SBP Amendment Bill Approved by Senate Finance Committee

The State Bank of Pakistan (SBP) Amendment Bill, 2021, was adopted by the Senate Standing Committee on Finance, Revenue, and Economic Affairs on Thursday, allowing commercial banks to lend 60% of their deposits.

The law aims to address the issue of irrational and inequitable loan lending, which has long been a priority of smaller provinces. It would guarantee that commercial banks’ minimum credit/lending to the private sector for the establishment of industrial and commercial operations in smaller provinces is on par with provincial total deposits.

Senator Talha Mahmood presided over a Senate panel hearing held at Parliament House on Tuesday.

The fate of cryptocurrency in Pakistan will now be decided by an SBP committee.

Senator Mohsin Aziz introduced the SBP Amendment Bill, which requires all public and private commercial banks to lend 60% of their deposits to borrowers. SBP will control the distribution of loans by commercial banks following the modification, according to the bill’s sponsor. He said that commercial banks in Khyber Pakhtunkhwa were denying borrowers loans. He added that if a corporation fails, the province as a whole should not be held responsible. He said that two provinces received Rs. 2.5 trillion and Rs. 2.4 trillion, while Khyber Pakhtunkhwa was left out.

Under the SBP Act, banks are permitted to lend 24 percent of total deposits, according to Executive Director SBP. Senator Farooq H. Naik proposed that a clause allowing for the loan of 50% of the deposits be added, whereas the majority of the members believed that 60% of the deposits should be available for lending to borrowers.

The SBP Amendment Bill 2021 was unanimously approved by the committee with further revisions.

“We approved the law with regulatory changes and 60 percent deposit lending,” said Senator Talha Mahmood, the bill’s chair.

The committee also reviewed the £190 million in financial crime recovery funds coming from the United Kingdom. The Executive Director SBP said that this sum was not sent to the SBP account and that the money was transferred to the account of the Registrar of the Supreme Court via the National Bank of Pakistan, as requested by the committee at its previous meeting.

Senator Musaddiq Malik questioned why money confiscated under the Economic Crimes Act had not been transferred to the government’s account. Senator Mohsin Aziz said that this money belonged to the federal government, not the National Bank or the Supreme Court.

Governor of the SBP, Dr. Raza Baqir, told the gathering that the money from the UK had not arrived in the SBP account. He said that the Financial Monitoring Unit could investigate the matter since the SBP could only verify whether a transaction went wrong and that the bank only looked at questionable transactions.

Within three weeks, the committee requested a report from the Finance Ministry on the £190 million problems.