Microfinance, SME banks in rural areas to facilitate farmers

Farmers need microfinance and SME (MSME) banks in rural areas to meet their financing needs at affordable rate to replace the middlemen system prevalent in rural areas.
President UNISAME Zulfikar Thaver urged the government to facilitate the SME farmers to enable them to come out of the dependency on middlemen (arthis) by financing them with different kinds of financing for purchase of fertilizers, seeds, fumigation insecticides, logistics, milling and processing at reasonable mark up.
SME farmers need finance for various purposes from sowing, cultivation, harvesting to marketing and the middlemen provide fertilizers, seeds, insecticides, milling services but in return tie up the entire crop which the SME farmer is compelled to handover to the middlemen. Kanyolal Mandhwani from Bagharjee in Sukkur said the middlemen are just one call away and available for all kinds of financial needs of the micro to medium farmer and give them loans for personal and family needs as well, all against the expected crop.
The main issue is the high cost of finance. The middlemen adds substantially to the prices of the items supplied to the farmer as mostly all financing is done in the shape of seeds, fertilizers, insecticides, packing material, storage services rent, milling and processing.
It was concluded at the meeting that to replace the middlemen the bank branch managers will have to become farm managers and facilitate the farmers in all aspects of farming inputs.
The banks for financing the farm sector will be comfortable when their risk of disaster and death is covered by insurance.
The UNISAME committee will recommend all types of insurance for crop, cattle and poultry by low premium insurance by the government to promote the farm sector.
Thaver as chairman Capacity Building Working Group (CBWG) under the National Financial Inclusion Strategy (NFIS) said to achieve financial inclusion of all segments of society it is very important to begin from grass root level and the primary sector needs special attention as it is the source of raw material.
Welcoming the Asian Development Bank (ADB) and its consultants to Pakistan, he said we look forward to our official meeting with them on 1st February 2017 at UNISAME office and we have decided to present our recommendations for disaster relief finance (DRF) and also an alternate to middlemen finance to the ADB team.

Published in Pakistan Observer, January 30th, 2017.

Monetary policy: SBP keeps key interest rate unchanged at 5.75%

The State Bank of Pakistan (SBP) announced to keep interest rate unchanged at 5.75% for the next two months, foreseeing challenges to the economy on an external front.

Revealing the monetary policy statement, which is announced once every two months, SBP Governor Ashraf Mahmood Wathra said the decision of maintaining the policy rate was taken after “tough debate” among members of the Monetary Policy Committee.

The central bank has maintained the rate since May 2016 and remains Pakistan’s lowest in over four decades.

Majority of the analysts argued that the rate had bottomed out and foresaw gradual upward revision going forward. The monetary policy rate was in double digits (at 10%) in the first half of fiscal year 2012-13.

“Growing China-Pakistan Economic Corridor (CPEC) related imports, decline in exports, absence of Coalition Support Fund and slowdown in remittances, pushed the current account deficit on the higher side,” said Wathra.

The deficit doubled to $3.6 billion in the current fiscal year’s first-half ended December 31, 2016 from $1.7 billion in the same period last year.

“Going forward, with…risks to the external sector, the need of financial inflows would grow further,” he said, adding that the higher deficit was financed by an increase in bilateral and multilateral funding along with pick up in investment flows.

The governor, however, presented the optimistic side. “The current account deficit has increased because of higher import of plants, machinery and projects equipment. The imports will help increase [industrial] production. This should be seen in a positive way.”

Excluding import of machineries, the deficit stood at “1.2% which is not much,” Wathra added.

He hoped that exports would revive after the government announced an export package worth Rs180 billion. He said Pakistan has received zero funds on account of Coalition Support Fund (CSF) in the current fiscal year against an expected receipt of $1.1 billion.

The CSF is US reimbursement against expenditure Pakistan has already incurred on war against terrorism.

The governor added that the slowdown in remittances – sent home by Pakistani living abroad – was seen after Middle Eastern and GCC economies came under pressure due to lower fuel oil prices and hardening of reimbursement laws in the US and UK. Saudi Arabia, Abu Dhabi, UK and US are big four sources of remittances to Pakistan, he said.

The depreciation in the UK currency (British pound) against the dollar has also impacted remittances to Pakistan. “People living in UK send remittances in British pound and we count them in dollar value,” he said.

