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Express Tribune
30-06-2025
- Business
- Express Tribune
Departmental spending exceeds budget
Despite a projected budget deficit exceeding Rs38 billion for the upcoming financial year, most Sindh government departments have shown little willingness towards effectively controlling expenditures. Budget documents have revealed that several departments have overspent their allocated budgets during the current fiscal year, with additional expenses mostly attributed to non-productive categories such as fuel, operational costs, and allowances. Among the major over spenders, the Sindh Assembly Secretariat used Rs871 million against an allocation of Rs760 million, with Rs371 million spent on fuel alone. The Chief Minister's House exceeded its budget of Rs1.32 billion by spending Rs1.63 billion. The Anti-Corruption Department went beyond its allocation of Rs1.65 billion and spent over Rs2 billion. Similarly, the Energy Department, allocated Rs62.4 billion, ended up spending Rs68.2 billion. The Transport Department recorded the highest overspending. Against an allocation of Rs7.61 billion, it spent Rs11.03 billion, reportedly due to the procurement of new buses for Karachi. Similarly, the Education Works Department, responsible for construction and maintenance of school buildings, spent Rs10.21 billion, which is Rs2 billion more than its allocation of Rs8.2 billion. Likewise, the Board of Revenue also exceeded its allocation of Rs8.94 billion slightly, spending Rs9.10 billion. The Local Government Department overspent by Rs2 billion as well. Critics have argued that most of these excesses are unnecessary and avoidable, primarily related to perks and fuel allowances. Tighter administrative controls and meaningful legislative debate could significantly reduce wasteful spending. According to Dr Ikramul Haq, an economist, if the federal government provided Sindh with its full share under the National Finance Commission (NFC) award, Sindh government might not even need to incur additional expenditures. "This time as well, the federal government has given Rs250 billion less to Sindh, Provinces including Sindh prepare their budgets based on projected income for the coming year, which includes funds expected from the federal government. When the federal government does not provide provinces with their due share, the provinces are inevitably forced to make additional expenditures," explained Dr Haq. It is worth noting that during the current fiscal year, which ends on June 30, Sindh's government departments incurred an additional expenditure of Rs156 billion. The Sindh government recently had this amount approved as a supplementary budget by the Sindh Assembly. Among Deputy Commissioners (DCs), the most notable overspending was reported in Umerkot, Thatta, Qambar Shahdadkot, Mithi, Matiari, and Sanghar. For instance, DC Umerkot spent Rs140 million against a Rs116 million allocation, and DC Thatta spent Rs165 million against a Rs148 million budget. According to a senior official from the Sindh Finance Department, many government institutions habitually overspend, and the Finance Department incorporates these figures into supplementary budgets, which are then approved by the Sindh Assembly, often without much scrutiny. "In the aftermath of the 18th Amendment, with a higher share from the National Finance Commission (NFC), provinces like Sindh have gained financial autonomy, reducing central oversight and enabling such expenditures with little resistance," said the official. Journalist Muneer Saqi, who has long reported on Sindh Assembly proceedings, noted that, in principle, these additional expenditures should be debated in the Assembly. "In practice, however, the ruling party uses its majority to get them approved along with the annual budget, side-lining accountability," claimed Saqi. The problem of overspending, however, is not limited to provincial departments since divisional and district administrative offices are also reporting significant budget overruns.
