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Management of Financial Institutions

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Management of Financial Institutions - MGT 604
VU
Lecture # 10
STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.)
Exchange Policy Department
(EPD) one of the core departments of the State Bank is responsible for overall stability of
the foreign exchange market and is engaged in the process of policy formulation and
implementation. It reviews on continuous basis, the existing rules and regulations, to
facilitate foreign exchange activities in the country. Foreign exchange business in Pakistan
is governed / regulated under Foreign Exchange Regulations Act, 1947 (FERA, 1947).
Exchange Policy Department is structured into three divisions namely:
1. Policy Division:
Policy Division is responsible primarily for dealing with policy matters in the areas of
export/ import transactions, issuance of Authorized Dealer's license, Foreign Exchange
Exposure Limits, Foreign Currency Accounts Scheme, Exchange Risk Cover Fee on
Medium & Long Term Loans, etc
2. Investment Division:
This division primarily facilitates implementation and compliance of policy of the
Government for investments in Pakistan and abroad. This is carried out by offering
feedback on matters of varied natures, reviewing and updating of investment related policies
and activities and operational management
3. Exchange Companies Division:
Policy formulation for establishing Exchange Companies & ensuring adequate framework
for licensing, operating, effective supervision & monitoring thereof are the prime
responsibilities of Exchange Companies Division. These activities are carried out in close
coordination with other the Field Offices of SBP-BSC and concerned government
functionaries etc. It also organizes training and development activities for the respective
financial institutions and concerned bodies.
Banking Policy & Regulations Department
Due to major fundamental changes in the scope and orientation of financial systems in
1990, and the subsequent need to put in place a more prudent regulatory framework to cope
with the changing conditions, Prudential Regulations were put in place first in 1992.
Since then, the Prudential Regulations have been reviewed many times and the latest
version relates to three different sets covering the areas of Corporate, SMEs and Consumers
financing.
Basic Purpose of Prudential Regulations
Prudential Regulations have been issued by State Bank of Pakistan to put in place a prudent
regulatory framework for ensuring safety and soundness of the financial system besides
protecting the interests of users of financial services.
Human Resources Department
Divisions of HRM Department
1. Compensation & Benefits Division
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Management of Financial Institutions - MGT 604
VU
2. Employee Relations Division
3. Human Resource Information System Divisions
4. Performance Management Division
5. Planning & Development Division
6. Recruitment Division
Information Systems & Technology Department
ISTD with its capabilities, methodologies, and experience aims at technological
advancement in SBP, focusing on solutions that intend to reduce operating costs, improve
end-user performance, and meet overall business goals. Success competitiveness in today's
marketplace requires extra effort centered upon ISTD's value to provide high-quality
solutions and services, effective communication, and smooth 24/7 operations.
Audit Department
The prime objective of audit department is to examine and evaluate whether the SBP's
frame work of risk management, control, and governance processes, is adequate and
functioning properly. In addition, the objectives of audit department include advising and
recommending senior management for improvements in internal control and risk
management systems. Audit Department is performing two types of functions i.e. Financial
& Operational Audit and I.T Audit. Currently, Audit has three dedicated teams for Financial
& Operational audit and one team for I.T audit. In addition to this, the Department has one
Compliance Cell and one Services Unit
Off-site Supervision & Enforcement Department
(OSED) is one of the newly created departments emerging in the wake of re-organization of
former Banking Supervision Department under recent SBP restructuring. OSED is
responsible for off-site supervision of the financial institutions coming under regulatory
purview of the State Bank of Pakistan (SBP). The department also ensures effective
enforcement of regulatory and supervisory policies, monitors risk profiles, evaluates
operating performance of individual banks/DFIs and takes necessary enforcement actions
against institutions for their non-compliance (with laws of the land and regulations put in
place by the SBP) as identified by, the inspection teams of BID during their onsite
examination, and/or by the supervisors of this department based on submitted returns,
interaction with financial institutions and market information. Currently, over 50 financial
institutions are supervised by the State Bank of Pakistan. These include banks,
Development Finance Institutions (DFIs), and Microfinance Banks & institutions.
