Day: January 18, 2022

State Bank of Pakistan (SBP) has rolled out the mechanism for payment of mark-up subsidy and credit loss subsidy to commercial banks working as Wholesale Lenders (WLs) and Microfinance Providers/Housing Finance Companies working as Executing Agents (EAs) under Kamyab Pakistan Program (KPP).

In this regard, commercial banks as WLs are advised to submit their claims and also the claims of their respective EAs to the Program Management Unit (PMU) of Finance Division, Government of Pakistan within 15 working days after the end of the respective quarter.

Kamyab Pakistan Program (KPP) Payment Mechanism:

The Government of Pakistan (GoP) has launched Kamyab Pakistan Program (KPP) to provide subsidized microloans to small businesses, the agriculture sector and the housing sector. Commercial banks/ Development Financial Institutions (DFIs), referred to as Wholesale Lenders (WLs), will provide liquidity to Executing Agents (EAs) i.e. Microfinance Providers (MFPs) and Housing Finance Companies (HFCs) for onward lending to borrowers. Microfinance providers include Microfinance Banks (MFBs), Microfinance Institutions (MFIs) and Rural Support Programs (RSPs).

KPP has three components related to financing i.e. (i) Kamyab Karobar (ii) Kamyab Kissan and (iii) Naya Pakistan Low Cost Housing (NPLCH). MFPs shall extend financing under all three components of KPP, whereas HFC will only extend financing under the NPLCH component.

Mechanism for Payment of Mark-up Subsidy:

Government shall pay the difference of “customer rate” and “bank rate” as a mark-up subsidy. The bank rate shall be determined through a competitive bidding process by ensuring transparency and compliance with Public Procurement Regulatory Authority (PPRA) Framework in letter and spirit.

The bank rate is defined as the WLs rate approved by the government through a competitive bidding process and includes both the WLs and EAs spread. Within the approved bank rate, WLs and EAs will negotiate and decide the rate which covers the EAs operational cost for financing under KPP. Markup subsidy claimed by WLs will be the difference of bank rate and markup rate charged by EAs from customer(s). EAs shall prepare and submit their subsidy claims (as the difference of EAs operational cost rate agreed with WLs and customer rate) to WLs on the standard format.

WLs will also prepare their mark-up subsidy claims. WLs will arrange an audit of the subsidy claims by External Audit Firms and submit the audited claims to PMU for receiving mark-up subsidy on outstanding regular KPP portfolio of WLs and EAs.

The audited claims of EAs/WLs along with a certificate from an external auditor relating to the accuracy of markup subsidy calculations shall be submitted through WLs to PMU within 15 working days after the end of the respective quarter for payment of mark-up subsidy claims.

The EAs/WLs shall submit their credit loss claims on the standard formats and Prudential Regulations (PR) of SBP on Microfinance Banks to determine the default i.e. Regulations related to the classification of a loan in the “Loss” category would be the benchmark for this purpose and presently it is 180 days.

However, in case of EAs regulated by the Securities and Exchange Commission of Pakistan (SECP), Non Banking Finance Companies & Notified Entities Regulations, 2008 of SECP shall apply. WLs shall only be eligible to claim 50 percent Pari-Passu Government Guarantee when their respective EAs will declare the default or file bankruptcy/insolvency i.e. WLs shall make all efforts to recover the default amount over and above 10 percent against each component/scheme from the respective EAs and remedy to claim Pari-Passu 50 percent Government Guarantee shall only be available to WLs when EAs will declare default/file bankruptcy and recovery is no more possible from EAs.

Mechanism for Payment of Credit Loss Subsidy:

EAs shall prepare and submit their credit loss claims to WLs. WLs will also prepare their credit loss claims if any and will arrange an audit of the External Audit Firms for onward submission of both claims (EAs & WLs) to PMU for receiving credit loss subsidy on the outstanding principal amount. The audited claims of EAs/WLs along with a certificate from an external auditor relating to the accuracy of subsidy & loan loss calculations shall be submitted through WLs to PMU within 15 working days after the end of the respective quarter for payment of credit loss subsidy claims. PMU shall, within 5 working days, validate the claim before recommending it for payment by Development Finance Support Department (DFSD), SBP Banking Services Corporation (BSC) Head Office Karachi. DFSD shall apply a sanity check on each claim to maintain the consistency of each claim payment. DFSD shall advise the SBP BSC Karachi office to debit the GoP’s Account and credit the respective WL’s account within three working days from the date of receipt of the claim from PMU.

Role of External Audit Firms:

WLs shall appoint External Audit Firms on the Panel of SBP to undertake audits of at least 50 percent of the subsidy & loan loss claims by EAs/WLs on an ongoing basis. Audit firms shall prepare the format for receipt of mark-up & credit loss subsidy claims for onward submission to PMU.

PMU may conduct a special audit in case EAs credit loss default rate exceeds 10% or in any other case where it is deemed necessary. The PMU will define an arbitration process to resolve issues regarding disputes on amounts of subsidy and guarantee claims, etc. The decision of PMU will be final in a resolution of disputes regarding claims and disputes, if any, between EAs and WL.

Source: Pro Pakistani

The Pakistani Rupee (PKR) reversed its winning streak against the US Dollar (USD) and posted losses in the interbank market today. It lost 26 paisas against the greenback despite hitting an intra-day high of Rs. 175.75 against the latter during today’s open market session.

