operates on the basis of two regulators: SBP, with its primary focus on price stability, is also the regulator of the banking sector, and is mandated to safeguard financial stability, while SECP governs the non-bank finance companies, the insurance sector and the securities market. While the issue of transferring deposit-taking institutions back to SBP was under consideration until last year, SBP and SECP have signed a MoU to undertake consolidated supervision to enable effective regulation of emerging financial conglomerates, he added.
“Notably, the perimeter of financial regulation has strived to strike a balance between light regulation and over-regulation, while at the same time ensuring that all important sources of systemic risk in the financial services industry are regulated and supervised”, Raza emphasized.
SBP Governor said the events since August 2007 have brought forth the realization that the impact of the recent global crisis would not have been so severe had banks not virtually abandoned the traditional age-old model of banking i.e. raise funds by mobilizing deposits and exercise prudence in lending them onward at a reasonable margin. He said the banks in Pakistan predominantly rely on their deposit base for funding their expansion in assets and emphasized on the need to strengthen prudent asset-liability management by banks, particularly in view of their maturity transformation.
Raza stressed that financial regulation should be designed for large banks to hold capital and liquidity buffers that account for the systemic risk they pose, and their organization structure should enable an orderly winding down. He said that the pre-crisis prudential regulation regimes generally lacked a macro-prudential focus, which is essentially based on the assessment of the financial system as a whole, instead of simply the assessment of a collection of individual entities.
He said that given the cost of financial crises, there has been a renewed emphasis on attempting to contain or, in the least, mitigate systemic risk by adopting macro-prudential surveillance, which is defined as monitoring of conjectural and structural trends in financial markets so as to give warning of the approach of financial instability.


IT industry shows reverse trend

KARACHI: “Despite encouraging global trend regarding growth in the IT Industry, Pakistani market is showing reverse trend and has not been able to exploit emerging opportunities”, said Munawar Iqbal, President of Pakistan Computer Association (PCA).
Reacting to new report of IDC’s Worldwide Quarterly PC Tracker, Munawar Iqbal said that the computer and IT industry of Pakistan has not been able to keep the momentum as a result of numerous factors including the worsening law & order situation in the country. The other contributing factors, he said, were energy crises, ill conceived taxation policies, fragile currency and failure at official level to identify and explore new opportunities in the sector.
He said that despite the ongoing mix of gloom and caution on the economic front, the PC market continues to rebound quickly.
According to report, he said, the continued strength of both the US and worldwide PC business in the face of difficult economic environments underscores the value that both consumer and corporate buyers place on PCs.
Munawar Iqbal said that Pakistan IT industry is quite capable of showing the same results if the government ensures an enabling business environment and improved law & order situation in the country.


KSE completes all formalities for debt market trading

KARACHI: The Karachi Stock Exchange (KSE) has completed all developmental and regulatory work for the trading in the debt market securities at the exchange through bond automated trading system (BATS).
According to a recent KSE notice, the date for go-live will be announced very soon.
The Securities & Exchange Commission of Pakistan had already accorded approval for regulations governing bond automated trading system of KSE.
The KSE would provide live, system based, on screen, electronic trading platform called BATS.

