The Lahore Chamber of Commerce and Industry (LCCI) has highlighted the profiteering behavior of banks and problems in the provision of LCs for the import of heavy machinery as two primary problems being confronted by the business community. Finance Minister Miftah Ismail hosted a virtual meeting with a delegation of LCCI at the Finance Division.
The Profiteering Behavior of Pakistani Banks Was Impacting the Operational Efficiency of the Chamber
Lahore Chamber of Commerce and Industry President Mian Nauman Kabir, Senior VP Mian Rehman Aziz Chan, and Vice President Haris Ateeq attended the meeting regarding the profiteering behavior of banks. The finance minister was briefed about the contribution of LCCI to the monetary development of the country and informed about problems being faced by the business community in Pakistan. The major problems were the profiteering behavior of banks, issues in the provision of LCs for import of heavy machinery, and differential rates for import in FATA and PATA impacting the operational efficiency of the chamber.
All Relevant Stakeholders Have Been Taken on Board to Resolve the Banking Issues
In addition to this, the finance minister of Pakistan comprehensively reflected on the problems being shared by the Lahore Chamber of Commerce and Industry delegation involving the profiteering behaviour of banks. He assured them that various issues have already been resolved while the remaining issues would be resolved at the earliest time possible. The minister informed that all relevant stakeholders have been taken on board for the resolution of these issues. He directed the relevant authorities to undertake the required steps for the resolution of these issues.
Banks Overcharged for LCs
In addition to this, the Letters of Credit (LCs) for oil shipments of May and June that landed in July were being retired at rates above Rs241 against the US dollar. “Even state-owned banks, which usually do not charge a large spread between the interbank, are charging such rates,” said a major importer. Moreover, a large state-owned enterprise also retired its LC of $70 million at the rate of Rs242/USD. The banks in some cases overcharged these LCs at the rate of up to Rs250 per dollar when the dollar rate was Rs221 on 20-July-2022. In response to this, the State Bank of Pakistan was criticised for its non-intervention in this profiteering behaviour, the Pakistani regulator then posted the below mentioned video, claiming that this is a normal occurrence and not faulting it out.
Why inter bank rate always differs with the rate at the counter of bank? Watch full episode 04 of #SBPPodcast to know more about how foreign exchange market works: https://t.co/lUrnNpSO0I pic.twitter.com/B8nVlRD5yu
— SBP (@StateBank_Pak) July 21, 2022
However, later SBP announced to enhance the monitoring of volatility in the exchange rate and the difference between the interbank rate and the rate being offered by Exchange Companies and banks to their customers.
Though the recent profiteering behaviour of banks is apparently the proof that the banking regulator is helpless.