Ijaz Kakakhel Islamabad
A legislative body of upper house of parliament on Wednesday was apprised that after completion of an enquiry over higher US dollar value by banks, no illegal activity was found; however, the commercial banks may tax in the upcoming budget 2023-24 the profits of banks making extra profits on the dollar.
These revelations were made by the Deputy Governor State Bank of Pakistan while briefing the Senate Standing Committee on Finance and Revenue, which held on Wednesday at parliament house while Senator Saleem Mandiwalla was on chair. The committee took briefing by the Deputy Governor State Bank of Pakistan on SBP report on banks scam of extra US dollar rates being charged from the customers for the opening of LC’s.
The Deputy Governor SBP said that State Bank gave a clean chit to the banks after 9 months on the increase in dollar value. He said that the investigation has been completed and no illegal activity has been observed. Dr Anayat Hussain said that Banks role was irresponsible on rupee depreciation and profiteering, the Deputy Governor SBP said that the upcoming budget may tax the profits of banks making extra profits on the dollar.
The committee was apprised that the SBP has moved to market based foreign exchange (FX) regime in which the spread charge on FX sale / purchase transaction is generally determined by the banks on the basis of market conditions like (FX) liquidity and short Net Open FX Positions of the banks were the main reasons of charging higher spreads by the banks during May to August 2022. It was apprised that SBP has conducted limited scope inspection of the matter and furnished its report to Finance Division. It was observed that the overall increase in FX income of the banks was mainly driven by higher spreads due to heightened volatility, however. In some cases, the banks charged higher spreads. SBP was in the process of imposing monetary penalties on the banks. It was also apprised that the SBP has initiated enforcement action against the banks involved in accordance with its supervisory framework.
While discussing the progress of EXIM bank the SBP governor ensured that transaction will commence within 2 weeks, it was apprised that the bank has planned to start the operations in a three phased manner. In the first phase, the bank will introduce Export Credit Insurance products to the exporters. In the second phase, lending products and trade guarantee products will be introduced and in the final phase Islamic financing products.
It was apprised that currently, SBP is engaged with EXIM Bank on the issues like deficiencies in existing IT infrastructure in terms of its integration, cyber security measures and absence of Core Banking System besides deployment on internal controls mechanism. The Secretary Finance said that the absence of the board of directors should not be a hindrance in commencing the transaction. The committee also regretted that as yet the ZBTL and the National Bank has not been appointed a President and wondered this delay.
On the Matter of recommendation made by the Committee on Dawlance (Pvt.) limited and Avagat Kimya (Pvt.) limited it was apprised that the companies has taken up with the concerned banks for an amicable resolution in line with the applicable laws, rules and regulations.
While discussing the matter of import of vintage cars still parked at dry port because government is not giving clearance it was apprized that the matter involves the requirements of IPO 2016, which falls in the domain of the ministry of commerce. Ministry may deem it appropriate to take up the matter with the Federal Cabinet for relaxation in the IPO.
The Senate Standing Committee on Finance and Revenue in a report on the status of the budget recommendation of the Senate of Pakistan for the last five years (2018-2022) apprised the Committee that during the tenure of Senator Farooq H Naek as the Chairman Committee (2018-2020) out of total 185 recommendations to the National Assembly only 63 has been fully implemented, similarly in the tenure of Senator Muhammad Talha Mahmood (2021) 56 recommendations were totally implemented out of 136. In the fiscal year 2022 under Senator Saleem Mandiwalla’s chairmanship 54 recommendations have been presented out of which 25 have been totally implemented.
Earlier in the meeting, detail briefing was presented on crypto currency. The chairman committee remarked that we should not out rightly object to the mechanism of crypto currency and bring it to the country’s advantage and regulate it by drafting legislation. Federal Minister of State for Finance Aisha Ghaus Pasha said that crypto currency is not a legal tender and FATF is not in favor of it. Dr Inayat Hussain said that the rules of crypto are such that no government can control it. It was briefed that over 9 million people which is around 4.1 of Pakistan’s population own crypto currency and so far worth 20 billion dollars of crypto exchange has taken place. Deputy Governor of State Bank of Pakistan said that examining the models of other countries on the issue of crypto currency, 91 million users or 20 billion rupees worth of crypto transactions is an exaggeration, he added.
The meeting was attended by Senators Saadia Abbasi, Anwar –ul-Haq Kakar and Senator Kamil Ali Agha. Federal Minister of State for Finance Aisha Ghaus Pasha, Deputy Governor SBP and senior officials from the Ministry and other concerned departments were also in attendance.