Time of India
21-05-2025
- Business
- Time of India
First quarterly loss for IndusInd Bank in 19 years
MUMBAI: IndusInd Bank reported a quarterly loss of Rs 2,236 crore for the three months ending March 2025, reversing a net profit of Rs 2,346 crore in the same period a year earlier. It was the bank's first quarterly loss since March 2006. Tired of too many ads? go ad free now This disclosure follows the abrupt exits of its chief executive and his deputy last month after the bank unearthed widespread irregularities in its foreign exchange derivatives and microfinance portfolio. The bank managed to record a profit of Rs 2,642 crore for FY25, which was 70% lower than Rs 8,950 crore in the previous year. In filings to the stock exchange, the bank said internal and external reviews uncovered a fresh fraud where Rs 172.6 crore was wrongly booked as fee income in its microfinance arm. Broader discrepancies spanned derivative trades, income recognition, and the classification of assets and liabilities. The board now suspects fraud involving senior employees and has said it will file complaints with enforcement agencies. Sunil Mehta, the bank's chairman, told analysts that the accounting of internal derivatives was discontinued from April 2024, following confirmation of irregularities by external reviewers. Additional audits found income was misclassified, loans wrongly categorized-leading to an under-provisioning of Rs 1,885 crore-and balances in "other assets" and "other liabilities" lacked substantiation. The bank also misbooked Rs 760 crore of interest income that should have been recorded elsewhere. Mehta said that the board will "do whatever needs to be done and follow the due process of law without fear or favour to ensure accountability". Tired of too many ads? go ad free now He said that all issues were duly identified, duly addressed, and declared with stakeholders, and the new CEO would be starting with a fresh slate. The statutory audit for FY25, conducted by MSK & Associates and Chokshi & Chokshi, reveals a damning litany of past lapses. Among the more serious findings was a write-off of Rs 1,960 crore in "accumulated notional profits" since FY2016 arising from internal trades, termed by the auditors a "prior period item." They also flagged the reversal of cumulative interest and fee income worth Rs 846.4 crore recorded during the year. Auditors highlighted manual entries dating back several years that were netted off in the current year, amounting to Rs 595 crore. More seriously, they pointed out glaring lapses by former key management personnel.
Business Recorder
23-04-2025
- Business
- Business Recorder
MCB: Back to bonds
The banking results season has kicked off right on cue. MCB Bank reported a 10 percent year-on-year dip in pretax profits for 1QCY25, while staying true to its reputation as a dividend-friendly stock, announcing a Rs9/share first interim payout. Yet, it's the balance sheet that grabs attention—just two quarters apart, but seemingly from two different banking eras, as the industry has decisively returned to its old habit: ditching private credit for government securities. After the ADR sprint of 4QCY24, where banks scrambled to dodge penal taxation, 1QCY25 brought a quick relapse. MCB's ADR tumbled from 54 percent to the 30s, comfortably settling back into familiar territory. It's not that the asset mix was ever skewed in favour of advances—but the speed of investment build-up was striking. From the sharpest quarter-on-quarter rise in ADR last quarter to one of the steepest declines this time—the ephemeral nature of credit growth has rarely been more evident. MCB's investment portfolio surged by Rs650 billion (56 percent) over the previous quarter, pushing the IDR to a record 87 percent. Advances, on the other hand, shrank by Rs282 billion or 27 percent, taking the outstanding book to Rs760 billion—levels last seen at the close of 2022. Unsurprisingly, the ADR collapsed to 36 percent. The retreat in advances is not MCB-specific—it's an industry-wide phenomenon. Total advances for the banking sector dipped 15 percent over December 2024 to settle at Rs15 trillion. Interestingly, NBFIs, which account for just 8 percent of the banking sector's loan book, contributed to a third of the Rs2.4 trillion quarterly decline, thanks to the temporary lending surge in the ADR-fuelled dash last quarter. On the liabilities side, MCB made up for the Rs140 billion deposit outflow seen in 4QCY24, recovering to the same level as end-3QCY24. Deposits grew by 9 percent over December 2024, outpacing the industry's 4 percent growth during the period. The significant shift in the interest rate outlook played a role in the drop in markup income. On the non-markup front, a modest uptick was seen, with fee, dividend, commission, and FX income contributing the bulk. However, administrative expenses rose sharply, outpacing headline inflation and pressuring the cost-to-income ratio, which fell over 8 percentage points year-on-year. With inflation cooling and the external account holding steady, interest rate cut expectations have returned to the chatter. Yet, industrial output remains sluggish, and the farm economy is sending mixed signals, leaving little hope for a significant revival in private sector credit appetite in the near term.
