Friday, February 1, 2013

Shahid Aziz Siddiqi leads State Life turnaround

Shahid Aziz Siddiqui
By Abdul Qadir Qureshi
(Pakistan News & Features Services)

Shahid Aziz Siddiqi has lived up to his huge reputation by leading the turnaround of the State Life Insurance Corporation of Pakistan (SLIC) in a matter of five years. The corporation, under his dynamic leadership, has registered impressive growth in this period as reflected in the statistics shared with the media recently.

Having help important governmental posts, after topping CSS exams, Shahid Aziz Siddiqi has not only revived the SLIC during his tenure as its Chairman but he has succeeded in taking it to new level. 

“State Life is one of the few government-owned companies that are actually profitable,” he remarked while disclosing that the annual profits that the Corporation remitted to the government in 2012 were Rs750 million. 

Instead of just comparing the yearly figures with those of the preceding year, the SLIC Chairman summed up the five-year performance which highlighted the company’s growth since 2008. State Life had remitted Rs296.22 million to the government in 2008, which showed that its payouts to the government increased at an average rate of 26.1% annually between 2008 and 2012.

State Life’s investment portfolio in 2012 consisted of Rs289.9 billion after being Rs275.1 billion in 2011. Its investment income also increased from Rs18.7 billion in 2008 to 35.8 billion in 2012, showing an annual rise of 17.6%. 

The equity portion in the investment portfolio remained Rs28.8 billion in 2012, which generated an income of Rs4.7 billion for the company. 

State Life’s total income, which included premiums as well investment income, increased to Rs89.7 billion in 2012, which was 18% higher than the total income of Rs75.7 billion in 2011. 

The total income of State Life was Rs 41.8 billion five years ago, which represented an annual increase of 21% between 2008 and 2012 while the average inflation during the same period remained 14.3%. 

State Life paid its policyholders Rs 24.3 billion in 2012 in claims as opposed to Rs12.8 billion that its policyholders received in 2008. The most recent year-on-year increase in total claims paid by State Life was 25%, as it paid Rs19.49 billion in claims during 2011.

Similarly, individual life first-year premiums in 2008 were Rs4.9 billion which, after increasing at an annualised rate of 29.4%, reached Rs13.9 billion in 2012. The year-on-year increase in individual life first-year premiums during 2012 was 16%, up from Rs12 billion in 2011. 

The individual life renewal premiums in 2008 were Rs13.4 billion rose to Rs30.6 billion in 2012, reflecting an annual growth rate of 22.8% between 2008 and 2012. The year-on-year increase in individual life renewal premiums in 2012 was 13%, up from Rs28.2 billion in 2011. 

The network of 155,000 State Life agents selling different insurance products nationwide played the pivotal role as they increased the number of total policies that are in force to 4.25 million in 2012 from 2.57 million in 2008 with the number of new policyholders in 2012 alone being 752,448. 

The most significant increase was witnessed in group life premium income, as it increased from Rs3.8 billion in 2008 to Rs8 billion in 2012, showing an annual rise of 20%. After the year-on-year increase of 69% in 2012, the company’s group life premium income rose to Rs8 billion, up from Rs4.7 billion in 2011. The number of lives covered under State Life’s group life insurance also increased from 3.8 million in 2008 to 7.8 million in 2012.

Monday, January 7, 2013

Pak Railway Karachi Division show improvement in train operations



By Abdul Qadir Qureshi
(Pakistan News & Features Services)

The punctuality of train operation from Karachi has achieved considerable improvement during the last 2-3 months with almost all the trains except one or two running on time.

“The couple of trains which are facing late departures for about half an hour to two hours is because of certain unavoidable reasons,” Anzer Ismail Rizvi, Divisional Superintendent, Pakistan Railways Karachi Division, disclosed in an interview on January 6.

He revealed that the punctuality improvement has been achieved due to strict monitoring of train operation and motivation which resulted in improved maintenance of locomotives, coaches, signaling system as well track in the Division.

