ISLAMABAD  -  Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb on Saturday apprised the Lower House of the Parliament that the private banking institutions lending and financing procedures have been stiffened post-FATF regulations creating stringent processes for politically exposed persons (PEPs). He was responding at the point of order queries raised by the Senators on different financial matters including PEPs related financing bottlenecks, Islamic banking, and markup issues.

Minister for Finance, Muhammad Aurangzeb while acknowledging the issues raised by Senator Abdul Qadir said the concerns about PEPs were correct,  since doing business with PEPs involves more diligence and checks in their processes.

However, he underlined that no negligence could be done in this regard whereas the matter would take up the matter with State Bank of Pakistan (SBP) and Chairman Banking Association. “Pakistan got in the grey list of FATF and it took four to five years for the country to turn up into the white list. This has involved and increased more checks and procedures. However, the Private sector companies would have to bring more transparency in their procedures,” he said.   Pakistan, he said is the only country that had this term of non filer as every country has a complete fashion of tax paying at all levels of the society. “Macroeconomic stability is means to an end and not a mean in itself. The present stage of stability achieved has to be sustained for an enduring stability to avoid such restrictions like halt on imports and other dividends. The government wants to give this signal to the banking sector that it’s not a desperate burrower any more and it should start lending to private sector,” he added.  To a query on Islamic banking, he said there should be a separate session on Islamic banking and it should be sent to the finance committee for proper queries. He informed that the foreign remittances have increased in a significant way in the first quarter. After FATF compliances, he said foreign remittances and transactions have been restricted. “The matter pertaining to additional restrictions on religious institutions’ foreign remittances would be taken up with the Religious Affairs Ministry. Roshan Digital Account (RDA) and direct remittances are two sources of transfers of foreign remittances whereas the RDA has gone up to $9 billion , he said.

Senator Abdul Qadir at the point of order said the private banks were misusing the PEPs category on Parliamentarians and did not approve their loans. He added that many parliamentarians owned businesses or were businessmen prior to coming into politics. “The businesses and companies of parliamentarians before joining politics have faced impacts on their businesses due to the above rules and compliances. The Finance Minister should take notice of it as these regulations needs to be standardized and balanced. Private banks commiting violations of the regulations needs to be checked and the matter should be sent to the committee,” he added.

Senator Rana Mahmood ul Hassan said the banks during closure of LCs led to alleged looting of banks that left many businesses bankrupt.  The matter should be sent to the committee and the minister should take up this matter, he added.   Senator Farooq H. Naik queried that the Finance Minister should explain Islamic banking system and prevailing markup ratio, compounding of interests.   “Whether baking institutions can charge markup on markup? These questions should be sent to the finance committee for proper answers,” he said.