Wathra projected remittances to amount to over $20 billion in the ongoing fiscal year. “They will be higher than last year,” he added.

Talking about average inflation, he said that it clocked at 3.9% during July-December 2016, lower than the earlier projections due to smooth supply of perishable items, stable exchange rate (interbank) and government’s absorption of the impact of higher international oil prices.

“The current trends suggest that the actual inflation would be lower than the target rate of 6% in FY17,” he said.

A sizeable net retirement of government borrowing to scheduled banks and an increase in bank deposits helped increase private sector credit.

Private businesses are actively borrowing from the banking sector for upgrading and expanding their business processes. They borrowed Rs375 billion in the first half of FY17 as compared to Rs282.6 billion availed in the corresponding period.

Demand for consumer financing, especially for auto loans, also gathered pace during the first half of the year, said the governor. Healthy credit expansion, along with higher production of Kharif crops, visible improvements in energy supply, and upbeat business sentiments signal recuperating real economic activities.

Large-scale manufacturing grew by 3.2% during the first five months of the current fiscal year and further increase is expected on account of growing infrastructure spending and recent policy support for export oriented sectors, Wathra added.

Published in The Express Tribune, January 29th,2017.

The rising risk of central bank instability

Separate comments last week from European Central Bank President Mario Draghi and Federal Reserve Chair Janet Yellen confirmed an ongoing change in the policy configuration facing their two systemically important central banks: The recognition of a transition in both economic conditions and prospects, along with questions about robustness and durability.

For now, their response is to maintain a stimulative direction to their policies, and to use verbal guidance that avoids rocking the boat. Although it’s consistent with investor expectations, the forward-looking policy path may not be as secure and smooth as market pricing would suggest, however.

In both Europe and the US, nominal gross domestic product trackers have been ticking up on indications of both higher inflation and higher growth, while fears of a deflationary trap have receded. At the same time, the administration of President Donald Trump has repeatedly signalled its intention to increase infrastructure spending, and the prospects for that happening are higher now that there are Republican majorities in both houses of Congress.

Although it’s consistent with investor expectations, the forward-looking policy path may not be as secure and smooth as market pricing would suggest

The two speeches given by Yellen late last week, together with Draghi’s news conference last Thursday, acknowledged the improved economic conditions. Still, both institutions are resisting, at least for now, the notion that this foretells inflation and asset pricing that leaves monetary policy ‘behind the curve.’ In addition, they were quite guarded in their comments on the prospects for fiscal policy in the US, preferring to wait for more concrete evidence of an actual shift.

The recognition of a changing economic situation and the possibility of looser fiscal policy have not proven sufficient, at least for the moment, to trigger a modification in policy signals. Instead, the two central bank leaders reiterated last week the guidance that was provided at earlier policy meetings, thereby seeking to retain considerable flexibility.

In doing so, they reaffirmed a balance of risk preference that has been a constant of their policy approach since the 2008 global financial crisis.

In formulating policies — especially in an unusually fluid global economy — central banks must consider not just what can go well but also the mistakes they could end up making, albeit inadvertently. This entails an effort to limit possible known mistakes to those they can afford to make and undo relatively easily over time.

Facing an unusually timid cyclical response and a challenged structural one, central banks have again demonstrated that they would rather err on the side of too much stimulus rather than too little, despite the risks entailed for future financial stability and the efficient allocation of resources.

And that is what traders and investors have gotten to expect after observing and internalizing central banks’ preferences over the last few years.

Indeed, in the case of the US, market pricing related to the policy rate still suggests less tightening in 2017 than the three hikes indicated by the Fed at its most recent policy meeting and reiterated in subsequent statements by individual Fed officials. These more subdued interest-rate expectations also extend beyond 2017, to the medium-term path of policy rates, again notwithstanding what Fed officials have signalled about that.

But the more central banks persist with this approach amid changing economic and fiscal conditions, the greater the potential need for a sudden shift in monetary policy that, while economically warranted, could be quite jarring for markets. And it is a possibility that investors may be underestimating as judged by market metrics, including measures of implied volatility.