He stated that notwithstanding the ongoing financial crunch, the Railways Divisional authorities did this within their own resources. He pointed out that 57.5 Km of speed restrictions have now been normalized without spending any money thus resulting in running of trains with normal speed.

The Divisional Superintendent maintained that although the Railway Division has allotted 102 locomotives, it was operating 42 locomotives. However, their maintenance has been improved bringing normalcy in the train operation.

It also resulted in operating on an average two freight trains daily from Karachi. He informed that the Railway Division earned 346 million rupees in excess during the last six months of the current financial year as compared to the same period of last financial year.

Anzer Ismail spoke about what he called a significant achievement and said that after a gap of 20 months with effect from January 12013, the Sukkur Express was now running with full composition after attachment of  one Air-condition Sleeper and two Lower AC coaches which were withdrawn from service in May 2011 due to non-availability of power plant. He said these plants have now been made available after a lot of efforts and follow-up.

He said AC Sleeper Coach has a seating capacity of 16 while Lower AC coaches have a capacity of 76 each and will greatly facilitate the passengers intending to travel to Sukkur and Jacobabad.

As regards the future plans, DS Karachi Railways informed that efforts are being made to re-introduce Mehran Express which was a popular mode of journey from Karachi to Mirpurkhas and was closed due to non-availability of locomotives.

Anzar Rizvi informed that railway track from Karachi to Kotri has been rehabilitated while that of Down track was in progress which has brought improvement in speed and running time.

According to him the track rehabilitation from Hyderabad to Mirpurkhas was also in progress and will be completed in about six months which will reduce running time between the two destinations bringing it down from 90 to 60 minutes.

Thursday, April 19, 2012

Seminar on Corporatization, Corporate Compliance and eServices


In order to raise awareness among the business community and other stakeholders of the importance of corporatization, corporate compliance requirements and eServices, the SECP organized a seminar in collaboration with the Sialkot Chamber of Commerce and Industry at Sialkot Chamber of Commerce and Industry. 

Mr. Liaqat Ali Dolla, Joint Registrar-in charge, SECP’s Company Registration Office, Lahore, spoke on ‘Corporatization, Corporate Compliance and eServices’. He highlighted the importance of corporatization and corporate compliance followed by a detailed briefing regarding eServices project of the SECP. He also talked about salient measures taken by the SECP for the purpose of increase in corporatization and corporate compliance and encouraged feedback from the participants for making the SECP’s existing services more efficient.

Ms. Sidra Mansur, Deputy Registrar of Companies, Company Registration Office, Lahore, explained the e-processes in detail from creation of eServices account to the requirements of electronically incorporating a company and filing different statutory returns for the purpose of compliance with the post incorporation statutory requirements. 

Mr. Naeem Anwar Qureshi, president of Sialkot Chamber of Commerce and Industry, appreciated the SECP’s contribution in the development of corporate sector and capital markets and expressed an interest in holding these seminars on a regular basis. The participants asked various technical questions and gave some useful suggestions for further improvement in services provided by the SECP.

Being the apex regulator of corporate sector, the SECP has always collaborated with the professional and trade bodies in the past, and plans to conduct more seminars and workshops in collaboration with other professional and trade bodies as well, in near future to seek their feedback and to create an environment of mutual trust between the business community and regulator, for enhancing corporate compliance of companies  through improvement in its services and by creating awareness  among the stakeholders.

Saturday, April 14, 2012

CENTRAL BANK LEAVES POLICY RATE UNCHANGED AT 12 PERCENT;INCREASES MINIMUM PROFIT RATE ON SAVING DEPOSITS FROM 5 TO 6 PERCENT


The Central Board of Directors of the State Bank of Pakistan at its meeting held under the Chairmanship of SBP Governor, Mr. Yaseen Anwar in Karachi today has decided to keep the policy rate unchanged at 12 percent. The State Bank has also decided to raise the minimum Profit Rate on PKR Saving/PLS Saving Products from 5.0 to 6.0 percent.

