Mandatory section of mortgaging the property of debtors is being amended-Wathra

MULTAN: Governor State Bank Ashraf Mehmood Wathra  said that Government was introducing a new law to amend the mandatory section of mortgaging the property of debtors for advancing loans from banks and financial institutions. A bill in this regard has already been approved. Addressing the meeting of  member of Multan Chamber of Commerce & Industry(MCCI) chaired by Khawaja Jalaluddin Roomi, Its president,Wathra further said that  Pakistan Mortgage Refinance Company is being formed to promote housing finance market with greater participation by the banks and financial institutions.The refinancing facilities will be for long, medium and short term period to banks and financial institutions against their existing conventional and Islamic housing finance portfolios.He said that  shortcomings of house building laws were being removed to ensure the recovery from the defaulters.The multilateral creditors such as the IMF, WB and ADB had predicted real GDP growth rate of 4.5 percent for the current fiscal year against Islamabad’s envisaged target of 5.5 percent. Wathra recommended unlocking of capital through progressive financial policies, including increasing mortgage-based lending, which he said were key to providing finance for SME entrepreneurs. Public sector accounts for 60% of lending from banks while SMEs account for as low as 6% of the total lending, the former SBP governor said it was partly a failure of the financial sector. He said that loans of Rs.80 billion were advanced to SMEs in the country.The central bank is also formulating Prudential Regulations for the SMEs, including setting up of Credit Information Bureau, enabling commercial banks to finance SMEs. The Governor said the State Bank of Pakistan will facilitate the SMEs in the best way possible. SBP is pursuing a three-pronged strategy to achieve the goal of 50 percent financial inclusion by the year 2020, said  governor of the central bank."The SBP is creating a favourable regulatory environment for the micro finance sector, while providing cheaper financial resources and building infrastructure to reduce the cost of delivery of funds. It will continue to facilitate the borrowers and ensure their protection.""Twenty million households need micro finance in Pakistan. So far, we have achieved access to 4.3 million borrowers, so we still have a long way to go to reach the target of 50 percent financial inclusion by 2020. Equitable economic growth and financial inclusion is the key to progress,” he said, while addressing the 10th Micro finance Country Forum 2016.
He underlined the need for an inclusive growth in the country at an accelerated pace, and said that all segments of the economy must contribute towards this goal. “Lack of general public’s understanding of prevalent Islamic banking paradigm is one of the major impediments to sustainable growth of the industry,” he added.

The governor said that SBP had successfully piloted a Nationwide Financial Literacy Program (NFLP) to improve the financial well-being of low income strata through enhanced flow of financial education. Now it was contemplating NFLP. However, he conceded that such efforts needed to be complemented with information and guidance from opinion leaders who have an influence on mass behaviour.
Wathra has said there is a dire need to create awareness to promote Islamic mode of banking that is fast gaining grounds around the globe.He said that bankers should launch new schemes to attract people towards Islamic banking. He said though Islamic mode of banking looks like conventional banking there is a lot of difference between the processes. He said that today more than 250 Islamic financial institutions are operating worldwide from China to USA. Western banks through their Islamic units in UK, Germany, Switzerland, Luxembourg etc. are also practicing Islamic banking. He said the basic principle of Islamic banking was the prohibition of Riba or interest, which had seldom been recognised as applicable beyond the Islamic world but many of its guiding principles had consciously or unconsciously been accepted. Wathra emphasized the importance of the SME sector to the development of the nation’s economy and reiterated the central bank’s support in building confidence among stakeholders.SMEs do not have access to financing from the formal sector and have been primarily relying on the credit facilities from informal sector.The Governor of the State Bank of Pakistan (SBP), Ashraf Mahmood Wathra has said that private sector investment is vital for economic growth of the country. The Governor said that inflation has come down to 2.9 per cent in FY16 which is lowest for the last 47 years whereas real GDP growth rate is 4.7 per cent. Wathra said several important economic reforms including legislative changes have been completed during the last three years, which will promote economic growth and its benefits to the general public Governor mentioned formation of independent Monetary Policy Committee; disclosure of minutes of Monetary Policy Committee; approval of Deposit Protection Corporation Bill by Parliament; Financial Institutional (Recovery of Finances) Amendment Bill and removal of impediments for growth of SMEs through secured transaction bill of 2016 as some of the achievements made by State Bank of Pakistan.Pakistan’s economic growth was set to increase during this fiscal year, Mr Wathra said, adding that the impetus was likely to come from the continuation of same positive factors, including rising investment under the Public Sector Development Programme (PSDP) and China-Pakistan Economic Corridor (CPEC); improved energy availability to industry; lagged impact of prudent monetary policy; healthy private sector credit uptake and better law and order.In his welcome address Khawaja Jalaluddin Roomi President of MCCI has said that country’s economy has performed well during the last three years.Several prudent measures by the government, including ban on import of gold and investment flows, have helped strengthen the rupee and reducing the rate inflation. He stressed the need for paying proper attention towards SMEs, House Financing, and good packages for the manufacturers and other industry sothat joblessness could be ended and middle  class could  construct their own home.He was of the view that there wasdire need of check and balance on Islamic banking to protect the interest of the people. SBP should organise awareness workshops to highlightthe financial policies,Islamic banking  and facilities for SMEs. The senior representatives of the Chambers of Commerce and Industry of Multan, Khawaja Jalaluddin Roomi ,Sahiwal, Bahawalpur and D G Khan,PCGA 's Haji Muhammad Akram , All Pakistan Oil Mills  Association Khawaja MuhammadFazil,All Pakistan Bed Sheet & Upholstry Manufacturers Association(APBUMA)Chairman Khawaja Muhammad Younas,Multan Dry Port Trust attended this meeting.The Governor highlighted various initiatives taken by SBP for the promotion of exports, SMEs and agricultural activities. The representatives of various chambers apprised about the issues faced by them regarding banking services and made suggestions to improve them. The Governor assured them that SBP would resolve their issues in consultation with the banks.