State Bank of Pakistan

PRESENTED BY :SHEHROZ AHMED ADIL – 10833

PRESENTED TO : S IR GHULAM MURTAZA KORAI

History of State Bank of Pakistan

Late Governor Zahid Hussain presenting an address of welcomeon the occassion of the opening ceremony of the

State Bank of Pakistan on July 1, 1948.

History of State Bank of Pakistan

Quaid-e-Azam performing the opening ceremony of

the State Bank of Pakistan

History of State Bank of Pakistan

Quaid-e-Azam delivering his inaugural address on the occasion of the

opening ceremony of the State Bank of Pakistan on July 1, 1948

State Bank of Pakistan

• Mr. Ashraf Mahmood WathraGovernor, State Bank of Pakistan

• Mr. Kazi Abdul MuktadirDeputy Governor

• Mr. Saeed AhmadDeputy Governor

ADMINISTRATIVE ORGANIZATION

To run and monitor the bank it is divided into three parts.

• CENTRAL BOARD OF DIRECTORS

• CENTRAL DIRECTORS

• FIELD OFFICE

Statutory Obligations

STATUTORY CASH RESERVE

• In terms of Section36(1) SBP Act, 1956, every scheduled bank is required to maintain with State Bank a balance the amount of which shall not at the close of business or any day be less than such percentage of Time & Demand Liabilities in Pakistan as may be determined by State Bank.

• Presently the requirement is 5%.

STATUTORY LIQUIDITY REQUIREMENT

• In terms of Section 29(1) of Banking Companies Ordinance, 1962 every banking company shall maintain in Pakistan in cash, gold or un-encumbered approved securities valued at price not exceeding "the lower of cost or the current market price" an amount which shall not at the close of business in any day be less than such percentage of the total of its time & demand liabilities in Pakistan, as may be notified by State Bank from time to time.

• Presently the requirement is 15%.

MAINTENANCE OF LIQUIDITY AGANINST CERTAIN LIABILITIES

• In terms of Rule 6 of NBFIs Rules of Business, all NBFIs are required to invest 14% of their liabilities defined in the Rule, in Government Securities, NIT Units, shares of listed companies or listed debt securities in the prescribed manner. For the purpose of this rule, liabilities shall not include NBFIs equity, borrowings from financial institutions, lease key money, deferred taxation not payable within 12 months, dividend payable within two months, advance lease rentals and deposits from financial institutions. In addition, they are also required to maintain cash balance with State Bank, which shall not be less than 1% of their liabilities as defined above.

SUBMISSION OF ANNUAL AUDITED ACCOUNTS BY NBFIs

• Under Rule 17 of NBFIs Rule of Business, all NBFIs are required to invest to submit their annual audited accounts within a period of 6 months after the close of their accounting year.

ANNUAL ACCOUNTS

• At the expiration of each calendar year every banking company incorporated in Pakistan, in respect of all business transacted by it, and every banking company incorporated outside Pakistan, in respect of all business transited through its branches in Pakistan, shall prepare with reference to that year a balance-sheet and profit and loss account as on the last working day of the year in the prescribed forms(Section 34 of Banking Companies Ordinance, 1962).

SUBMISSION OF RETURNS

• The accounts and balance-sheet referred to in section 34 together with the auditor’s report as passed in the annual General Meeting shall be published in the prescribed manner, and three copies thereof shall be furnished as returns to the State Bank within three months of the close of the period to which they relate (Section 36 of Banking Companies Ordinance, 1962).

MINIMUM CAPITAL REQUIREMENTS• In terms of Section 13 of Banking Companies

Ordinance, 1962 no banking company shall commence business unless it has a minimum paid up capital as may be determined by the State Bank or carry on business unless the aggregate of its capital and unencumbered general reserves is of such minimum value within such period as may be determined and notified by the State Bank from time to time for banking companies in general or for a banking company in particular.

• As present, all banks operating in Pakistan are required to maintain capital and unencumbered general reserve, the value of which is not less than 8% of their risk weighted assets. Additionally they are also required to maintain a minimum paid up capital of Rs.500 million.