While the upward movement in yields further out the curve for US government bonds would likely be contained by arbitrage flows from Europe and Japan, the foreign exchange market does not benefit from such a moderating influence. As such, the dollar could be being set up for some consequential volatility.

— El-Erian is a Bloomberg View columnist. He is the chief economic adviser at Allianz SE and chairman of the President’s Global Development Council, and he was chief executive and co-chief investment officer of Pimco. — Bloomberg/The Washington Post Service

Published in Dawn, Business & Finance weekly, January 30th, 2017

SBP Governor urges forex companies to help strengthen rupee against dollar

KARACHI: State Bank of Pakistan Governor Ashraf Mahmood Wathra has urged foreign exchange companies to play their role in strengthening rupee against US dollar in the open market.

The SBP Governor, in a meeting with the representatives of the Forex Association of Pakistan (FAP) here on Tuesday, expressed concern over the increase in US dollar exchange rate to 108.60 in the open market, which is nearly four rupees higher than the inter-bank rate.

He stressed the foreign exchange companies to play their part to bring down dollar rate in the free market.

SBP Deputy Governor Saeed Ahmed, Senior Executive Director Muhammad Ali Malik and Executive Director Irfan Ali Shah were also present.

FAP President Malik Bostan explained that there is demand of 10 million US dollars in the market as against the supply of five to six million dollars, which include workers' remittances and cash foreign currency.

This situation is pushing up the dollar's rate in the free market, he maintained.

Malik Bostan apprised the SBP Governor that commercial banks are not providing them cash dollar notes, which is causing shortage of dollar.

The SBP Governor said if the commercial banks do not provide cash dollar note, foreign exchange companies can directly get dollar from the Central Bank.

SBP Executive Director Muhammad Ali assured the forex association of action if any commercial bank does not provide dollar to foreign exchange companies or client.

Malik Bostan appealed to the SBP Governor to grant two-month exemption of the condition of surrendering 10 per cent of dollars to inter-bank market out of the dollars brought in the country by forex companies against the export of the foreign currency.

This step would help increase supply of dollar in the market, he added.

He also assured the SBP Governor said dollar exchange rate in the open market would soon come down from 108 to 106.

Copyright APP (Associated Press of Pakistan), 2017

Published in Business Recorder, January 17th,2017

SBP to withdraw 10pc surrendering condition to enhance dollar supply

KARACHI: In order to enhance the dollar supply in open currency market, the State Bank of Pakistan (SBP) on Tuesday gave the assurance that it would withdraw condition of 10 percent dollar surrendering by the Exchange Companies in the interbank market.

The SBP convened a meeting of Exchange Companies to discuss the various issues particularly exchange rate. The meeting was chaired by Ashraf Mahmood Wathra Governor State Bank of Pakistan and attended by Saeed Ahmed Deputy Governor SBP, Muhammad Ali Malik Executive Director SBP, Irfan Ali Executive Director SBP, Zafar Paracha General Secretary Exchange Companies Association of Pakistan (ECAP), Malik Bostan President Forex Association of Pakistan (FAP) and other representatives of exchange companies.

The meeting discussed the gaps in rupees between open and interbank market. Governor SBP expressed concern over the rising exchange rate in the open currency market and said that there is no shortage of US dollar in the country and sufficient quantity is available to fulfill the domestic requirement of all type of foreign exchange needs.

While, sufficient dollar stocks are available, there is no reason of higher dollar rate in the open market compared to interbank market, he added.

He said that presently there is some Rs 4 difference in the US dollar rate of open and interbank market that is directly hurting the home remittances inflows. Currently, dollar is being traded at Rs 108.60 in open currency market compared to Rs 104.40 in the interbank market.

During the meeting exchange companies suggested that in order to further enhance the dollar supply in the open currency market SBP may withdraw the condition of 10 percent dollar surrendering into the interbank market for next two months.

According to participants, the governor SBP has been agreed with this suggestion and assured that the condition to surrender 10 percent in the interbank by the exchange companies would be withdrawn shortly on those currencies which are exporting through Exchange Companies. The exemption will be for a limited period to enhance the dollar supply in the open currency market, he added.

During the meeting Wathra also asked exchange companies to get dollar from SBP in case of shortage.

Zafar Paracha of ECAP and Malik Bostan oof FAP has confirmed that SBP has assured to exempt exchange companies for dollar surrendering for two months.

