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ISLAMABAD: Governor of the State Bank of Pakistan (SBP) Jameel Ahmad on Wednesday said that the inquiry report against certain banks on account of foreign exchange manipulation has been completed, indicating variation in banks’ forex profits during a specific period.

He informed the National Assembly Standing Committee on Finance, on Wednesday, that there were two options either to impose a penalty or take fiscal measures and the federal government is considering undertaking fiscal measures.

During the committee’s proceedings, one member of the National Standing Committee on Finance who is a major ally of the Pakistan Democratic Movement (PDM)-led government from Balochistan Awami Party (BAP) Khalid Magsi asked the Governor SBP that whether he wanted a public hearing or meeting should go ahead in-camera.

Dollar manipulation: SBP says probe complete, decision to be made on fiscal or regulatory action

The SBP governor preferred to keep the discussion on the manipulation of banks in exchange rate earnings as in-camera proceedings. The Chairman of the NA Standing Committee on Finance, Qaiser Ahmed Sheikh, gave a ruling for an in-camera meeting on alleged currency manipulations.

In a written reply during the NA Standing Committee on Finance, the SBP stated that the heightened volatility/ uncertainty, short forex liquidity, and short net open forex positions of the banks were the main reasons for charging higher spreads by the banks during the period from May to August 2022.

The SBP further stated that the bank’s gross FX income increased significantly in the first half (Jan-June) of 2022 as compared to 1st half of 2021. The allocation of additional income to various components of the FX business is quite difficult due to the complexities involved in their calculations and record keeping.

The SBP has conducted a limited-scope inspection and observed that the overall increase in FX income of the banks was mainly due to heightened volatility; however, in some cases the banks charged “higher spreads”. In this regard, the SBP is in the process of taking enforcement action on the banks. In their meeting with banks, the SBP also warned them about their practices and advised them to rationalize their spreads being charged to customers.

On import restrictions for opening up LCs, the chairman of the NA panel alleged that there were some under-the-table deals continuing and asked for placing some criteria for opening up LCs instead of handling it with discretionary powers.

The committee took up the issue confronted by a Chinese company which was eyeing to invest around $100 billion in coastal areas of Balochistan. However, their representatives informed the NA panel that they purchased 25,000 acres of land in the coastal areas but there were different requirements for no objection certificates (NOCs) which they could not secure despite running from pillar to post. The Chinese company intended to establish a smart city in the coastal areas.

It was informed during the proceedings of the NA panel that the CCP was dysfunctional because four posts of members were fallen vacant for quite some time and only the chairperson of the CCP was performing. Special Secretary Finance Awais Manzoor told the committee that the government received 186 applications, out of which, 114 were short-listed. Now the Minister for Finance along with a panel is to conduct= interviews of dozens of eligible candidates for selection of four members of the CCP.

However, the Chairperson CCP, Rahat Kaunain, informed the committee that the decisions against the powerful sector could not yield any results because they secured stay orders from the courts. When the chairman of the committee inquired her about the solution, she replied that the financial matters need to prioritise as it took 10 years to get a hearing of the cases without getting any desired results.

The CCP issues orders against powerful and well-connected sectors but they immediately get a stay order from High Court.

Copyright Business Recorder, 2023


1000 characters
Dr.Salaria, Aamir Ahmed Mar 09, 2023 07:47am
Very shocked that iron brother company had to run pillar to post for a big investment and still failed to kick-off. Shows how corrupt and lackluster Chinese companies are. No doubt the honest officials blocked iron brother company due to the irregularities.
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KhanRA Mar 09, 2023 08:58am
SBP manipulated the rupee’s value by going along with Ishaq Dar’s dangerously stupid ideas.
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Abdul Sheikh Mar 09, 2023 11:44am
Sbp should’ve probed itself for artificially jacking up the rupee value.
thumb_up Recommended (0) reply Reply

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