SBP unearths anomalies in dollars payment to importers

The State Bank of Pakistan (SBP) has detected irregularities in payments of dollars to the importers by several banks, its governor said on Thursday.


SBP Governor Ashraf Mahmood Wathra, without disclosing the amounts involved, said the central bank has launched actions against such banks.

“During the past two years, several cases were detected where three to four import payments were acquired from banks by the traders for single consignment,” said Wathra, talking with the office bearers of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

“(In one case), single advance payment was declared against multiple proceeds,” he added.

Wathra said the SBP has started criminal action against banks. “Heavy penalties will be imposed on such malpractices by the banks,” he added.

He said the central bank, in collaboration with Pakistan Customs, has already introduced an export form to improve the monitoring of receipts against foreign trade.

He further added that import form would also be launched in the next few days.

On a question about difficulties in opening of the letter of credits (LCs) for alternative energy projects, the governor said the SBP didn’t disallow such requests.

He said dozens of meetings have been held with the stakeholders and delay in opening of LCs is due to differences in the financial plans of the companies.

The business community informed the SBP governor that the government borrowing from banks (having reached to Rs7 trillion) was discouraging lending to private sector.

Wathra said the private sector credit offtake is improving. The SBP is also injecting funds through open market operations to ensure liquidity in the banking system.

He said presently trade transactions with Iran can be made through Asian Currency Unit. He said the restriction on Iran is not fully over; however, officials from four Pakistan’s banks have visited Iran to strengthen the transactions system.

Wathra said SBP holds a small portion of exporters’ refunds, which are disbursed after approval.

He, however, said the exporters should be paid promptly.

On a query regarding bonds against refunds, he said details have not been shared with the SBP. He said if the government adopts such a mechanism the SBP will facilitate the business community in issuing the bonds.

The governor said the margins of corporate profits in Pakistan are much higher than other regional economies despite all odds.

President Abdul Rauf Alam of FPCCI said interest rates offered by Chinese banks are much lower than Pakistan. Alam urged the central bank to devise mechanism to make conducive environment for local entrepreneurs.

Presidents and representatives of around 20 banks were also present during the meeting.