Malik Bostan said that due to rumors of Rs 5000 cancelation, sudden UD dollar demand in the open currency market has been created. Presently, dollar demand in about $10 million par day as against the supply of $5-6 million per day including home remittance and foreign inflows, of which dollar rate is increasing in the open currency market.

He informed that meeting that Exchange companies are bringing some $4 million per day against the exports of currencies, while some $3 billion per day arrives on account of home remittances. He assured that with support of measurers being taken by SBP dollar rate will reverse to Rs 106 in open currency market in next two months.

Copyright Business Recorder, 2017

Published in Business Recorder, January 18th,2017

Reserves increase by $51mn to US$23.191 billion

KARACHI: The total Liquid Foreign Reserves held by the country stood at US $23,191.5 million on January 13, 2017 with an increase of 51 million dollars, said a State Bank of Pakistan statement here on Thursday.

It said that the Foreign Reserves held by the State Bank of Pakistan stood at US $18,361.0 million, while the net foreign reserves held by commercial banks stood at US $4,830.5 million. The total Liquid Foreign Reserves were US $23,191.5 million.

It said that, during the week ending January 13, 2017, SBP's reserves increased by US $51 million to US $18,361 million.

Copyright APP (Associated Press of Pakistan), 2017

Published in Business Recorder, January 19th,2017

CDNS achieves Rs 116 billion by January, 20

ISLAMABAD: The Central Directorate of National Savings (CDNS) has achieved Rs 116 billion savings till third week of third quarter of current fiscal year, from July 01 to January 20, 2016-17.

The target for the year 2016-17 was set at Rs 228 billion, while the directorate was able to achieve the target of Rs 218 billion for the previous fiscal year,an official of CDNS told APP here on Monday.

He said that CDNS has launched first phase of modernization plan in collaboration with National Institutional Facilitation Technologies (NIFT) to facilitate its customers.

After signing a Memorandum of Understanding (MoU) with NIFT, now senior citizens and pensioners would get the amount credited in their accounts from National Bank of Pakistan (NBP).

Under the plan, the CDNS would give this facility on Savings Accounts, Bahbood Savings Certificates and Pensioners' Benefit Account.

In second phase of institutional reforms, same facility would be given on the remaining schemes.

The directorate would be equipped with modern tools for shifting from manual to innovative information technology (IT) services, especially in rural branches, he said.

The official said, 83 branches of CDNS have been computerized in different regions under the first phase while 140 more branches would be automated during the second phase.

He said the modernization plan would be completed in September this year.

Replying to a question,he said after agreement with NIFT, the directorate would launch registered prize bonds, besides transferring profit to the customers accounts.

The official said the proposed structural reforms plan would be launched gradually in order to provide better service delivery to customers.

Copyright APP (Associated Press of Pakistan), 2017

Publishedin Business Recorder, January 23rd2017

SBP initiates annual foreign investment survey

KARACHI: The State Bank of Pakistan (SBP) has initiated annual foreign investment survey to collect data on foreign assets and liabilities of companies/enterprises operating in Pakistan. According to the SBP, the survey is conducted as part of a global undertaking and is co-ordinated by the International Monetary Fund (IMF) and Securities and Exchange Commission of Pakistan (SECP) to collect information for compiling Pakistan's Balance of Payments (BoP) statistics and International Investment Position (IIP) of the country.

All resident units, operating in Pakistan and having foreign participation in the form of claims or obligations, are included in the survey.

Accordingly, chief executive officer (CEO) of all companies with foreign assets/liabilities have been asked to submit the required data (as per define format) as of December 31, 2016, along with a copy of the latest annual report of company/entity, the SBP by March 30, 2017.

The survey is conducted in exercise of the power conferred under sub-section (1) of Section 4 Articles of Agreement IMF, Government of Pakistan, Ministry of Finance Notification No 3 (3) IMF/56, dated 4th October, 1956 and Section 38 of the SBP Act 1956, whereby all relevant persons are required to furnish information as on December 31 to the SBP as per the survey's questionnaire.

The information collected through the survey will be treated as strictly confidential and will be used for statistical purposes only and the survey's results will be published in an aggregate form that will prevent disclosure of data by individual respondents, it added.

