Day: December 30, 2021

As part of its objective to promote ease of doing business, the Securities and Exchange Commission of Pakistan (SECP) has issued a procedural guide on the formation and licensing of Nonbank Finance Companies (NBFCs) in order to facilitate the prospective investors of the sector.

Available on the SECP’s website, this guidebook provides comprehensive information on the procedure for formation, incorporation, and licensing of NBFCs, in addition to details of applicable fees, other important pre-requisites, reference to the relevant legal provisions, forms, and formats.

The guide covers applicable requirements for the formation and licensing of Fund Management NBFCs as well as Lending NBFCs. Fund Management NBFCs provide services including Asset Management, Investment Advisory, REIT [real estate management trust] Management, Private Equity & Venture Capital Management, and pension fund schemes. Lending NBFCs provide services including Investment Finance Services, Discounting, Housing Finance, Microfinance, and Leasing.

By consolidating all the applicable requirements in one place, the guidebook would make it easier for prospective investors to understand and comply with the applicable regulatory regime.

Source: Pro Pakistani

The foreign exchange reserves held by the State Bank of Pakistan (SBP) fell week-over-week by $298 million (1.64 percent).

According to the central bank’s weekly report released on Thursday, the country’s total liquid foreign exchange reserves went down on December 24, 2021 to $24.2 billion. SBP’s reserves fell by $298.4 million to $17.855 billion during the week under review, compared to $18.153 billion on December 17.

Meanwhile, the net foreign reserves held by the commercial banks amounted to $6.4 billion, depicting a decline of $11 million on a weekly basis. Overall, the liquid foreign currency reserves held by the country, including net reserves held by banks other than the Central Bank stood at $24,273.6 million, down $359 million on a week-over-week basis.

In the last 21 days alone, the foreign exchange reserves saw an outflow of $877 million on different accounts from debt payment to high imports cost.

It is pertinent to note that back in August 2021, the foreign exchange reserves held by SBP umped to an all-time high of $20.15 billion after Pakistan received a general allocation of Special Drawing Rights (SDRs) worth $2,751.8 million from the International Monetary Fund (IMF) on August 24. However, the bank’s reserves began to decline steadily during the same month, which the bank attributed to the fulfillment of debt repayments and other related regulations.

Meanwhile, the Pakistani Rupee (PKR) finally stopped its losing streak against the US Dollar (USD) and appreciated by 72 paisas against the greenback in the interbank market on Thursday. It closed at Rs. 177.51 after closing at an all-time low of 178.24 in the interbank market on 29 December.

Source: Pro Pakistani

The Finance Minister, Shaukat Tarin, on Thursday, presented the Supplementary Finance Bill in the parliament amid strong protest from opposition benches.

The bill, dubbed the mini-budget by opposition parties, was originally scheduled to be presented in the parliament a day earlier, but the cabinet deferred its approval. The government had been pushing for the bill’s approval as it was a pre-requisite to resume the $6 billion External Fund Facility of the International Monetary Fund (IMF).

The State Bank of Pakistan (SBP) Amendment Bill 2021 was also presented in the House, which was referred to the relevant standing committee.

Speaking at the occasion, Pakistan Muslim League Nawaz (PML-N) legislator, Khawaja Asif, claimed that the government had violated the constitution by presenting lapsed and expired ordinances.

The PML-N leader said that the control of the State Bank of Pakistan (SBP) is being given to the IMF. Claiming that “Pakistan is being sold,” he urged the House not to compromise on Pakistan’s sovereignty.

The former defense minister said the entire nation was ashamed of what was happening in the parliament.

Foreign Minister, Shah Mehmood Qureshi, speaking at the occasion, said that the opposition has the right to present its narrative, but the government has to apprise the public regarding facts.

Opposition members pointed toward an incomplete quorum as the foreign minister spoke. Speaker Asad Qaisar adjourned the session till Friday on the objection raised by the opposition.

Under the Finance Supplementary Bill, 2021, presented before the parliament, it is proposed that GST exemptions on large ships, imported bicycles, imported formula milk, live animals, imported meat, journals and periodicals, and raw material for pharmaceuticals be withdrawn.

For food items, the GST exemptions on items that are sold in big bakeries and sweet shops, in-flight kitchen items, and branded packaged poultry items, among others will be withdrawn.

There is a proposal to impose a 17 percent sales tax on branded dairy products, cars above engine capacity of 850cc, hybrid vehicles with engine capacity of more than 1800cc, re-meltable scrap, and gold and silvery jewelry, among others.

