The Senate Standing Committee on Finance, Revenue, and Economic Affairs approved on Thursday the State Bank of Pakistan (SBP) Amendment Bill, 2021, under which the commercial banks would give 60 percent loans concerning their deposits.
The bill seeks to rectify unjustified and inequitable credit lending that has been a longstanding demand of smaller provinces. It will ensure that minimum credit/lending of commercial banks to the private sector for establishing industry and commercial activities in smaller provinces is at par with those of the total deposits of provinces.
The Senate panel meeting was held with Senator Talha Mahmood in the chair at the Parliament House on Tuesday.
Tabled by Senator Mohsin Aziz, the SBP Amendment Bill calls upon all public and private commercial banks to give 60 percent loans of their deposits to borrowers. The bill mover said that SBP, after the amendment, would manage the disbursement of loans by commercial banks. He said the commercial banks in Khyber Pakhtunkhwa were not giving loans to borrowers. If a company defaults, the entire province should not be targeted for non-repayment, he explained. He said that Rs. 2.5 trillion and Rs. 2.4 trillion were given to two provinces but Khyber Pakhtunkhwa was deprived.
On the occasion, Executive Director SBP said the banks were allowed to lend 24% of total deposits under SBP Act. Senator Farooq H. Naik suggested that a provision to lend 50% of the deposits should be included, while most of the members opined that 60% of the deposits should be allowed for lending to borrowers.
The committee unanimously passed the SBP Amendment Bill 2021 with further amendments.
“We passed the bill with amendments to regulatory matters and lending of 60% deposit,” said the Chair, Senator Talha Mahmood.
The committee also discussed £190 million coming from the United Kingdom on financial crimes recovery. As the committee had sought clarification from SBP in its last meeting, the Executive Director SBP said this amount was not transferred to the SBP account and the money was transferred to the account of the Registrar of the Supreme Court through the National Bank of Pakistan.
Senator Musaddiq Malik asked as to why the money seized under the Economic Crimes Act did not reach the government account. Senator Mohsin Aziz said that this money did not belong to the National Bank or the Supreme Court, rather it belonged to the federal government.
Briefing the meeting, Governor SBP Dr. Raza Baqir said the money from the UK did not land in the SBP account. He said the Financial Monitoring Unit could look into the issue, as SBP could only check if a transaction did not go well, adding that the bank only reviewed suspicious transactions.
The committee sought a report from the Finance Ministry on the issue of £190 million within three weeks.
Deliberating on the point of public importance regarding Maintenance of Politically Exposed Persons (PEP) Account of Parliamentarians raised by Senator Danesh Kumar, the committee was informed that no restrictions had been imposed regarding the opening of PEP accounts. Members of the committee demanded these requirements be immediately withdrawn and a compliance report be submitted within five days.
The panel also discussed the problems facing the Pakistani exporters, who carried out exports to Afghanistan, because of the letter issued on December 7, 2021. It suggested that the letter, allowing trade between Pakistan and Afghanistan on a barter basis, must be withdrawn to reinstate old regulators.
The meeting was attended by Leader of the House, Senator Shehzad Waseem, Senator Saadia Abbasi, Senator Musadik Masood Malik, Senator Mohsin Aziz, Senator Farooq Hamid Naek, Senator Kamil Ali Agha, Senator Zeeshan Khanzada, Senator Faisal Saleem Rehman, Senator Dilawar Khan, Senator Danesh Kumar and senior officers from the Ministry of Finance, Revenue and Economic Affairs, alongside representatives of Federal Board of Revenue (FBR), State Bank of Pakistan (SBP), and Securities and Exchange Commission of Pakistan.