All Pakistani enterprises, companies and branch offices of foreign companies, operating in Pakistan and having foreign assets and liabilities, have been advised to report the requisite information vis--vis their entities as on December 31, 2016 to the SBP's Statistics & Data Warehouse Department.

The IIP of a country shows the total holdings of foreign assets by domestic residents and the total holdings of domestic assets by foreign residents at a point in time whereas the BoP reflects flows during the period. Data relating to individual enterprises will not be made available to anyone, except the officials compiling it and they are bound to maintain confidentiality of the information under the SBP Act.

Published in Business Recorder, January 25th,2017

Wait-and-see central banks to play second fiddle to Trump

LONDON: U.S. President Donald Trump will again be center of attention in the coming week with any policy statements, having helped put the Federal Reserve, Bank of England and other central banks in wait-and-see mode.Trump, inaugurated as 45th president on Jan. 20, pushed Republican lawmakers on Thursday for swift action on a sweeping agenda including his planned U.S.-Mexico border wall, tax cuts and repealing Obamacare.

The White House also floated the idea of imposing a 20 percent tax on goods from Mexico to pay for the wall, sending the peso tumbling and deepening a crisis between the two neighbors.

"Markets will be focused on whether he (Trump) continues to show a high degree of commitment to implementing his pre-election promises and whether he gets onto detailing his fiscal plans," said Victoria Clarke at Investec.

A rise in protectionist trade policies is the biggest risk facing the global economy, according to a Reuters poll of hundreds of economists taken earlier this month.

Trump has already withdrawn from the Trans-Pacific Partnership (TPP) and threatened to renegotiate - or even scrap - the North Atlantic Free Trade Agreement (NAFTA) with Mexico and Canada.

In contrast, speculation Trump will enact bold stimulus and reflationary measures has pushed up U.S. 10-year Treasury yields, lit a fire under the dollar and sent the Dow Jones Industrial Average above the 20,000 mark for the first time.

Last month the Fed added 25 basis points to borrowing costs, only its second hike since the Great Recession and a year since the first one. At the time, policymakers signaled as many as three increases in 2017.

But no hike is expected on Wednesday and rates will remain at 0.50-0.75 percent until the second quarter, when another 25-basis-point rise is likely, a Reuters poll found.

Strong labor market data, due on Friday, would lend credence to those expectations for a second quarter hike. A Reuters poll predicts a pick-up in non-farm payrolls.

The European Central Bank has had an ultra-loose monetary policy for years, with little chance of any change in the foreseeable future, as it has so far failed to get inflation anywhere near its close to 2 percent target.

Euro zone inflation rose to 1.5 percent this month, flash data are expected to show on Wednesday, still a long way from target. Germany's is expected to rise to 2 percent.

But ECB President Mario Draghi has remained relatively comfortable about upward movements and relaxed about German calls for tighter policy as its inflation rate climbs.

"We expect inflation releases due this week from several countries to show prices are accelerating further. Oil is the main factor behind rapidly rising inflation; Brent crude was about 65 percent higher year-on-year in January 2017," said Achilleas Chrysostomou at Standard Chartered.

An increase in euro zone manufacturing is also expected to be confirmed with the release of purchasing manager indexes.

A slowdown in growth in Britain's dominant service industry and among its manufacturers during January, after they finished 2016 strongly, is expected to be reported by Britain's purchasing managers' indexes.

Britain's free-spending consumers again confounded warnings that June's Brexit vote would cause an immediate slowdown in the country's economy, driving robust growth in the final three months of 2016, data showed on Thursday.

Gross domestic product rose at a quarterly pace of 0.6 percent in October-December, keeping up the same above-average pace seen in the initial three months after the referendum decision to leave the European Union.

But economists have warned booming inflation and uncertainty around the terms of Britain's divorce from the EU could curtail growth rates this year. Prime Minister Theresa May has said she will trigger Article 50, starting the two-year countdown to leaving, by end-March.

"The Bank of England is expected to leave rates on hold next week and is likely to retain its position that a rate hike is just as likely as an interest rate cut," said James Knightley at ING.

"Certainly the recent data flow has been strong and inflation is on the rise, but there are tentative signs of a slowdown in employment growth while business surveys suggest a growing sense of caution surrounding Brexit."

