The Senate’s Standing Committee on Economic Affairs grilled the State Bank of Pakistan (SBP) for its lenient response to commercial banks involved in overcharging importers by Rs65 billion during the 2022 foreign exchange crisis.
According to a news report, the issue arose from unauthorised higher charges on letters of credit (LCs) opened for imports, a practice that took place during a period of severe foreign exchange shortages.
Presided over by Senator Saifullah Abro, the committee demanded that the SBP provide details on profits earned by banks from foreign exchange transactions related to imports. It also urged the Economic Affairs Division to establish a dedicated monitoring desk for foreign-funded projects.
The committee expressed concerns over banks profiting from excessive charges on LCs and asked the SBP to report on the recovery of the Rs65 billion from the banks involved. The committee also sought details on how funds received from the International Monetary Fund (IMF) over the years had been utilised.
Senator Abro recalled that then-finance minister Ishaq Dar had acknowledged the “unreasonable” foreign exchange earnings made by banks and had ordered an investigation. However, SBP officials informed the committee that they had already investigated the matter, imposing fines of Rs1.4 billion on the banks involved for “over-invoicing.”
Despite this, Senator Kamran Murtaza criticised the penalties as inadequate, given the substantial profits banks allegedly made. He expressed frustration that banks were only fined Rs1.4 billion despite making over Rs65 billion in profits from the inflated LC charges.
SBP officials further explained that the Federal Board of Revenue (FBR) had also imposed a 10% foreign exchange income tax last year, but banks had challenged the tax in court, where the case is still ongoing. However, Senator Abro noted that the SBP officials seemed reluctant to fully acknowledge the alleged Rs65 billion loss, despite the finance minister’s previous statements.
The committee concluded the meeting by requesting all relevant details from the SBP within two weeks.
