KARACHI: State Bank of Pakistan Governor Ashraf Mahmood Wathra on Monday urged banks to rationalise ‘average spreads’ which he said continued to remain high.

The governor warned banks that the SBP shall “review the position by the end of June 2015 and may take regulatory measures to lower the spread”.

On the first working day after the announcement of 100 basis points cut in policy rate to 8.5 per cent, the SBP governor summoned a meeting of Presidents/CEOs of all commercial banks and development finance institutions (DFIs) at its head office in Karachi ostensibly to seek feed of the banking sector on the monetary policy decision.

A press release by the SBP stated that Wathra ‘took stock of operational activities and performance and issued important directives to enhance the efficiency of banks’.

The governor was said to have asked banks to focus on private sector lending and deposit mobilisation.

The statement noted that Wathra was “also critical of the banks for inefficiencies of their overseas offices”.

He said: “SBP has been receiving requests from different banks to have their representation overseas but on the contrary, performance of existing representative offices is not productive.”

“Therefore, instead of having overseas offices, banks should perhaps consider subsidiaries in foreign markets as ‘exchange companies’ which may further help home remittances as well,” he advised.

Wathra told the banks to improve their foreign exchange related services for small customers.

“The staff needs to be appropriately trained, and products must developed to assist public in the easy execution of their genuine foreign exchange transactions, such as fees or medical expenses.”

He advised that measures should be taken at institutional level to improve the quality of services and stated that SBP would also review its foreign exchange circulars to facilitate the banks in this regard.

Urging the banks to realise the efforts required for maintaining foreign exchange reserves, the governor emphasised that banks should discourage import of non-essential items by reviewing their internal credit policies.

He directed banks to facilitate the exporters at maximum to promote growth in exports, which in turn would have positive impact on the economy.

Discussing the condition of Islamic Banks, governor highlighted that they should reward their customers appropriately in line with the surge in their profits.

“Banks were advised to come up with their own solutions or the SBP will apply Shariah compliant measures to address the issue,” the release said.

Talking about the IT security management, the governor stated that banks must strengthen their back-up support and improve security measures.

He also pointed out the need to improve capacity of bank staff to upscale their service standards.

He offered that banks could be facilitated by the National Institute of Banking and Finance (NIBAF) and Institute of Bankers (IBP) to train the human resources at different levels. The governor added that branchless banking agents also need to be trained.

He advised the banks to improve the functioning of their automated teller machines (ATMs), as its unavailability is akin to going to a bank branch counter which doesn’t have cash.

The banks were advised to ensure round the clock services of their ATMs for the public.

Taking notice of banking frauds with the involvement of staff, the governor stated that banks cannot exonerate themselves from such incidences and must take strict measures to eliminate such frauds.

“The banks are responsible for their staff and signatories who authorise transactions,” he said.

The governor also encouraged the banks CEO/Presidents to actively participate in programmes of public interest.

Published in Dawn January 27th, 2015

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