A recent Reuters poll suggested the Bank would leave its record-low interest rates and other stimulus measures unchanged at least until 2019. All but one of the 67 economists surveyed said there would be no tweaks in the next policy announcement on Thursday.

The Bank of England will also publish its quarterly Inflation Report.

The Bank of Japan, Central Bank of Kenya and the Central Bank of Russia all have the policy decisions, but none are expected to move. China continues celebrating its Lunar New Year so there will be little news from the world's second largest economy.

Published in The News, January 29th, 2017

SBP leaves interest rate on hold at 5.75 pc as widely expected

KARACHI: The State Bank of Pakistan on Saturday held its benchmark interest rate steady at 5.75 percent, as expected, citing the need to further boost economic growth in a muted inflationary scenario.

The central bank kept the policy rate unchanged for the fourth consecutive time. The bank cut the interest rate to the current level in May last year.

The bank said average inflation clocked in at 3.9 percent during the first half of the fiscal year of 2016/17, lower than the earlier projections due to smooth supply of perishable items, stable exchange rate, and government’s absorption of the impact of higher international oil prices.

“The current trends suggest that the actual inflation would be lower than the target rate of six percent in 2016/17,” SBP’s Governor Ashraf Mahmood Wathra said, unveiling the monetary policy decision for the January-February period.

 “Based on an assessment of the developments and after detailed deliberations, the monetary policy committee has decided to keep the policy rate unchanged.”

The bank viewed stability in international oil prices in the short- to medium-term, however, it would remain vigilant “to see how the international market will behave in the next six months.”

The central bank projected the growth rate between five to six percent for the current fiscal year in line with the finance ministry’s target of 5.7 percent. The growth rate was recorded at 4.7 percent – the highest rate in the past eight years – for the last fiscal year of 2015/16.

The World Bank increased its growth forecast for Pakistan to 5.2 percent for fiscal year 2017, 0.7 percent up from its earlier projection, while International Monetary Fund projected the GDP growth rate at five percent for the current fiscal year.

The SBP’s committee said healthy credit expansion, along with higher production of Kharif (summer) crops, visible improvements in energy supply and upbeat business sentiments, “signal recuperating real economic activities.”

“Large-scale manufacturing grew 3.2 percent during the first five months of the current fiscal year and further increase is expected on account of growing infrastructure spending and recent policy support for export-oriented sectors,” the bank said in a policy statement.

The assumption of rise in domestic demand and economic activity is supported by Rs180 billion worth of exports incentive package, recently announced by the government, for the struggling exporters.   

The central bank, however, sees risks to current account position if foreign inflows run short of supply.

“Growing CPEC (China-Pakistan Economic Corridor) -related imports, decline in exports, absence of coalition support fund, and slowdown in remittances pushed the current account deficit to $3.6 billion in the first half of FY17, from $1.7 billion in the same period last year,” it said. “This higher deficit was financed by an increase in bilateral and multilateral funding along with pickup in investment flows. Overall surplus in the balance of payments stands at $0.2 billion in the first half of the current year.”  With the aforementioned risks to the external sector, the need of financial inflows would grow further, it added.

The SBP’s governor said capital goods, including machinery and plants, were the major catalyst to imports. He, however, said such imports would result in rising productivity.

The governor sees remittances to reach more than $20 billion during the current fiscal year.

The SBP said soft interest rate, couple with a sizeable net retirement of government borrowing to scheduled banks and an increase in bank deposits, helped increase private sector credit.

“Benefiting from the historic low interest rates, private businesses are actively borrowing from the banking sector for upgrading and expanding their business processes,” the SBP’s statement said. “Private sector borrowed Rs375 billion in first half of FY17 as compared to Rs282.6 billion availed in the corresponding period of last year.”  

The SBP said loans for fixed investments increased Rs134.1 billion in the first half of 2016/17 compared with an expansion of Rs83.8 billion in the same period of last year. “Demand for consumer financing, especially for auto loans, also gathered pace during the first half of the year,” it added.

Published in The News, January 29th, 2017

Director Risk Management Department SBP

The position is responsible for development & implementation of Enterprise Risk Management (ERM) Framework and overall supervision & monitoring of risks associated with foreign exchange reserve management activities of the Bank.

