CSS Forums - View Single Post

sibgakhan · #**130** Thursday, February 02, 2006

Anti-money laundering law shortly: Shaukat

By Nadeem Malik

ISLAMABAD: Pakistan will enact laws against money laundering and benami practices to strengthen the financial sector, said Finance Minister Shaukat Aziz on Friday.

At a press conference, Aziz talked about the banking sector reforms, non-performing loans, next generation reforms and the legal environment governing the financial sector. "Our regulations are as per best international practices, and much stronger than the peer countries, like India and others," he said.

The minister said the cabinet has approved the draft anti-money laundering law, which would be placed before the House, once law division vets the act. He also announced the introduction of a banking ombudsman. Pakistan initiated banking sector reforms in 1997 with the help of multilateral institutions, as the financial sector entities were on the verge of bankruptcy after nationalization.

"Now almost 85 per cent of the banking system is in the private sector, with the Capital Adequacy Ratio (CAR) for commercial banks at 12.1 per cent at the end of 2003, far higher than the 8 per cent mandatory requirement under the international Basel Capital Accord," Aziz said.

The minister said the better supervisory and monitoring of the State Bank helped timely actions against the Bankers Equity, Indus Bank and Prudential Commercial Bank, and now against the Saudi Pak Commercial Bank. He said the corporate governance in the financial sector has improved due to transparent policies on appointment, powers and responsibilities.

Aziz also highlighted the performance of the Corporate and Industrial Restructuring Corporation (CIRC), an Asset Management Company (AMC), in containing the rising trend of NPLs. He said as of March 31, 2004, CIRC purchased loans worth Rs 46.9 billion from the banks at a discounted price of Rs 5.8 billion, and auctioned off 87 units, receiving Rs 2.82 billion. The Committee for Revival of Sick Units (CRSU) has restructured loans worth Rs 45.3 billion since 2000 by allowing waivers and write-offs to revive 170 sick units.

Similarly, under the SBP guidelines on loan write-off of 2002, 51,152 borrowers approached the banks/DFIs till February 29, 2004, to settle the defaulted loans worth Rs 89.6 billion. The banks/DFIs settled 49,816 cases, with total amount of Rs 41.97 billion. Total cash recoveries under the scheme have been Rs 3.3 billion so far.

The minister said the government is already working on the next generation of reforms, which would address most of these issues in the financial sector. APP adds: Aziz said Pakistan is now on top tier of the World Banking and Financial reforms and its policies are acknowledged internationally.

Regarding low capitalization ratios, Aziz said capitalization requirements for banks in Pakistan are as per international standards. Capital adequacy ratio for the commercial banks, he said, was 12.1% as of December 2003, which is far higher than basel capital accord required level of 8%. He added that SBP has also raised the minimum capital requirement to Rs. 1 billion (over $ 17 million), consequently a number of financially weaker and/or smaller banks have consolidated/merged, therefore, reducing the chances of systematic risk.

He said the expertise of the banks in risk management has improved through SBP imposed higher requirements in this area and through induction of professional risk managers and intensive training of the bank staff.

In 2003, he said, to make the regulatory framework more risk focused (for all types of risks) and to cover diverse areas of banking, three sets of Prudential Regulations for Corporate and Commercial banking, SME financing and Consumer banking were issued by SBP.

The SBP, he said, also has taken the initiative to prepare the Pakistani banks for basel capital accord II by issuing comprehensive guidelines on risk management in 2003. Furthermore, he said, SBP is finalizing the introduction of capital requirements, on Pakistani banks, to cover market risk.

Aziz said that NPLs of the banking sector in Pakistan have been on a decline and as of December 2003 were lower by Rs 24 billion against the level of December 2002. Aziz said on a flow basis, the situation is even better as gross NPLs, for the loans booked after year 1997, as a percentage of total loans, is far below 5%, which is the international standard.

