Pakistan's banks to upgrade practices to global standards

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Pakistans banks to upgrade practices to global standards
Pakistani banks and bankers, operating in Pakistan or abroad, are already highly regarded.

Islamabad - This is good news for international businessmen, investors and savers in the country

By M. Aftab

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Published: Sat 16 Sep 2017, 6:48 PM

Last updated: Sat 16 Sep 2017, 8:50 PM

Pakistan's central bank has launched compliance risk management guidelines with a view to upgrade banking system practices to global standards. The deadline to adopt this is on December 31, 2017.
Separately, the State Bank of Pakistan (SBP) has okayed banks' financial stability. Also, it has allowed non-bank entities to provide ATM services to help a growing number of ATM users to withdraw cash.
The good news for international businessmen, investors and savers in Pakistan is that the SBP has unveiled new rules "to ensure the total risk management guidelines and provide the banking sector a uniform benchmark".
"This will help the banks on various aspects of their operations, including identification, assessment, and management of compliance risk in their management," an SBP spokesman told Khaleej Times. "Globally, the fact is there an increasingly complex nature of bank operations, resulting from widespread use of technology, product innovation and there is a fast growing competitiveness in the banking sector."
"At present, financial institutions are confronted with significant risk management and corporate governance challenges, particularly with regard to compliance risks that transcend business lines, legal entities and jurisdiction of operations."
The SBP, a healthy and strong regulator of the banking sector, has been striving to foster the requisite risk compliance governance practices in the banking field, in line with the changing consumer attitudes and behaviour and complexity of the players in the industry, and to safeguard depositors' interest and bring the domestic industry at par with the international standards and the best practices.
Pakistani banks and bankers, operating in Pakistan or abroad, are already highly regarded, but by adopting and following this SBP upgrade it will further raise their status. On the other side, it will raise, still higher, the confidence of foreign customers in their financial dealings with Pakistan and Pakistani bankers, as the financial sector expand globally.
The guidelines lay down that "the banking sector will follow the international standards in all matters of risk compliance by adopting structured and risk focused approach".
These guidelines will supplement "the role and responsibilities of compliance function as already prescribed in Regulation Q-1 of Prudential Regulations for Corporate and Commercial Banking, as amended from time-to-time".
All banks and financial-sector entities are advised to "comply with these guidelines in letter and spirit. Keeping in view the size, nature and scope of business, and complexities of operations, the banks are advised to bring their compliance functions, policies and procedures in line with requirements of the guidelines by December 31, 2017". Surely, these steps will be liked by bankers and their domestic and foreign customers.
Meanwhile, there is news for Pakistanis and foreign business and investors, including those operating in the UAE and Saudi Arabia. The National Bank of Pakistan, one of the Big 5, will open "at least, two branches in China, this century's biggest market, foreign trader and investor", bank president Saeed Ahmad told Khaleej Times.
He said: "We are going to have, at least, two full-fledged branches in two major cities of China by the middle of financial year 2018. It will further expand all types of business transactions between Pakistan and China and will also establish our footprint in the Asian's giant's market. It will help finance the fast growing businesses and projects related to the China-Pakistan Economic Corridor [CPEC]."
"The $61 billion CPEC is being implemented on a fast-track basis, as Chinese President Xi Jinping and Pakistan have billed the One-Line-One-Road project to be the biggest global project of this century," he added. It involves transactions worth billions of dollars both ways. The import of Chinese machinery and capital goods for energy and infrastructure projects is already the biggest item on Pakistani import bill.
As Pakistanis are taking to using ATMs in large numbers, the SBP has approved for them yet another facility. The SBP has announced that "the non-bank entities can now own and operate automated teller machines and charge their own service fee on offsite locations".
"The potential of ATM growth lies at offsite locations, which is still an untapped area. Although several banks have installed ATMs at offsite locations, operation and maintenance of these machines are a big challenge. In order to encourage use and growth of offsite ATMs, the non-bank entities have been allowed to provide this facility," it said.
The writer is based in Islamabad. Views expressed are his own and do not reflect the newspaper's policy.

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