Eligibility Criteria Qualification: Masters or Bachelors Degree (16 years) in Finance, Risk Management, Economics or equivalent from HEC recognized local or foreign university. Experience:    Minimum 12 years relevant (post qualification) experience with exposure in international financial institutions. Application Procedure Interested candidates meeting the above mentioned eligibility criteria may send their detailed CVs to the address mentioned below or at recruitment@sbp.org.pk. Please clearly mark the envelope with the position applied for. Only short listed candidates will be contacted. Female candidates are encouraged to apply. Senior Joint Director Human Resources Department State Bank of Pakistan, 10th Floor, SBP Main Building I.I. Chundrigar Road, Karachi Application Deadline: February 06, 2017 For Details and Apply Click Here

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PU holds seminar on Islamic banking, finance

Punjab University Hailey College of Commerce in collaboration with State Bank of Pakistan organized an awareness session on Islamic Banking & Finance at its seminar hall.
On this occasion, PU Vice Chancellor Prof Dr Zafar Mueen Nasir, Dean Faculty of Commerce and Principal College Dr Hassan Mobeen Alam, Chief Manager SPB BSC Javaid Ahmad Bhatti, Deputy Chief Manager Huma Mahmood Bukhari, Divisional Head Product Development MCB Arshad Hussain Zubari, Head of Sharia Compliant MCB Islamic Mufiti Syed Sabri Hussain, faculty members, students and a large number people from diverse field were present. Arshad Hussain Zubari and Mufiti Syed Sabri Hussain shared that Islamic Banking in financial system based on the principles of no charging interest, which is prohibited under Islam.
The speakers clarified the difference between Islamic & conventional Banking under the umbrella of Quran and Hadees. The speakers also gave important information about Islamic Banking contracts, Sharia compliance growth of Islamic banking in Pakistan and role of SBP for Islamic Banking promotion.

Published in Pakistan Observer, January 27th, 2017

DIB targets 10-15pc loan growth in 2017

Dubai Islamic Bank (DIB), the United Arab Emirates’ largest sharia-compliant lender, is targeting loan growth of between 10 and 15 percent in 2017 after reporting an estimate-beating 58.4 percent rise in fourth-quarter 2016 net profit. Aiming to pave the way for the bank’s next stage of growth, it also said it would seek shareholder approval next month to raise Tier 1 issued capital by $1 billion, as well as issue senior or subordinated sukuk for up to $5 billion.
Speaking in an earnings conference call after the release of the results, chief executive Adnan Chilwan said the bank was adequately capitalised and had no set timeframe for when it would raise capital. Its Tier 1 capital adequacy ratio, a crucial indicator of a bank’s health, stood at 17.8 percent at the end of December, well above the 8 percent required by the local regulator. Apart from the third quarter, when earnings were dented by a rise in costs, the bank’s earnings growth has outpaced most of its local rivals in recent quarters in a slowing economy.
In the latest quarter, the bank made 1.37 billion dirhams ($370 million) in the three months to Dec. 31, according to Reuters calculations. This compares with a 864.7 million dirhams profit in the corresponding period of 2015. The result was well ahead of the average forecast of three analysts polled by Reuters, who had forecast a quarterly profit of 850.4 million dirhams.
The bank grew its loan book by 18 percent in 2016, ahead of its target of between 10 and 15 percent for the year. DIB also said its board proposed a 45 per cent cash dividend to shareholders for the year, the same as for the previous year.—Reuters

Published in Pakistan Observer, January 27th, 2017

Biometric ATMs make Islamic banks more accessible

MCB Islamic Bank Limited is expanding access to financial services and reaching the unbanked population with new cash dispensing technology and software from Diebold Nixdorf. MCB Islamic Bank is opening new branches across Pakistan and will outfit each branch with Diebold Nixdorf’s latest self-service platform and software.
“Our goal is to provide our customers with the most reliable and advanced technology to ensure they receive positive experiences at our bank every time,” said Sufian Saeed, head of digital banking and alternative delivery channel, MCB Islamic Bank Limited. “Diebold Nixdorf’s superior self-service technology and software enables us to remain at the forefront of retail banking and deliver the best quality services to our customers.”
The new technology, equipped with biometric authentication and powered by Diebold Nixdorf’s dynamic software, will enable the bank to drive connected commerce and enhance the consumer experience with increased security and convenience while providing a seamless experience across their entire network.
“As financial institutions expand their reach within the region, we will continue to serve as a true partner to provide industry-leading technology and services to shape the future of consumer transactions,” said Habib Hanna, Diebold Nixdorf managing director, Middle East. “We are committed to creating collaborative partnerships with financial institutions, such as MCB Islamic Bank, to enable broader access to financial services and provide best-in-class consumer touchpoints for every market.”