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Table of Contents:
  1. Financial Environment & Role of Financial Institutions:FINANCIAL MARKETS &INSTITUTIONS
  2. FINANCIAL INSTITUTIONS:Non Banking Financial Companies
  3. CENTRAL BANK:Activities and responsibilities, Interest Rate Interventions
  4. POLICY INSTRUMENTS:Open Market Operations, Capital Requirements
  5. BALANCE OF TRADE:Balance of Payments Equilibrium, Public Policy and Financial Stability
  6. STATE BANK OF PAKISTAN:History, Regulation of Liquidity, Departments
  7. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS:Banking Inspection Department
  8. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Debt Management
  9. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Training Programs by SBP
  10. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Human Resources Department
  11. MAJOR DRIVERS OF FINANCIAL INDUSTRY:GLOBAL FINANCIAL SYSTEM, The World Bank
  12. INTERNATIONAL FINANCIAL INSTITUTIONS:ADB Projects in Pakistan, Paris Club
  13. PAKISTAN ECONOMIC AID & DEBT:Macroeconomic Stability, Strengthening Institutions
  14. INCREASING FOREIGN DIRECT INVESTMENT:Industrial Sector, Managing the Debt
  15. ROLE OF COMMERCIAL BANKS:Services Typically Offered by Banks, Types of banks
  16. ROLE OF COMMERCIAL BANKS:Types of investment banks, The Management of the Banks
  17. ROLE OF COMMERCIAL BANKS:Public perceptions of banks, Capital adequacy, Liquidity
  18. ROLE OF COMMERCIAL BANKS:Problem bank management, BANKING SECTOR REFORMS
  19. ROLE OF COMMERCIAL BANKING:Private Deposit Insurance,
  20. BRANCH BANKING IN PAKISTAN:Remittances, Online Fund Transfer
  21. ROLE OF COMMERCIAL BANKS IN MICRO FINANCE SECTOR
  22. Mutual funds:Types of international mutual funds, Mutual funds vs. other investments
  23. Mutual Funds:Criticism of managed mutual funds, Money Market Fund
  24. Mutual Funds:Balanced Funds, Growth Funds, Specialized Funds, Measuring Risks
  25. Mutual Funds:Cost of Ownership, Redemption Fee, Reports to Shareholders
  26. Mutual Funds:Internet Fraud, The Pyramid Scheme, How to Avoid Investment Fraud
  27. Mutual Funds:Investing In International Mutual Funds, How to Pre-Select a Mutual Fund
  28. Role of Investment Banks:Recent evolution of the business, Possible conflicts of interest
  29. Letter of Credit:Elements of a Letter of Credit, Commercial Invoice, Tips for Exporters
  30. Letter of Credit and International Trade:Terminology, Risks in International Trade
  31. Foreign Exchange & Financial Institutions:Investment management firms, Exchange Traded Fund
  32. Foreign Exchange:Factors affecting currency trading, Economic conditions include
  33. Leasing Companies:Basic Purpose of Leasing, Technological Benefits
  34. The Leasing Sector in Pakistan and its Role in Capital Investment
  35. Role of Insurance Companies:Indemnification, Insurer’s business model
  36. Role of Insurance Companies:Life insurance and saving
  37. Role of financial Institutions in Agriculture Sector:What is “Revolving Credit Scheme”?
  38. Agriculture Sector and Financial Institutions of Pakistan:What is SMEs
  39. Can Government of Pakistan Lay a Pivotal Role in this Sector?:Business Environment
  40. Financial Crimes:Process of Money Laundering, Terrorist Financing
  41. DFIs & Risk Management:Managing Credit Risk, Managing Operational Risk
  42. Banking Fraud & Misleading Activities:Rogue Traders, Uninsured Deposits
  43. The Collapse of ENRON:Auditing Issues, Corporate Governance Issues, Corrective Actions
  44. Classic Financial Scandals:Corruption, Discovery, Black Wednesday
  45. RECAP:FINANCIAL INSTITUTIONS, CENTRAL BANK,