Pakistan, Malaysia sign MoU for business gala next year

KARACHI: The E-commerce Gateway of Pakistan and OIC International Business Centre of Malaysia recently signed an MoU to jointly organize a business and investment gala titled, Muslim Big, in Putra World Trade Centre, Malaysia from June 4 to 6, 2010.
The MoU was signed by Dr. Khursheed Nizam, President of E-Commerce Gateway Pakistan and Dato Raja Mohamad, President of OIC International Business Centre of Malaysia in an impressive ceremony held at Putra World Trade Centre in Kuala Lumpur on Thursday.
Dato’ Mukhriz Mahathir, Deputy Minister of International Trade and Industry, Malaysia witnessed the signing ceremony.
As per MoU, E-Commerce Gateway and OIC International Business Centre of Malaysia will organize Exhibition and Conference in Kuala Lumpur to promote business and investment, specifically between Malaysia and Pakistan, and among fifty seven members of the Organization of Islamic Countries (OIC).
The President of E-commerce Gateway later met with the High Commissioner for Pakistan Lt. General ® Tahir Mahmud Qazi and briefed him on the salient features of the business and investment Gala.
The High Commissioner termed the Business and Investment Gala as an ideal platform for businessmen and entrepreneurs of Pakistan to promote Pakistani Halal products in the exhibition as Pakistan and Malaysia are ideally placed to capture multi billion dollar Halal market by complementing each other in Halal business.
He advised the Pakistani Business persons and entrepreneurs to fully utilize this forum to exhibit and introduce their high quality products related to traveling and tourism, sporting goods and sports tourism, banks and financial institutions, engineering industry, textile and garments, consumer goods and handicrafts and giftwares to the estimated 60,000 visitors, investors and buyers from Malaysia, Asian countries and business persons from US, Europe, Central Asian Republics, China and 57 member countries of the OIC.
Dr. Khursheed Nizam apprised the High Commissioner that the Muslim Big Exhibition and Conference previously held in Karachi, Pakistan in 2007 was a resounding success where in all 190 exhibitors including 61 foreigner exhibitors specially Malaysia displayed their products. The exhibition was attended by over 60,000 buyers, investors and visitors.


Textile Minister offers full support to Apparel Sector

KARACHI: Federal Minister of Textile Industry, Rana Farooq Saeed Khan has stressed upon the need of research, development and training in textile sector which could result in enhanced exports and can also earn billions of dollars of foreign exchange through highest level of value-addition.
He expressed these views while distributing the training certificates among the 70 successful women trainees who have recently completed their training under Stitching Machine operator Training Program (SMOT) of Ministry of Textile Industry at J&M Clothing Company at EPZA.
Rana Farooq said that they want to avoid the shortage of skilled workers for readymade garments sector and the objective of this exercise is to train large number of skilled stitching machine operators to provide support to textile garments sector.
Minister said that 60 percent remaining R&D Fund would soon be released by finance ministry to State Bank of Pakistan.
He said that textile policy has been announced for the first time in 62 years and we assure the industry that this would be followed and implemented in letter and spirit.
He said that government is seriously committed in supporting the textile industry as it was not only the largest foreign exchange earner for Pakistan but also the largest employment producing industry.
He said that Pakistan foreign friends should open up their markets for Pakistani textile products and remove all kind of restriction imposed on textile imports from Pakistan.
He was of the opinion that Pakistan can solve all its problems through enhanced trade and exports. Rana said, “We considering establishing the training centers in rural areas and setting up textile units with the private sector cooperation so that rural population could also be brought into the economic cycle.”
Speaking on the occasion, Central Chairman Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), Mohsin Ayub Mirza said that SMOT Program has been very supportive for the entire apparel industry which provides 2 months quality training in stitching to existing redundant women labor force.
He said that SMOT Scheme is aimed at increasing the participation of women work force in the economic activities which could result in their socio economic uplift, he added.
Chairman PRGMEA informed that, women, who come for this training at J&M Clothing Company at EPZA, are provided with 100 percent job guarantee on successful completion of their training course and are also provided with subsidized food, transport, monthly stipend and insurance of up to 200,000.
Commissioner Textile, Idrees Ahmed informed that over 5,000 trainees, including 3,000 women have so far been trained by Textile Skill Development Board in textile garments stitching sector.


