The National Assembly standing committee on finance has given the nod to amend the State Bank of Pakistan (SBP) Act 1956 to replace the Monetary and Fiscal Policies Co-ordination Board, that has become redundant in terms of current practice.
On Wednesday, the report of the committee on SBP (Amendment) Bill 2010 was presented in the House by Fauzia Wahab, chairperson of the NA body on finance with recommendation that the committee considered the proposed legislation in detail during the meeting on August 3 and subsequently passed the Bill unanimously without any amendment.
According to stated objects and reasons by the Ministry of Finance, the State Bank of Pakistan Act, 1956, being an old law would benefit from being updated to bring it closer to the current emerging functions of a modern central bank and to better conform to best international practice.
The Monetary and Fiscal Policies Co-ordination Board is redundant in terms of current practice. It is proposed to replace it and give the current Monetary Policy Committee statutory status, with external experts to be appointed by the Federal Government. The Central Board will be represented by two members on the Committee which will be responsible to formulate, decide and implement the monetary policy and decide on matters such as those relating to key interest rates, supply of reserves, exchange rate policy, and the limits and nature of advances and loans to the Government. The main object for introducing this statutory committee is to facilitate the State Bank's autonomy in 'performance of its essential functions in the changing financial, environment. Consequently, various sections in the Act have also been amended to bring them in line with the role of the Monetary Policy Committee.
The lending to the Government has been restricted by insertion of a new section (Section No 20A), and emergent functions pertaining to open market and credit operations and international reserves have been elaborated and clarified by substitution of the existing sections.
Section 52 of the SBP Act, which provided for the supersession of the Central Board by the Federal Government since the time the State Bank was privately owned, has been repealed in conformity with the current autonomy of the central bank, and international practice.
These amendments will make the law more conducive to the changing global economic and regulatory environment and will better enable the modern functions of the central bank. The report of Standing Committee on Cabinet secretariat on the Oil and Gas Regulatory Authority (Ogra) Bill 2008 (Ordinance No11 of 2008) regarding appointment of Chairman was also presented before the National Assembly.
The bill proposes to substitute sub section 4 in Section 3 of the Ordinance, 2002 as, "The Chairman shall be an eminent professional of known integrity and competence with a minimum of twenty years of related experience in law, business, engineering, finance, accounting, economics or petroleum technology":
The proposed amendment was issued by the Federal Government in view of energy crisis in the country. Since the post of Chairman of Ogra is filled up by the Federal Government, therefore, it was deemed necessary by the Government to fill it by appointing a person who has hands on experience on regulatory matters, with proven track record of leadership, initiatives and experience in management with a broad based exposure to working of the Government at all levels. Report of the standing Committee of Commerce on Pakistan Institute of Fashion and Design bill 2009 and National Disaster Management Bill (Ordinance III of 2007 was also laid before the House.
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