Body formed to resolve banks' ADR issue

ISLAMABAD: Prime Minister Shehbaz Sharif has constituted a high-powered committee under Deputy Prime Minister Ishaq Dar to explore possibilities to tax the bank profits accrued from investment in government securities.

Interestingly, Finance Minister Mohammad Aurangzeb has been included only as member of the committee.

The committee will also review the existing legal framework of fiscal measures related to Advance to Deposit Ratio of Banking Sector.

A notification issued by the PM Office said in pursuance of the Prime Minister’s Office U.O. No. 7(122)/DS (F.A-LII)12024 dated 05.12.2024 on the above subject, a committee to resolve the issue of Advances to Deposit Ratio (ADR) had been constituted. The committee shall comprise deputy prime minister, minister for finance & revenue, law minister, minister of state for finance & revenue, attorney general for Pakistan, finance secretary, chairman FBR, governor State Bank of Pakistan and Ms. Asma Hamid.

The Terms of Reference (ToRs) of the committee shall be to review the existing legal framework of fiscal measures related to Advance to Deposit Ratio of Banking Sector, to deliberate on alternative fiscal schemes to tax bank profits accrued from investment in government securities, and to engage with the banking sector developing a consensus on way forward, if possible.

The TORs further included firmed up recommendations for an optimum solution ensuring realization of government revenues by December 31, 2024 and suggest non-fiscal regulatory measures for increasing advances to private sector.

The committee shall submit its report within one week besides suggesting legal amendments and regulatory changes for legislation, if needed.