KARACHI: Pakistan’s state minister for finance on Friday vowed “exemplary punishment” for commercial banks allegedly involved in the currency exchange rate manipulation as the central bank chief said the scope of an ongoing probe into the matter could be expanded.
Jameel Ahmed, the Pakistani central bank governor, last month informed a parliamentary committee on finance and revenue that authorities had launched an investigation against eight banks for their alleged involvement in exchange rate manipulation, adding that more banks would be investigated in the next phase.
Ahmed told the Senate committee on finance and revenue on Friday that commercial banks charged extra dollars on payments for Letters of Credit (LCs), whenever they faced shortage of greenback.
Briefing the senators, State Minister for Finance Ayesha Ghous Pasha said the government would hand down “exemplary punishments” to banks that were over-charging importers for LC payments.
“The banks would be heavily fined so that no one will dare get involved in such activity in the future,” Pasha said.
Pakistan’s commercial banks earned a record high profit of Rs85 billion ($383 million) in the quarter ending on September 30, with the record appreciation of dollar being a major driver of profit growth.
The income of the banks due to the foreign exchange rate volatility remained 50-550 percent on a year-on-year basis, with the US dollar going up by 46 percent from Rs157 in June 2021 to Rs229 by June 2022, Khurram Schehzad, CEO of the Alpha Beta Core financial advisory firm, said this month.
Also on Friday, the central bank introduced measures for the identification of illegal foreign exchange activities.
“In order to promote an environment of accountability and integrity, the State Bank of Pakistan (SBP) has introduced a dedicated email address ([email protected]),” the central bank said in a statement.
It said the public at large could report any unauthorized foreign exchange activity to this email address, while it might also be used to report any unauthorized activity carried out by an exchange company or if an exchange company was not providing a system-generated receipt of a currency exchange transaction.
