Opening of LCs: Banks overcharging importers to face action, SBP assures NA panel

ISLAMABAD: The State Bank of Pakistan (SBP) has assured the National Assembly’s Standing Committee on Finance Wednesday that action would be taken against the banks allegedly involved in overcharging the importers in the opening of LCs by the end of this month.

The meeting of the committee presided over by Qaiser Ahmed Shaikh was informed that based on inspection findings, the SBP held meetings with the banks and warned them about the practice and advised them to rationalise the spreads being charged to the customers.

In light of inspection findings, the SBP is also in the process of completing enforcement actions against concerned banks to ensure that they follow a reasonable and transparent approach in pricing their FX transactions and observe fair market conduct.

SBP Deputy Governor Inayat Hussain assured the committee that the process is in the closing stages and various banks have been charged. He added that it will be concluded by end of the current month.

In addition, he said that the SBP has tightened monitoring and no further complaints regarding manipulation is coming to them.

Dr Hussain told the committee that the inquiry process against the banks has been completed and the action will be taken by the end of this month. He added that strict monitoring is being done of the banks since the issuance of notices to them.

He said that there has been no complaint from the banks customers in the recent month. However, the lack of inflow of the dollar is a different matter. The dollar inflows are not coming in adequate amounts neither investment is happening nor are remittances increasing. The current account deficit has increased but there is no foreign investment to balance it, the situation of the dollar will improve in one to two months.

He said that the SBP is now in the process of their internal evaluation of the banks’ replies and action would be taken against those found involved in unusual charging from their customers.

The committee was of the view that it expects strict punishment and fines will be meted out to the accused banks. The chairman of the committee stated that banks have been overcharging their customers in the opening of LCs and no one knows as to what action the SBP was taking against the banks.

Inayat Hussain said that the banks were issued show cause notices on overcharging the customers and they submitted a reply in writing. He said that increase in the current account deficit led to volatility in the market and complaints were received from the banks customer in the month of June-July and subsequently, action was taken by issuing show cause notices to them.

He added that “we have market-based exchange rate”. Adviser to Prime Minister on Finance Tariq Bajwa said that the market determines the rate of the dollar and the SBP occasionally intervene in the market when it notices something unusual in the market.

Chairman said that we will again take up this matter on December 15, 2022, and the SBP governor should brief the committee in detail about the involved banks and action taken against them.

On the agenda items of allocation of floods and essential items provided to the flood victims during the recent floods, the National Disaster Management Authority came under server criticism with Birjees Tahir and Nafisa Shah expressed total dissatisfaction over its performance.

Birjees Tahir wanted the chairman of the committee to take strong exception of the absence of the chairman NDMA from the meeting and should summon him, whereas, Nafisa Shah said that the number of deaths/casualties has crossed 2,000 because of the floods, whereas, according to her information four to five thousand children have died in Khairpur district alone.

Birjees Tahir regretted that the NDMA has no data as there are between 0.15 million floods victims in Khairpur district but the disaster management has distributed only 9,000 tents. He added that the people of Khairpur district are still living under the open sky.

Birjees asked the NDMA how many tents were given to the victims in Khairpur district within three months and stated that the prime minister has given funds for all the areas in which tents and other essential items were also included.

The committee said that the assistance was coming from the federal and the provincial governments, NGOs and international donors but the NDMA has no data as to how much was given and to whom and in which areas.

The NDMA officials told the committee that 9,380 tents have been given in Khairpur district, 3,648 tarpaulins, 0.1 million mosquito nets, and 9,000 blankets were distributed. Member operation NDMA said that the district administration compiles the data of deaths.

Nafisa Shah said that this is the biggest problem that “we don’t know how many victims are in Khairpur district and if they had the data the problem would have been addressed in a better way.”She further stated that unfortunately, data was never given priority as everyone is helping, but there is no proper procedure and coordination to ensure that everyone gets the help.

She urged the committee chairman that he should direct the NDMA and other relevant authorities to gather data. Some members of the committee questioned the absence of the NDMA chairman from the committee that “why did the NDMA chairman not come to attend the meeting.”

Birjees Tahir said that the chairman of the committee had the power to issue warrants to the chairman NDMA. The members of the committee stated that the chairman should come to the committee and brief it on the current situation in flood-affected areas. If the chairman does not come, the chairman of the committee should summon him, Tahir added.

President Zarai Taraqiati Bank (ZTBL) also briefed the Committee regarding the ZTBL operations and performance. The committee showed apprehensions regarding the unsatisfactory performance of the bank. It also showed its concern regarding reports of victimisation of some employees of the ZTBL. The committee said that it wants the ZTBL to get its affairs in order and brief the committee again after rectification of outstanding issues.

Copyright Business Recorder, 2022