KARACHI: The State Bank of Pakistan’s (SBP) profit declined by 26 per cent to Rs175.6 billion in FY18, from Rs238bn last year — a decrease of Rs62.4bn.

The decline is primarily attributed to an exchange loss of Rs72.3bn in FY18 versus an exchange gain of Rs24.6bn during the previous year — a decline of Rs96.8bn, SBP’s Annual Performance Review 2017-18 stated.

Meanwhile, general administrative and other expenses increased by 21pc to Rs27.7bn from last year, SBP reported.

“In the wake of changing market dynamics and technological advancements, a Roadmap 2025 for banking industry is also under consideration,” the central bank said.

“SBP is also working with the Accountant General Pakistan Revenues (AGPR) and the Controller General of Accounts (CGA) to shift from existing cheque-based payments to Direct Credit System (DCS) under the World Bank Group-funded project titled ‘Public Financial Management and Accountability,” said the report.

In the first phase, salaries and pension of federal government employees will be shifted to DCS, wherein the funds will be credited to the beneficiary accounts in real-time upon receipt of electronic instructions from AGPR.

The SBP report said the number of branchless banking accounts reached 39.2 million, showing a 43.6pc growth in FY18.

“The recently published World Bank Group - Global Findex Report 2017 showed that account holders in Pakistan have increased from 13pc to 21pc of the adult population over two years,” said the report.

Strong growth momentum was recorded during FY18 as disbursements grew by 38pc to Rs972.6bn. In terms of outreach, 450,000 new borrowers were provided agriculture finance, increasing their number to 3.7m.

The report said the SBP has been actively pursuing measures to prevent banking channels from being used for money laundering and terrorist financing.

“Anti-money laundering and combating financing of terrorism regulations have been aligned with Financial Action Task Force (FATF) recommendations,” said the report.

Pakistan’s National Risk Assessment (NRA) was undertaken in collaboration with all government stakeholders to identify and understand money laundering and terrorist financing risks in the country and follow a risk-based approach to mitigate the same.

Based on the NRA findings, revised regulatory instructions have been issued, said the report, adding that the SBP continued its cooperation with the government for effective implementation of the National Action Plan. It took measures to freeze bank accounts of individuals listed on the fourth schedule of Anti-Terrorism Act as well as UNSC Resolutions.

Framework for the identification of a Domestic Systematically Important Banks (D-SIBs) was introduced to address negative externalities created by such institutions, said the SBP. Banks designated as such would be subject to enhanced supervisory requirements.

“The SBP is progressively advancing towards the implementation of a Risk-Based Supervision (RBS) framework as a forward-looking approach to strengthen its supervisory role,” said the report.

The architecture of RBS framework was developed in-house and the Toronto Centre for Global Leadership in Financial Supervision is helping SBP for capacity building of supervisory resources to finalise its components.

Published in Dawn, November 2nd, 2018