SWIFT - Society for Worldwide Interbank Financial Telecommunication

SWIFT or Society for Worldwide Interbank Financial Telecommunication provides a network to allow financial and non-financial institutions (e.g. corporates) to transfer financial transactions through a 'financial message'.

Currently SWIFT's network can support the following message standards:^[

SWIFT MT

SWIFT messages, developed by SWIFT Standards Laboratories Private Limited, consist of five blocks of data including three headers, message content, and a trailer. Message types are crucial to identifying content.

All SWIFT messages include the literal "MT" (Message Type). This is followed by a 3-digit number that denotes the message category, group and type. Consider the following example, which is an order to buy or sell via a third party:

• Example: MT304

The first digit (3) represents the category. A category denotes messages that relate to particular financial instruments or services such as Precious Metals (6), Treasury (3), or Travelers Cheques (8). The category denoted by 3 is Treasury Markets.

The second digit (0) represents a group of related parts in a transaction life cycle. The group indicated by 0 is a Financial Institution Transfer.

The third digit (4) is the type that denotes the specific message. There are several hundred message types across the categories. The type represented by 4 is a notification.

Overview of SWIFT MT Categories:

Message Type	Description
MT0xx	System Messages
MT1xx	Customer Payments and Cheques
MT2xx	Financial Institution Transfers
MT3xx	Treasury Markets
MT4xx	Collection and Cash Letters
MT5xx	Securities Markets
MT6xx	Treasury Markets - Metals and Syndications
MT7xx	Documentary Credits and Guarantees
MT8xx	Travellers Cheques
MT9xx	Cash Management and Customer Status

Source : www.wikipedia.org

SMEs are now further classified into SEs & MEs

In the recent issue of PRs SBP has further categorized SMEs into Small Enterprises (SE) and Medium Enterprises (ME) on the basis of below mentioned criteria,

Definition of Small Enterprise 
A Small Enterprise (SE) is a business entity which meets both the following parameters: 

Number of Employees	Annual Sales Turnover
*Up to 20	Up to Rs. 75 million

*including contract employees 

Definition of Medium Enterprise 
Medium Enterprise (ME) is a business entity, ideally not a public limited company which meets both the following parameters: 

*Number of Employees	Annual Sales Turn-Over
21-250 (Manufacturing & Service MEs)  21- 50 (Trading MEs)	Above Rs 75 million and up to Rs 400 million  (All types of Medium Enterprises)

*including contract employees 

Revised Prudential Regulations for Small and Medium Enterprise (SME) Financing

SBP has issued IH&SMEFD Circular No. 08 of 2013 in which they have issued revised PRs for Small & Medium Enterprises. Before this SBP issued separate Prudential Regulations (PRs) for SMEs in 2003 which has now further been revised with the following structure:

1. General Prudential Regulations that apply on both Small and Medium Enterprises
2. Specific Prudential Regulations for Small Enterprise Financing
3. Specific Prudential Regulations for Medium Enterprise Financing

Revised PRs are applicable with immediate effect for the fresh financing facilities. However, since the banks/DFIs need to segregate their existing SME portfolio according to the new definitions and revised classification criteria, Banks/DFIs are allowed a maximum implementation period upto September 30, 2013 for their existing portfolio. 

Revised Regulations (R-1) specifically require banks to prepare a comprehensive SME specific Credit Policy duly approved by BoDs. Risk Management Department is also requested to update existing policies, guidelines and procedures (including TAT as per SE R-10) to the effect and accordingly its approval from concerned quarters.

In these PRs they have provided different definition of Small Enterprises and for Medium Enterprises. This is because banks were probably much focusing on the medium level enterprises and small enterprises which are more in number and have much more need of bank credit, were being neglected. 

This seems a good step, as this shows that SBP is constantly working on their strategy of bringing credit for small businesses which play a very vital role in the development of economy. 

Why you took comprehensive test ?

Few Days back I got a call from Marketing Department of IBP in which they asked me that why you took comprehensive test for Charter Banker ? What was your motivation behind that? My answer was simple, "The tag of Chartered Banker".

Question comes in mind, why I need that ? Is that worth spending efforts, time and money? would it pay me back something ? Is that really necessary for my banking career? My Answer would be yes ! Although its new in Pakistan but this standard for banking qualification might earn repute in the coming days and it might be helpful for you in getting a good job or for showing off on your CV or Business card. But currently it seems that people don't care much about this certification. IBP has to develop and market it into a brand so people who are earning this charter should feel proud of it and get some reward from their organization.

However, another motivation behind this comprehensive test was that I would be able to review all the books once again before I go to AIBP exam in the coming winter. As this is very important to refresh your knowledge which fades away in your busy office routine.

The guide hinted that the response of comprehensive test would be pleasent ! So, hope for the best and get ready to show off your Charter of Certified Banker !

Good Luck !

Islamic Banks restrained by SBP to give special deposit rates

Islamic banks were providing special deposit rates to their customer
by foregoing their own share of profit. This practice was adopted by
the banks to compete in the highly challenging Enviornment of banking.
However, objecting this practice, SBP has barred the Scheduled Islamic
Banks to distribute profits with special premiums.
SBP has issued circular No.3 dated Nov 19, 2012 in this regard with
subject "Instructions for Profit & Loss Distribution and Pool
Management or Islamic Banking institutions "

Some Islamic Bankers are of the view that this step was done to curb
the high growth in deposits of Islamic Banks.


However, SBP has taken a stance that this step would bring more
transparency, disclosure & standardization to the Islamic Banking
System.