KARACHI: The tightening of the monitoring regime to combat terror financing and money laundering under the umbrella of the inter-governmental Financial Action Task Force (FATF) is a positive move for the banking industry and the economy at large.
“It (FATF move) is good for us (banks), the economy and from the perspective of tax payments,” JS Bank President and CEO Basir Shamsie said while talking with the media on Friday.
The measures are helping banks make their operations clean. “Banks are recording all the suspicious transactions, doesn’t matter how big or small they are and are reporting to the State Bank of Pakistan (SBP) on a regular basis,” he said.
It remained no more a difficult job to detect suspicious financial transactions through banks as “availability of modern technology and software have made the job of detectors easier”, he said.
He said FATF measures are also helping change banking customers’ mindset. “Customers’ mindset is changing in order to declare exact earnings and pay taxes,” he said.
Bank focuses on mortgage, SME financing
He said the low interest rate regime in the country has convinced banks to shift their business strategy to aggressive financing for corporates and individuals from investing significantly in government securities like T-bills and Pakistan Investment Bonds.
“The (benchmark) interest rate is set to increase by 100-150 basis points this year, but it will not bounce back to historic highs,” he said. The central bank has increased interest rate by 175 basis points since January 2018 to 7.5% at present. It hit a historic high of 19.5% in October 1996.
“JS Bank has shifted its focus to aggressive mortgage financing and SMEs (small and medium-sized enterprises) financing in recent years,” he said. The bank’s mortgage financing portfolio stands at around Rs7-8 billion at present. “We are targeting to increase it to Rs10 billion in the next one year that remains a difficult task,” he said.
The bank is also preparing to participate in the SBP-introduced subscribed mortgage financing as the central bank has already introduced a policy paper for the purpose recently. “Our bank has become the fourth or fifth largest in terms of SME financing,” he added.
Besides, it was also actively involved in auto and agriculture financing. Its outstanding agri-financing has reached Rs10 billion, he said.
Published in The Express Tribune, September 8th, 2018.