Published in Pakistan Observer, January 27th, 2017

Islamic bonds, Sukuk dominating global scene

The share of Sukuk issuance in core markets such as Pakistan, Malaysia, Indonesia, Turkey and the Gulf Cooperation Council (GCC) region are expected to keep up their market share in 2017, said Bashar Al Natoor, Global Head of Islamic Finance. On the other hand the global Halal industry is estimated to be worth around USD 4.9 trillion. Growing at an estimated annual rate of 20%, the industry is valued to be around USD 8.4 trillion by 2020.
Thus, making it one of the fastest growing consumer segments in the world with a little over 1.8 billion Muslim consumers. Meanwhile, the new Sukuk issuance with a maturity over 18 months from the core markets of the Gulf Cooperation Council (GCC) region, Malaysia, Indonesia, Turkey and Pakistan rose to $40 billion (Dh147 billion) in 2016 from about $32 billion a year earlier. This represented 28.5 per cent of total bond and Sukuk issuance in these markets in 2016, down marginally from 29 per cent in 2015.
The outlook for Sukuk issuance in 2017 remains positive as GCC economies are expected to return to issuing Sukuks to fund their deficits and tap the increasing demand Islamic investors in the region. Moreover, with stabilising oil prices and austerity measures in place, GCC governments will have the time to standardise policies for Islamic instruments and tap the unfulfilled global demand,” Faisal Hasan, Head — Investment Research at Kamco. Global Sukuk issuance increased marginally by 2.2 per cent in 2016 to reach $77.1 billion as compared to $75.4 billion during 2015.
This increase was much smaller than the 5.5 per cent growth seen in 2015. The deceleration in growth was primarily due to the fall in sukuk issuance by Malaysia ($28.2 billion in 2016 as compared to $4.4 billion in 2015), in addition to the GCC countries that recorded a decline of $2.2 billion in 2016. “The Sukuk market did not play a counter-cyclical role in core Islamic finance markets in 2016, and we forecast a stabilisation of total issuance in 2017 at around $60 billion-$65 billion. We believe the complexity of Sukuk issuance will continue to weigh on issuance volumes, unless counterbalanced by tangible results on standardisation or the establishment of large issuance programs,” said S&P Global Ratings’ Global Head of Islamic Finance, Mohamed Damak. Sukuk issuance for the Mena region declined for the third consecutive year by 25 per cent in 2016, slightly lower than the 27 per cent decline during 2015.
On the other hand, bond issuance jumped from $42 billion in 2015 to $75.8 billion during 2016, a surge of more than 80 per cent. Analysts say the share of Sukuk in total debt issuances from the core Sukuk markets would have been higher last year but for the return of Saudi Arabia, Abu Dhabi and Qatar to the sovereign bond market with combined issuance of $31.5 billion.
Despite such huge surge in conventional issuances seven of 10 key markets did issue sovereign Sukuk in 2016 and other sovereigns in the GCC region have indicated they could issue Sukuk, or a mix, in the future, reinforcing the view that the market share of Sukuk will gradually rise. Malaysian companies continue to be the most active corporate issuers. Several other key markets have introduced or updated Sukuk laws in the past few years, including Saudi Arabia, Oman and Kuwait, which should gradually boost issuance by creating a standardised structure and improving transparency.
The recent sovereign bond issues from the GCC region should also help create a capital market pricing benchmark and lower bank liquidity could reduce the pricing gap between capital market funding and the bank loans on which GCC corporates have traditionally relied. The biggest remaining roadblocks to corporate issuance are the development of debt-management expertise and a change in the corporate culture to increase financial and management transparency.

Published in Pakistan Observer, January 27th, 2017