ISLAMABAD: PTI MNA Asad Umar on Tuesday said the State Bank of Pakistan (SBP) is facilitating money laundering.

Speaking at the National Assembly’s Standing Committee on Finance, Mr Umar accused the central bank of protecting the interests of those who buy properties abroad illegally.

The SBP responded to the statement through in a press release dismissing allegations as baseless. “It is unfortunate that allegations of the involvement of the SBP in money laundering have been made,” it said.

Asad criticised the SBP at a time when almost all committee members, including those belonging to the ruling PML-N, were already critical of the central bank for failing to secure the interests of the agriculture sector.

Committee members, including its chairman Qaiser Ahmed Sheikh, criticised the SBP governor for not showing up in the meeting and the central bank for not responding to the queries forwarded by the NA body.

“I want to recall in front of the whole committee, including guest MNAs... this is my statement on the record: why has the SBP not responded to a set of questions for almost four months?” Mr Umar said.

“I had asked a simple question about investments by individuals in Dubai – either in businesses or in the shape of properties. The SBP has not responded, so I am compelled to say that the central bank was supporting or facilitating money laundering,” he said.

Mr Umar asked SBP officials during a committee meeting four months back whether any individual was granted permission to take money abroad for investments. The answer was ‘no’ as the SBP officials said only reputed companies were given permission to invest abroad.

Mr Umar asked them about the reason behind regular newspaper advertisements that urged Pakistani citizens to invest in commercial and residential properties in Dubai. He forwarded a set of questions for the SBP in this regard.

During the meeting on Tuesday, the PTI MNA said the SBP failed to give a direct answer to his queries and that money continued flowing out of the country.

Talking to the media after the meeting, Mr Umar said the SBP governor is set to retire this month and this is why he is delaying the issue.

An official of the SBP said that most of overseas purchases in properties or businesses were conducted through multiple illegal channels, including money carriers, hundi and hawala.

Illegal channels are not known to regulator, the official said, adding that it would have stopped the same otherwise. “Besides, many modes of taking money abroad, like smuggling, do not fall under the purview of the banking regulator,” the official added.

However, in official response the SBP rejected these allegations and clarified that there was no request for information pending with it. “It is clarified that on December 19, 2016, the SBP received a set of questions from the NA Standing Committee on Finance regarding advertisements published in Pakistani newspapers inviting people to invest in property in Dubai etc. Some of these questions pertained to the SBP while the rest fell in the domain of other government agencies,” it said.

“On Jan 3, the SBP responded through the Finance Division while answering the questions relevant to the SBP,” it added.

The committee also discussed the issue of high markup on agriculture loans. The committee was informed that markup rates were around 4-4.25 per cent. But Zarai Taraqiati Bank (ZTBL) was lending at 12.5pc to small farmers and 14.5pc to large farmers, the NA body was informed.

The committee directed ZTBL to prepare recommendations in consultation with the SBP to lower its cost of funds.

Published in Dawn, February 8th, 2017