Pacts, MoUs signed on space technology, energy

ISLAMABAD: Pakistan and China recently signed two agreements and Memoranda of Understanding (MoUs) on Space concessional loan, space technology and alternative energy.
Prime Minister Yousuf Raza Gilani witnessed the signing ceremonies as the respective officials of the companies inked the documents.
The concessional loan agreement for Paksat was signed between Pakistan's Economic Affairs Division and Export Import Bank of China.
Under the agreement, China will provide an amount of 190 million dollars for the supply of Paksat-1R which will replace the Paksat-1 that has a life span till 2011. The loan will cover 85 percent cost of the project. Another agreement was signed between Space and Upper Atmosphere Research Commission (Suparco) and China Great Wall Industry Corporation for Pakistan-1R Satellite Ground Control Segment.
The Ground Control Segment will comprise the establishment of stations at Lahore and Karachi. The stations will be used to monitor the satellite and control its operation for the duration of its 15-year life. Pakistan's Alternative Energy Board signed MoUs with China's Wuxi Suntech Power Company and China Electric Equipment Group Solar Energy Research Institute Co Ltd (CEEG SI) respectively for co-operation in alternate energy projects in Pakistan.
Both Suntech and CEEG SI are major Chinese companies in the field of alternative energy and involved in several projects both in China and abroad. The two companies are interested in undertaking alternative energy projects in Pakistan to help overcome power crisis in the country.


NESPAK office in Libya to enhance engineering sector cooperation

ISLAMABAD: In the wake of Prime Minister’s recent visit to Libya, and also in consequence of mutual consultations at appropriate levels, the Government of Pakistan is considering to extend its overseas development operations in Engineering and other allied sectors by establishing branch of its premier engineering and consultancy organization (NESPAK) in Libya.
The concerned Ministers in Libyan Government have approached the Government of Pakistan through appropriate channels to consider the utility of establishing NESPAK entity in Libya to facilitate cooperation in multiple technical and engineering sectors.
A NESPAK representative visited Libya during August 2009 as part of a public – private sector construction consortium, receiving an encouraging response from the consultative meetings held with Libyan counterparts.
One of the Libyan state-owned companies has approached NESPAK for signing an MOU/ Joint venture relating to provision of technical support in ongoing development projects in brother Muslim country, Libya.
Pakistan’s Ambassador in Tripoli has also supported such a move and requested the home government to finalize the modalities leading to NESPAK’s establishing a permanent overseas office in Libya.
NESPAK meanwhile has been advised to work out the details of such an overseas presence in national interest, and also to promote technical cooperation with brotherly Muslim country.


PBA condemns forced closure of MCB branches

KARACHI: Pakistan Banks’ Association (PBA) recently expressed concern over the forced closure of MCB branches by some miscreants for the last two weeks now.
“High-handedness and forced closure of MCB branches by a group of miscreants is alarming for the banking community and if such activities are allowed to continue, unrest and lawlessness could spread to other banks”, PBA spokesman said.
Such incidents affect the business environment of the country. The country’s economy is presently passing through a critical phase, and disruption of bank operations would aggravate the situation and create panic and alarm within the business community and the general public at large.
PBA urged the government to take necessary measures to curb external interference in banks’ affairs. Law enforcement agencies should play their due role in establishing conducive business environment. Banking sector of Pakistan has in the last few years contributed significantly to the country’s economic growth. Incidents like these could shake the confidence of foreign investors in Pakistan’s financial sector.
For the past two weeks, MCB staff has been repeatedly threatened / harassed, branch operations forcibly disrupted at numerous locations, and customers have not been allowed to transact, causing inconvenience and financial loss. This situation is of serious concern for the banking community and a great setback for economy, said the spokesperson.


