ISLAMABAD (November 13 2002) : The government showed disappointment that the IMF and the World Bank have again delayed the planned Financial Sector Assessment Program (FSAP) mission.
However, Pakistan would seek every opportunity to discuss with the Fund country strategy on (a) protecting the financial system against illicit use, by bringing anti-money laundering (AML) rules up to best practices; (b) further modernising the prudential framework; and (c) phasing out the remaining of administered credit allocation (such as prescribed lending to agriculture).
This was expressed in the letter on intent to the IMF for third review of the Poverty Reduction and growth Facility (PRGF).
It also says that the Supreme Court decision has cleared the way for pursuing an evolutionary approach to Islamic finance, through encouraging the development of Islamic banking alongside traditional financial institutions, while adapting regulations for the supervision of chartered Islamic banks.
A draft anti-money laundering (AML) law has been prepared and will be promulgated before October 2002. It includes provisions to criminalise money laundering, to set up a financial intelligence unit, and to allow freezing and forfeiture of assets and international co-operation. In order to further strengthen the regulatory and supervisory framework and promote consumer financing and lending to small-and medium-sized enterprises (SME), the SBP is formulating separate prudential regulations for these two types of lending.
The SBP has already removed certain impediments that stood in the way of consumer financing by the nationalised commercial banks.
A study on housing finance has been completed and the commercial banks are embarking on developing new mortgage products. In the context of a capital market reform program supported by another ADB loan, we plan a number of steps to strengthen stock market supervision, develop secondary markets for government paper, strengthen corporate governance in the nonbank Financial institutions, and pursue the reform of the National Saving Schemes (NSS) to reduce remaining distortion and further lower the budgetary cost of such debt.