Muhammad Soban

To bring cross-border payments in line with international best practices, the State Bank of Pakistan (SBP) has announced re-engineering its business process by centralizing all cross-border payments at its Treasury Operations Department (TOD) from October 1, 2022. As a result of this re-engineering, the State Bank will centralize cross-border payments with Asian Clearing Union (ACU), Cash Reserve Requirements (CRR), and Special Cash Reserve Requirements (SCRR), as well as deposits and withdrawals from local US dollar instrument collection and settlement, at the TOD. According to a notification of the central bank, all banks (authorized dealers), including Islamic banks, must ensure compliance with new directives coming into effect on October 1. The SBP has given fresh instructions that all ACU payment cases/letters should now be addressed to Director-TOD, SBP, Karachi, according to formats provided by the central bank.

It is now necessary for all banks' CRR and SCRR deposits and withdrawals to be directed to Director-TOD instead of the chief manager, "DAD Section" of the SBP Banking Services Corporation, Karachi Office (BSC-KO). As a result, all local US dollar deposits and withdrawals originating from Instrument Collection and Settlement and addressed to the Chief Manager "DAD Section" SBP BSC-KO will now be forwarded to Director-TOD. Banks and development finance institutions (DFIs) have now been requested to submit queries regarding the payment cases to the Director-TOD for clarification, guidance, and advice.

According to current practices, the banks provide payment cases related to ACU, CRR, and SCRR, as well as deposits and withdrawals from local US dollar instruments collected and settled by the SBP BSC-KO. In addition, the banks submit queries concerning the payment cases to the SBP BSC-KO for clarification, guidance, and advice. The SBP has been playing a vital role in the development of financial institutions in accordance with international standards. The State Bank is responsible for regulating and supervising the financial system to ensure its soundness and stability, as well as protecting depositors’ interests.

Due to rapid advancement of information technology, as well as increasing complexity of modern banking operations, the supervisory role has become increasingly challenging. There has been an increase in institutional complexity, rise in technical sophistication, and expansion of the technical base of banking activities. In order to keep up with the fast-changing financial landscape of the country, the State Bank is endeavouring to keep up with these changes.

Credit: Independent News Pakistan-WealthPk