Tremendous potential exists for branchless banking: Salim Raza

KARACHI: Syed Salim Raza, Governor State Bank of Pakistan (SBP) has said that tremendous business potential exists for branchless banking in the country which allows financial institutions and other commercial players to offer alternate and economical financial services outside the bank premises.
Speaking at the inauguration of branchless banking product ‘Easy Paisa’ - a joint effort of Tameer Microfinance Bank and Telenor Pakistan – here at a local hotel, Raza said that the State Bank has always encouraged innovation and provided enabling regulatory environment in order to drive the banks to increase their outreach.
“As a regulator, we are concerned about the un-banked masses of our country that do not have banking facilities,” he said and added that branchless banking is a milestone to substantially increase the financial services outreach to the un-banked communities.
He said the banks have started to show interest in branchless banking and SBP has given regulatory approval to three banks to carryout branchless banking business. Six banks have been given approvals to offer cell-phone base banking services to their existing customer base as an alternate delivery medium, he said and added that there are many other banks in initial discussions with SBP on their proposals to start branchless banking.
SBP Governor said that developing an inclusive financial sector is a top policy priority area for the State Bank. He said that in the recent past, complete transformation of the banking industry, supported by privatization and restructuring and market-oriented policies, has resulted in broadening, deepening and diversifying financial services. “Yet, financial penetration remains quite low – with only 26 million depositors, 7 million borrowers, and over 20,000 people per bank branch in Pakistan,” he said and added that a significant majority are unable to access even the simplest financial services, meaning that they pay more to manage their money, find it harder to plan for the future and cope with financial pressures, and are more vulnerable to financial distress and over-indebtedness.
He said in this context, leveraging technology and finding innovative products and delivery channels, such as mobile phone banking, is the best way to increase financial outreach. The mobile phones and other branchless banking models have changed the lives of people in many countries around the World, such as Philippines and Kenya.
Raza said that usage of mobile phones has increased many fold in Pakistan within a couple of years and over 90 million SIMs have been issued in the country. Within a short span of around 15 years the mobile phone industry has gained landmark success by providing cheapest call rates, increased outreach and a number of value added services, he added. This provides immense opportunities to our banking system which caters to 26 million bank accounts through a network of 9358 branches, sub-branches booths etc.
“Therefore, synergic opportunities exist for banks and mobile operators to join hands and start working on each other’s strengths. I am sure the branchless banking is one such business where there is a win-win situation for both the bank and mobile network operator,” SBP Governor added.
Raza said this is the time the financial institutions need to move away from their inertia and their traditional business offerings so as to adopt continuous innovation as a building block of their business. The adoption of innovative ways of doing business by financial institutions not only gives rise to positive externalities but it also helps in improving the timeliness and quality of data, smoothens out markets functioning thereby resulting into a resilient and a strong financial system, he added.
SBP Governor said that to broaden the scope of access to financial services by exploiting information technology, the SBP has introduced Regulations on Branchless banking. The branchless banking is a recent innovation which is expected to shift and change the mindset from traditional branch banking to a new way of banking, he added. “I would like to reiterate that only innovative approaches and models hold the key to long-term development of financial services industry in Pakistan,” he said.
He said in the last few years, SBP has consistently been following a regulatory approach which promotes broadening of financial services to a larger population. Moreover, SBP is playing a developmental role by managing donor and government-funded programs. I would urge the innovative institutions to share their experiences with other players. He appreciated the joint efforts of Tameer and Telenor for being the first to launch the business of Branchless banking and to bring in this ground-breaking product into the Pakistani market.


SBP amends prudential regulations, provides 40 percent FSV benefit to banks

KARACHI: The State Bank of Pakistan (SBP) by amending the Prudential Regulations pertaining to provisioning of classified loans and advances has increased Forced Sale Value (FSV) benefit banks/DFIs (Development Finance Institutions) from 30 percent to 40 percent.
According to a circular (BSD circular No.10) issued to all banks/DFIs, FSV benefit has now been extended to industrial property (excluding plant & machinery) in addition to already available benefit on pledged stock and mortgaged residential & commercial properties, held as collateral against Non Performing Loans (NPLs) that are classified during the last 3 years from the date of classification for calculating provisioning requirement.
The State Bank has also introduced interim instructions on restructuring/ rescheduling of classified loans and advances that are overdue by less than one year. These instructions will be applicable till June 30, 2010 and banks/DFIs may also apply these instructions on their existing restructured loans, which were rescheduled/ restructured on or after January 1st, 2009. As per these instructions:
- Banks/DFIs may upgrade the category of classification by one category upon rescheduling/ restructuring of such loans & advances that are overdue by less than 1 year. Moreover, upon meeting the terms and conditions of the restructuring for one year and cash recovery of at least 5% of the restructured amount, the classification category may be further upgraded by one step.

