The State Bank of Pakistan (SBP) would ensure that all banks accept payment of utility bills. This assurance was given by Syed Ishtiaq Ali, Chief Manager, SBP-BSC (Bank) at the Local Credit Advisory Committee meeting held here under his chairmanship recently.
Replying to the complaint made by one of the participants of the meeting that about 50 percent of the banks do not accept utility bills payment, he said that SBP has already issued suitable instructions, and various teams are visiting different branches of commercial banks to ensure that they are providing facilities to the general public in respect of payment of their utility bills. He assured that all-out efforts are being made to provide this facility to the public, and at their doorsteps.
In respect of another complaint that banks are deducting service charges on the accounts of employees whose salaries are deposited in their accounts, the SBP informed that the issue was very old and banks are not entitled to charge such accounts as the SBP has already issued instructions in this regard.
Similarly, when the issue of exports on DP basis was raised an official of Exchange Policy Department (EPD) of SBP advised that the issue be forwarded to EPD for consideration. The issue raised was that in case of shipments/exports on DP basis, foreign buyer accepts the documents and sends the remittance against the shipment through the bank.
Thereafter, when the party approaches the banker to release its documents to the buyer so that he may obtain delivery of the goods, the bank refuses on the plea that they could only endorse the documents.
The participants desired that SBP in consultation with Trade Development Authority of Pakistan (TDAP) may devise some strategy to minimise the risk of exporters against consignments on DP basis.
Ishtiaq Ali, Joint Director of Small and Medium Enterprises and Micro Finance Department (SME & MFD) informed the committee that earlier an institution in the name of Export Credit Guarantee Scheme was established under the umbrella of the Government but it failed. In 1998, when the ERF scheme was revised, Pakistan Export Guarantee Agency was formed. It started with the assets of Rs 2 million but the assets gradually reduced and the company was near closure due to defaults. He also explained the comparative position of India.
On the question of reduction in the current rate of interest on export refinance, Ishtiaq said that at present the determination of ERF is linked with the weighted average yields on six months market treasury bills and these rates are being adjusted on monthly basis. He said that at present the rate of T-bills is 8.8 percent and if the bank rate of 1.5 percent is included it comes to 10.3 percent. But the SBP is providing credit facilities on ERF at the rate of 7.5 percent instead of 10.3 percent and, as such, further reduction was not possible.
Similarly, on the question of bringing down the consumer finance rate of mark-up, which is 15-30 percent, an official of SBP said that the rate of mark-up on credit facilities is determined by market forces and SBP has done away with the directed policy.
Regarding non-payment of export bills by Bangladesh banks, Zaheer Ahmed of EPD informed the meeting that same problem was also faced by some exporters of Lahore and upon pursuing the matter with the central bank of Bangladesh, some payments have already been released. He said that the issue would also be raised in the meeting of the Board of Directors of ACU countries. He advised all parties to refer such cases to EPD so that the same may be taken up.