• 1) REGULATION OF LIQUIDITY

• 2) ENSURING THE SOUNDNESS OF FINANCIAL SYSTEM: REGULATION AND SUPERVISION

• 3) EXCHANGE RATE MANAGEMENT AND BALANCE OF PAYMENTS

• 4) DEVELOPMENTAL ROLE OF STATE BANK

Core Functions of State Bank of Pakistan

Core Functions of State Bank of Pakistan

Traditional

Developmenta

l

Regulation of Liquidity

Monetary and Fiscal

Government targets

Macro Economic Growth

ENSURING THE SOUNDNESS OF FINANCIAL SYSTEM: REGULATION

AND SUPERVISION

Off Site On Site NBFIs

EXCHANGE RATE MANAGEMENT AND BALANCE OF PAYMENTS

As an agent to the Government:

• Purchase and sale gold, silver or approved foreign exchange

• Maintain Exchange rate fluctuations.

• Management of the foreign exchange reserves.

DEVELOPMENTAL ROLE OF STATE BANK

• Economic growth

• Utilization of country’s resources.

• Development of new financial institutions and debt instruments.

• Establishment of Development Financial Institutions (DFIs)

• Directing the use of credit according to selected development priorities.

• Providing subsidised credit, and development of the capital market.

ANTI-MONEY LAUNDERINGREGULATIONS FOR BANKS & DFIs

STATE BANK OF PAKISTAN

REGULATION -1REPORTING OF TRANSACTIONS (STRs/CTRs)

1. Banks/ DFIs shall comply with the provisions of AML Act, rules and regulations issued there under for reporting suspicious transactions/currency transactions in the context of money laundering.

2. Banks/ DFIs shall implement appropriate internal policies, procedures and controls for meeting their obligations under AML Act.

3. Banks/ DFIs shall pay special attention to all complex, unusually large transactions, and all unusual patterns of transactions, which have no apparent economic or visible lawful purpose.

4. The transactions, which are out of character or are inconsistent with the history, pattern, or normal operation of the account including through heavy deposits, withdrawals and transfers, shall be viewed with suspicion, be properly investigated and referred to Compliance Officer for possible reporting to Financial Monitoring Unit (FMU) under AML Act.

REGULATION - 2RECORD KEEPING1. Banks/ DFIs shall maintain all necessary records on

transactions, both domestic and international, including the results of any analysis undertaken (e.g. inquiries to establish the background and purpose of complex, unusual large transactions) for a minimum period of ten years from completion of the transaction.

2. The records shall be sufficient to permit reconstruction of individual transactions including the nature and date of the transaction, the type and amount of currency involved and the type and identifying number of any account involved in the transactions

3. Banks/ DFIs shall satisfy, on timely basis, any enquiry or order from the relevant competent authorities including law enforcement agencies and FMU for supply of information and records as per law.

REGULATION - 3 INTERNAL CONTROLS, POLICIES, COMPLIANCE, AUDIT AND TRAINING

1. Each Bank/ DFI shall formulate its own AML/CFT policy duly approved by their Board of Directors and cascade the same down the line to each and every business location and concerned employees for strict compliance. The detailed procedures and controls shall be developed by banks/ DFIs in the light of policy approved by the Board.

2. In formulating policies, procedures and controls, banks/ DFIs shall take into consideration money laundering that may arise from the use of new or developing technologies.

3. Banks/ DFIs shall apply their AML/ CFT policies to all of their branches and subsidiaries outside Pakistan to the extent that laws and regulations of the host country permit.

Compliance1. Banks/ DFIs shall develop appropriate AML/ CFT

compliance program, including at least, the appointment of a management level officer as the compliance officer to ensure that all the above regulations are being complied by Banks/ DFIs.

2. Banks/ DFIs shall ensure that the compliance officer, as well as any other persons appointed to assist him, has timely access to all customer records and other relevant information which they may require to discharge their functions.