- If classification category of a classified loan/advance is upgraded on restructuring/rescheduling, the bank/DFI shall maintain:
1. Provisions required for the category of classification, the loan/advance is in, after up-gradation (as calculated under prudential guidelines contained in relevant prudential regulations), plus
2. 50 percent of the difference between the amount of provision required for category of classification, the loan is in after up-gradation and the amount of provision required for former category of classification (as calculated under prudential guidelines contained in relevant prudential regulations).

- However, the benefit in provisioning will be subject to the following conditions:
1. Benefit arising from interim instruction shall be taken directly into equity as a capital reserve and shall not be available for payment of cash and stock dividends.
2. Banks/DFIs shall credit this provisioning benefit to P&L and declassify restructured loan only after meeting following conditions:
(i) Successful compliance with the terms and conditions of rescheduling/restructuring for 2 years and cash recovery of 10 percent of the rescheduled/restructured amount, or
(ii) Recovery of 25 percent of the restructured amount in cash or through acquisition of immovable properties i.e. land and building (excluding any plant and machinery installed thereon). However, banks/DFIs are required to ensure that after such acquisition of land and building, outstanding exposures of the borrower should remain fully secured.

- Where the terms and conditions of rescheduling/restructuring are not met, such loan/advance shall not be eligible for the benefit under interim instruction for any subsequent restructuring.
- Banks/DFIs shall continue to follow the prevailing instructions on classification/provisioning of classified restructured loan in respect of such loans and advances which are not covered under these interim instructions or which subsequently fail to meet the provisions of these instructions
- Banks/DFIs shall provide details of loans and advances rescheduled/restructured under the interim instructions on monthly basis as per prescribed format.


SBP determined to promote sports activities: Salim Raza

KARACHI: Syed Salim Raza, Governor State Bank of Pakistan has said that SBP is determined to contribute positively in the development of sports activities including cricket, hockey and other games in the country.
Inaugurating the newly built SBP Sports Complex at SBPBSC North Nazimabad Office, Karachi recently, he said that SBP has been arranging Regional and Super Series of Inter-Bank Governor’s Cup cricket tournament across Pakistan not only to promote cricketing activities but also to create awareness of its clean note policy amongst the general public.
Raza said that SBP Sports Complex will go a long way in promoting healthy sports activities among the employees of the Bank in a beautiful lush green environment.
“To make the Sports Complex more attractive we will build a small but all purpose-built pavilion with a 250 seating capacity,” he said and added that this pavilion will be completed in the next couple of months. Besides cricket, this Sports Complex also has a dedicated ground for hockey and all this has been achieved through the dedicated efforts of the Engineering Department and the Sports Committee headed by the SBP Deputy Governor, Muhammad Kamran Shehzad, he added.
He said that a joint team of SBP and BSC has again started participating in Grade-2 Tournament which is arranged by Pakistan Cricket Board. I am happy to share with you that in the first year of its participation in this tournament our team has played the Final of the Grade -2 Patrons Trophy in 2008.
“I am optimistic that our team will live up to the expectations and win the final of upcoming Grade-2 Champions Trophy,” SBP Governor added.
“State Bank is not only promoting cricket but is also actively trying to form hockey, table tennis and badminton teams. I am sure that with the passage of time these three sports activities will also gain momentum,” he added.
Later, he gave away prizes to winners and runners-up of the First Inter-Departmental SBP Cricket Tournament-2009. The ceremony was attended, among others, by SBP Deputy Governors - Muhammad Kamran Shehzad & Yaseen Anwar, Managing Director SBPBSC, Qasim Nawaz, Executive Directors, Directors, and a large number of SBP employees and their families, besides commercial banks’ executives and sport celebrities.