On inadequate banking supervision and regulation, the minister stated that after being granted autonomy in 1997, SBP has considerably strengthened its supervisory capacity over the years. It, he said, has adopted various proactive tools of offsite supervision and onsite inspection and is complying with the international accepted core principles of banking supervision.

State Bank, he said, has also demonstrated its ability to resolve problems of distressed banks. The sharper supervision of banks/DFIs has earned SBP favourable comments from the World Bank, IMF and other central banks, he remarked.

Aziz said to ensure stability of the financial system and safeguard interest of the deposition, SBP is continuously monitoring the banks thereby ensuring that sudden bank failure does not lead to domino effect resulting in systemic crisis.

On improved corporate governance of banking in Pakistan, the minister said that the comment about weak corporate governance in the banking sector is no longer applicable to Pakistan. SBP, he said has issued detailed regulations and guidelines on corporate governance that comprehensively cover the broad areas of appointment, powers and responsibilities of the Board of Directors, CEOs and external auditors.

He added that a comprehensive Corporate Governance handbook has also been issued by SBP which followed it up by organizing a conference on corporate governance in October 2003 for the Board of Directors and CEOs of banks/DFIs.

SBP, he said, has also issued and enforced "Fit and Proper Test", a criteria for appointment of directors to the board of banks/DFIs, for the CEOs and for the senior management of the banks/DFIs.

jang.com.pk

Pakistan makes major inroad into South East Asia for economic co-operation

ISLAMABAD (May 02 2004): Pakistan has made "major inroad" into the countries of South East Asian region for economic co-operation, during the nine-day visit of Prime Minister Zafarullah Khan Jamali to Laos, China, Cambodia and Thailand, informed sources said here on Saturday.

They said Mr Jamali's tour of South East Asian countries from April 21-30, 2004 is "a major step" towards the realisation of Pakistan's Vision East Asia.

It envisages building strong co-operative ties with South East Asia states and Asean countries - Brunei, Cambodia, Indonesia, Lao, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, while being closely associated with important regional processes in broader Asia-Pacific region.

Prime Minister Jamali's visit immensely contributed towards strengthening of co-operative links with this extremely important region, and Pakistan is hopeful to get membership of the prestigious Asian Regional Forum (ARF) (a grouping of 23 nations) at its meeting in Indonesia in June next.

The relevant ministries in Islamabad would now work out plans to take benefits from the visit of Mr Jamali. "Our thrust is economic and its benefits would also be political," sources said.

The sources said that Sultan of Brunei would pay a state visit to Pakistan this month, while Prime Minister of Singapore to visit Pakistan in June next.

The Presidents of Indonesia and Vietnam have paid state visits to Pakistan recently during which they had detailed discussions with President Pervez Musharraf and Prime Minister Jamali.

President Musharraf visited Thailand in year 2000, while the Thai premier undertook visit to Pakistan in 2002.

POLITICAL STABILITY: Mr Jamali and Federal Minister for Information Shaikh Rashid Ahmed, Minister for Privatisation & Investment Abdul Hafeez Shaikh and Petroleum & Natural Resources Minister Nouraiz Shakoor, who accompanied the prime minister on the tour, in talks with their counterparts spoke about political stability in Pakistan and continuation of economic and financial reforms.

They highlighted liberal investment regime in Pakistan and attracting international capital to flow into the country.

They briefed on the recent successful privatisation of Habib Bank, Telecom and award of cellular phone licences, and felt the momentum these have generated has to be built upon. It was a major breakthrough in terms of private sector financing of Pakistan's economic development.

Prime Minister Jamali addressed Business & Investment Conference focusing on making investment in Pakistan on April 26 in Hong Kong, attended by prominent businessmen and investors from China, Pakistan, some from South Korea, Singapore and Malaysia, besides, representatives of international fund managers. The Privatisation Ministry would hold another such conference in London on May 12, 2004.

The sectors available for foreign investment in Pakistan include oil, gas, telecom, food processing, electronics, infrastructure, construction material, textile, banking and commercial services and IT.

Copyright Pakistan Press International press