‘It was the expectation of SBP that these deposits will respond to market forces and adjust accordingly. The rigidity of the deposit rates, especially for small savers, is adversely impacting the savings-investment ratio of the economy, the State Bank of Pakistan said in its Monetary Policy Decision.

It said that a more balanced risk-reward incentive structure is warranted in the shape of appropriate deposit rate structure, as the savers, especially the smaller ones, need to be adequately compensated. ‘Therefore, it has been decided that, effective May 1st, 2012, all Banks are required to pay a minimum Profit Rate of 6.0 percent on PKR Saving/PLS Saving Products,’ it added.

Following is the complete text of the Monetary Policy Decision:

‘As the economy begins the last quarter of current fiscal year, SBP’s monetary management continues to play its part in balancing the implications of multiple challenges faced by the economy. The primary consideration remains bringing inflation further down as it has persistently remained in double digits in the last few years. Ensuring smooth functioning of the payment system and financial stability is also important given the current stressed liquidity conditions in the market. Similarly, elevated international oil prices, weak quantum of exports, and insufficient foreign financial flows require careful management of the external position. Last but not least, the consistent decline in private investment is also an important factor in formulating the monetary policy strategy as it impacts both the medium term inflation, growth and employment prospects.

Given limited set of instruments, not all these challenges can be effectively tackled by monetary policy alone. There are bound to be tradeoffs involved among these competing considerations. A supporting fiscal strategy and an active economic reform agenda is critical to deal with some of the structural  issues,  in  particular,  low  tax  to  GDP  ratio  and  energy  shortages.  Most  importantly,  the economy needs a forward-looking approach to policy making with strict adherence to rules laid out in the legal frameworks, be it the State Bank of Pakistan (Amendment) Act (2012) or Fiscal Responsibility and Debt Limitation (FRDL) Act (2005).

Following this approach is crucial in anchoring inflation expectations around the medium term targets of 9.5 percent for FY13 and 8 percent for FY14 as envisaged in the Medium Term Budgetary Framework (MTBF) of the government. In March 2012 the year-on-year CPI inflation was 10.8 percent and, given the current economic conditions, is projected to remain in double digits during FY13. Consistently growing government borrowing requirement from the banking system is a key variable that is adversely affecting the inflation outlook. Weak private demand, on the other hand, is one reason why inflation is not increasing sharply. Nonetheless, the size of fiscal borrowings and lack of investment is eroding the medium term productive capacity of the economy, contributing towards persistence of inflation in early double digits. Another risk factor that needs to be monitored closely for assessing inflationary pressures is the behaviour of international oil prices.

The current year government borrowings for budgetary support have been Rs373 billion from the scheduled banks and Rs218 billion from the SBP during 1 July 30 March, FY12. The year-on-year growth in these borrowings turns out to be 56.5 percent and 18.5 percent respectively. The year-on- year growth in the private sector credit, on the other hand, was only 4.2 percent and that in total deposits of the banking system was 17.4 percent during the same period. Thus, despite a decent growth in deposits, the banks continue to prefer financing the fiscal deficit as opposed to searching avenues, taking risk, and building partnerships to facilitate credit to the private sector. The cost to the economy is visible in terms of a decline in investment to GDP ratio to historically low levels and stagnant economic growth that is considerably lower than the economy’s potential.

If a revival in private sector credit and growth prospects is to take place, a pertinent question in the current circumstances is: how would the government rollover its maturing short-term debt and raise additional  financing  while  simultaneously  retiring  its  borrowings  from  the  SBP?  With  shortfalls  in external sources, the most likely avenue will be more borrowings from the SBP. The inflationary implications of this scenario should not be underestimated. However, according to the recent State Bank of Pakistan (Amendment) Act (2012), government borrowing from the SBP is required to be repaid at the end of each quarter and the existing stock is to be retired within eight years. In case of not observing these provisions, the Act also stipulates that the federal government will submit a statement to the Parliament giving detailed justification.