SBP puts new payment mechanism in place under PRI

KARACHI: The State Bank of Pakistan (SBP), under the auspices of Pakistan Remittance Initiative (PRI), has put in place a new payment mechanism whereby the banks would inform on daily basis to each other about the bank accounts to be credited with the remittances received while the funds shall route through Real Time Gross Settlement (RTGS) System simultaneously with the exchange of information.
The new mechanism will address the issue of delay in interbank settlement of remittance transactions. Five major commercial banks have now begun transferring remittances into beneficiaries’ accounts the same day under the new mechanism.
Allied Bank of Pakistan, Habib Bank Limited, MCB Bank, National Bank of Pakistan and United Bank Limited have joined the mechanism in the first phase and these banks are fully functional for this program with complete capability and capacity.
On the first day of its functioning, these banks credited Rs100 million into beneficiaries’ accounts on the same day under the new mechanism. This is a strategic milestone for the smooth delivery of home remittances under PRI.
With the successful completion of this milestone, State Bank is now making efforts to bring more banks into this fast track payment mechanism. The goal is to integrate all the banks into payment network for smooth flow of remittances.
The new payment mechanism facilitates banks for immediate transfer of funds through Real Time Gross Settlement System (RTGS) which makes remittance funds immediately available to the participating beneficiary banks so that they can credit remitted amounts to beneficiary accounts.
SBP pointed out that the State Bank, Ministry of Finance and Ministry of Overseas Pakistanis had undertaken a joint initiative called ‘Pakistan Remittance Initiative’ recently with a view to facilitating the flow of remittances through formal channels. This initiative has started to materialize and remittances through formal channels are showing considerable growth.


Textile Minister intends to launch BT cotton for textile boost

KARACHI: Federal Minister for Textile Rana Muhammad Farooq Saeed Khan has strongly supported move to introduce BT cotton for strengthening the base of textile industry, the only sector capable enough to solve the country's economic problems.
"I am fighting for BT cotton. Our scientists do not want new cotton variety despite the fact that they have done very little on this account over last 60 years", the Textile Minister said while addressing members of Pakistan Hosiery Manufacturers and Exporters Association, and Pakistan Apparel Forum here at PHMA House recently.
Muhammad Jawed Bilwani, Chief Coordinator of PHMA and Central Chairman of Pakistan Apparel Forum along with other senior business leaders welcomed the Minister.
Textile Minister asserted that with increased cotton production, our textile industry will boost; bringing huge amount of foreign exchange for the country. We must have to support and take care of cotton growers to emerge as big textile manufacturer and exporter country in the regional and international markets.
This year, he said, the cotton yield rate in Sindh was better than that of Punjab wherein the crop was hit by various diseases but total volume of cotton in Punjab was more due to vast area of cotton crop.
Saeed Khan, highlighting the importance of textile industry, said the textile is the only answer to our economic problems and that it should be expanded down to rural and remote areas of the country for better living standard of the people there especially economic empowerment of women-folk who make 51 percent of our population. We can set up small textile units like garments factories to jobs to millions of rural population at their door-step.
There would be economic revolution in the country with spread of textile industry -- from ginning , spinning to finished textile goods and their sale, he said.
Textile industry has also big potential to develop base of skilled manpower. The Government was seriously pursuing the agenda of skills promotion sensing its increasing demand in local and international markets. With support of Korea, high profile Textile Training Institute was being set up in Karachi and then in Faisalabad and Sialkot.
Textile Minister assured that Textile Policy would be implemented in letter and spirit within shortest possible time. President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani were taking personal interest in its formulation and now the successful implementation, he said.


New investment to be legally protected: Waqar

LAHORE: Minister for Investment Senator Waqar Ahmed Khan has said the Investment Policy would not be tabled at Senate for approval, until all the stakeholders including the chambers and trade organizations get satisfied with it.
Addressing the Lahore Chamber of Commerce and Industry (LCCI) here recently, he said the new Investment Policy would span five years, adding the government has decided to stabilize the alternate dispute resolution mechanism.
Waqar Ahmed Khan said the government wants to establish Special Economic Zones, adding the new Investment Policy would be offered legal cover, as new investment cannot be ensured without it.
Speaking on the occasion, Lahore Chamber president said the energy crisis is spiraling up, adding the industry cannot make any headway without putting an end to this crisis.
The government should increase more contacts with the chambers, he added.