The bill also suggests the rationalization of sales tax on mobile phones above the value of $200. There is also a recommendation to increase Federal Excise Duty (FED) on local and imported vehicles with an engine capacity of more than 1000cc.

Source: Pro Pakistani

Federal Minister for Finance and Revenue, Shaukat Tarin, has ruled out the speculations, being expressed by many, that the supplementary finance bill will cause an increase in inflation.

Addressing a press conference, jointly with Minister of State for Information and Broadcasting, Farrukh Habib, Tarin said the government had proposed to withdraw tax exemptions of Rs. 343 billion out of which Rs. 272 billion taxes were refundable or adjustable.

The minister said that proposed new taxes only amounted to Rs. 71 billion, out of which Rs. 69 billion taxes were on luxury imported items such as imported fish, high-end bakery items, imported cheese, and imported bicycles.

“We have proposed removal of only Rs. 2 billion tax exemptions on the items that can be related to the common man which would have a negligible impact on inflation,” the minister said.

“The International Monetary Fund (IMF) had asked us to impose Rs. 700 billion in new taxes but we negotiated and brought it down to just Rs. 343 billion,” he explained.

Giving a breakdown of the tax exemptions being withdrawn, the minister said the Rs. 112 billion tax exemptions on machinery and Rs. 160 billion tax exemptions on the pharmaceutical sector would be refundable or adjustable.

SBP Autonomy

Commenting on the State Bank of Pakistan (SBP) Amendment Bill 2021, the minister said it was aimed at strengthening the central bank. He added that strengthening the institutions was also included in the manifesto of his party.

Tarin said under the bill, the central bank would be given administration independence, which would provide it the authority to decide administrative measures.

He pointed out that members of the central bank board would be nominated and approved by the government. The board, he said, would be answerable to the relevant standing committees of the Parliament.

He rejected the notion that the bill was akin to selling the country’s sovereignty.

Source: Pro Pakistani

Federal Minister for Finance and Revenue Shaukat Tarin has stated that the incumbent government has laid the foundation of a welfare state to ensure the poor do not suffer anymore and have opportunities to earn a respectable livelihood.

The Minister was addressing a ceremony held to mark the start of the disbursement of interest-free loans under the Kamyab Pakistan Program (KPP). “The foundation of the welfare state has been laid. This is a big day, big day for the poor,” he remarked.

He said that initially four million households would be provided financial assistance under the program, and it would gradually be extended to six million and then seven million households.

He asserted that the program would bring prosperity across the country. He said when the low-income segment of society would become prosperous, it could be said that real Pakistan or Pakistan of Quaid-e-Azam was established.

He said that Prime Minister Imran Khan believed in Riyasat-e-Madina, so he had equal focus on a growing economy and on enhancing the income of the upper and middle classes and the welfare of the poor.

He said the Prime Minister wanted the poor to get opportunities under this program and earn respectable livelihoods for themselves without hurting their self-respect. The major banks, he said, would give wholesale loans to small and microfinance banks that would provide loans to the deserving people on a retail basis.

He maintained that under the program, farmers would be provided interest-free loans up to Rs. 150,000 for one crop and Rs. 300,000 for two crops and Rs. 200,000 for tractors. Rs. 500,000 loans would be provided to households for setting up a business and Rs. 2-2.5 million for building a house. In addition, Sehat cards were provided to ensure health coverage for the poor.

He said this was a complete package to target the poor of the country, adding that loans were being provided purely on a merit basis with complete transparency. He also appreciated all the stakeholders including small and large banks for making this program successful.

The Minister said even the World Bank (WB) was suspicious of how this could happen, but WB conveyed that it would take guidance from Pakistan to replicate the program in other countries.

Speaking on the occasion, Chairman Akhuwat Islamic Microfinance (AIM) Dr. Amjad Saqib said there was no such scheme in Asia that provides an interest-free loan to low-income people.

He said AIM, as per the vision of PM Imran Khan, started loan disbursements in three categories of KPP, including Kamyab Pakistan Low-Cost Housing, Kamyab Pakistan Enterprise Loan, and Kamyab Pakistan Kissan Loan. He said Akhuwat Islamic Microfinance had disbursed 2600 loans amounting to Rs. 400 million so far.

During the ceremony, the Akhuwat Islamic Microfinance disbursed 415 loans worth Rs. 60 million, whereas under the program 600 loans worth Rs. 90 million were distributed across Pakistan on December 30, 2021.

Senator Faisal Javed Khan and HBL Islamic Head Afaq Ahmed Khan were also present during the ceremony.

Source: Pro Pakistani