Adherence to this legal requirement, without serious adjustment in the fiscal position, would lead to significant injections of liquidity by the SBP to keep the payment system functioning and financial markets stable. But, SBP is already injecting substantial short term liquidity in the system, Rs200 billion as of 13 April 2012, which is being continuously rolled over. The permanent nature of these injections also potentially carries inflationary risks. Thus, simultaneously meeting the legal requirement of zero quarterly borrowings from SBP, scaling back liquidity injections, effectively anchoring inflation expectations, and creating space for the private sector, could prove to be a much more difficult task than appreciated.

Government borrowing requirements are not the only source of liquidity pressures. With a gradually rising external current account deficit and consistently declining foreign inflows, the SBP’s foreign exchange reserves are on a declining path. During the first eight months of FY12, the external current account deficit was $3 billion while the net capital and financial account receipts were only $187 million. Not surprisingly, SBP’s liquid foreign exchange reserves have declined to $11.8 billion by end- March 2012 from $14.8 billion at end-June 2011. These external sector developments are exerting downward pressure on rupee liquidity as indicated by a 21.4 percent year-on year decline in Net Foreign Assets  (NFA)  of  the  banking  system  by  end-March 2012.  Thus,  some  rupee  liquidity  injection  and increase in reserve money is required to facilitate normal transactions taking place in the economy.

Further, SBP’s operational monetary management framework sets the short term interest rate or the price of liquidity based on broad macroeconomic considerations such as likely inflation path relative to the announced target. The requirement of liquidity and thus growth in reserve money is residually determined and provided to ensure smooth functioning of financial markets. The SBP cannot simultaneously  set  both  the  interest  rates  anmoney  growth.  The  challenge  is  if  the  underlying behaviour of a significant user of money does not respond to interest rate signals, then monetary policy would become ineffective in achieving its objectives.

Given substantial external debt payments, declining trend of export quantum, elevated international  oil  prices,  and weak  financial  inflows,  the  external  position is likely  to  remain under pressure in the remaining part of FY12 and FY13.  Similarly, provisional financing data indicate that the fiscal deficit may have reached 4.3 percent of GDP during the first nine months of FY12. Given the last quarter seasonality, a substantial slippage compared to the revised target of 4.7 of GDP cannot be ruled out. Both these developments would have implications for variables that concern monetary policy such as inflation expectations, liquidity pressures, and private investment. In terms of solutions, the economy needs deep and decisive fiscal and energy sector reforms and an early realization of planned foreign financial inflows to mitigate uncertainty.

Another  area  of  reform  is  to  improve  financial  deepening  and  competition in  the  banking system. In this vein, SBP has already been encouraging depositors to put their savings in government securities through Investor’s Portfolio Securities (IPS) accounts. Among other objectives, this is expected to lead to better returns on deposits over time. Moreover, in May 2008, SBP introduced a minimum 5 percent floor on all categories of Savings/PLS Saving Products. Consequently, average deposit rate of all saving  related  products  increased  from  2.1  percent  to  5.25  percent,  with  no  significant  change thereafter. The saving deposits category now account for 38 percent of all bank deposits and 52 percent of total number of deposit accounts.


It was the expectation of SBP that these deposits will respond to market forces and adjust accordingly. The rigidity of the deposit rates, especially for small savers, is adversely impacting the savings-investment ratio of the economy. A more balanced risk-reward incentive structure is warranted in the shape of appropriate deposit rate structure, as the savers, especially the smaller ones, need to be adequately compensated. Therefore, it has been decided that, effective May 1st, 2012, all Banks are required to pay a minimum Profit Rate of 6.0 percent on PKR Saving/PLS Saving Products. At the same time, given the overall macroeconomic conditions, the Central Board of Directors has decided to keep the policy rate unchanged at 12 percent.’