It depreciated by 0.15 percent against the USD and closed at Rs. 176.18 today after gaining 14 paisas and closing at 175.92 in the interbank market on Monday, 17 January.

The rupee reported losses against the dollar today when markets opened in the US after the holiday for Martin Luther King Jr. Day yesterday. Despite most trends projecting nominal movements among major economic indicators, the PKR fell amid the usual fears of extremely volatile inflationary concerns. Moreover, subsequent to the country’s Real Effective Exchange Rate (REER) soaring to 98.5 in November 2021, domestic exports have become much more expensive and are piling more pressure on the local unit.

Discussing the rupee’s near-term outlook earlier in the day, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, explained on Twitter that higher inflation and trade data, together with November’s REER of 98.5436, suggest that data for December could be close to 100. While December’s remittances of $2.50 billion are in line with his ‘OUTLOOK 2022’ (BR) prediction of $30 billion, Rizvi said this could alleviate the pressure on the exchange unit. “I expect the PKR to gradually inch up until [the] IMF statement,” he added.

INTER BANK

With NOV REER 98.5436, higher inflation & trade numbers indicates DEC number could be close to 100. While DEC remittances at $2.50bn is in line of my forecast ‘OUTLOOK 2022’ (BR) for $30bn+ could ease pressure.I expect #PKR to gradually inch up until IMF announcement

— Asad Rizvi ???? (@asadcmka) January 18, 2022

The PKR also reversed its winning run against other major currencies and reported losses in the interbank currency market today. It lost seven paisas against both the Saudi Riyal (SAR) and the UAE Dirham (AED), and 36 paisas against the Canadian Dollar (CAD) in today’s interbank currency market.

Conversely, it posted gains of 36 paisas against the Euro (EUR), 38 paisas against the Pound Sterling (GBP), and 25 paisas against the Australian Dollar (AUD).

Source: Pro Pakistani

The Ministry of IT has proposed a National Disaster Telecommunications Plan for the provision and use of telecommunications services before, during, and after a national disaster in the National Broadband policy.

According to the proposed plan, these services will be provided during each phase of a disaster. It will comprise of the services to be provided in the disaster-hit areas and the services to be provided in other areas to closed user groups and to the general public.

The services to be provided will be a subset of those normally available from a licensee. A catalog of critical telecommunications elements to be available at times of emergency. Moreover, the terminal devices connecting to telecommunication networks will need to be traceable within a reasonable distance of the actual location to facilitate the provision of emergency services.

According to this document, telecom service providers and CMOs should keep themselves ready all the time for any type of emergency and disaster and additional arrangements to be made for the restoration of basic services in minimum time during an emergency or disaster. A process to be followed for the urgent replacement of critical infrastructure including obligations on suppliers of such infrastructure.

During national disasters a process to be followed by the ministry, PTA, and other institutions to liaise with licensees about the reconfiguration of their networks and services to provide the specified services and for returning networks and services to their commercial state. Related internal processes are for individual licensees to develop.

According to this plan, the federal government, in consultation with PTA, will assess the national and provincial requirements for critical telecommunications infrastructure and services. In this respect, relevant government departments and provincial governments will be consulted. The PTA, in conjunction with the NDMA, and in consultation with licensees, will develop regulations and licensees will adopt regulations that apply when a regional or national emergency has been declared by the government or a provincial government in the legally required manner to promulgate the plan.

According to the policy document that promulgates the necessary regulations and periodically, thereafter, PTA will require licensees to audit and test their individual national disaster plans and processes. PTA, in conjunction with NDMA, may periodically require licensees to participate in National exercises to test overall disaster management processes and plans.

Recently, during the Murree disaster, it was observed that despite the declaration of emergency in Murree, telecommunication services remained suspended in some areas for a few days, and CMOs were blaming MoIT and PTA for non-corporation. PTA also wrote letters and contacted IESCO and WAPDA for the restoration of power in critically hit areas where telecommunication services were also disturbed. The experts think that this national plan will be helpful during any emergency or disaster in the future as it sets SOPs during a national disaster.

The National Broadband Policy draft has been prepared by the Ministry of IT. It is open for consultation, after which it will be sent to the federal government for approval.

Source: Pro Pakistani

The Federal Board of Revenue (FBR) is set to launch a series of online hearings from next month, enabling taxpayers to directly lodge their complaints with the tax authorities.

The announcement was made by the Chief Commissioner Inland Revenue, Haider Ali Dharijo, while addressing the members of the Korangi Association of Trade and Industry (Kati). He said all the procedures and documents for redressal of grievances had been made available online to ensure transparency.

Dharijo said income tax certificates could now be obtained online besides taxpayers could also submit their tax returns with just one click. He further informed that the refund payment system has also been fully automated.

The FBR commissioner informed that an amount of Rs. 1.6 billion was refunded to leather exporters during the first half of the current fiscal year, an increase of Rs. 0.6 billion compared to the corresponding period of the previous year.

Speaking at the occasion, Kati Patron-in-Chief, S.M. Muneer, lamented that FBR did not make timely payments, as a result, a huge amount of refunds was still pending with the tax authorities since 2007.

Dharijo assured that a focal person would be appointed for resolving the tax issues of Korangi industrialists.

Source: Pro Pakistani