According to Audit Report-2012-13, the deficit of financial assets over financial liabilities for (i) interest bearing-maturity after one year amounted to Rs 270.193 billion (on balance sheet gap); (ii) non-interest bearing-maturity up to one year amounted to Rs 2,460.46 billion (on balance sheet gap) and (iii) non-interest bearing-maturity up to one year amounted to Rs 24.42 billion (off balance sheet gap) for the year 2012 needs to be justified.
The report further revealed that the leverage ratio of the Bank declined by 1.4 percent for the year 2011-12, depicting a further deterioration in capital adequacy by 22.4 percent. This means that dependence on funds outside the Bank's resources increased during this period. The audit also noted that balance of un-appropriated Profit/Loss totally eroded. It was mainly due to the fact that profit for the year (after dividend) of Rs 260.8 billion was transferred to government of Pakistan and Rs 1.1 billion was transferred to Reserve Funds.
Investment in Market Treasury Bills (MTBs) ie assets created by the Bank by providing money directly to the debtor - the government - reached Rs 1,803.84 billion registering an increase of Rs 440.03 billion (32.3 percent) when compared to last year. Justification is needed in respect of these significant lending to the government instead of investments in economic/productive activity. According to the audit report, there was a decline in interest/mark-up expense by 15.4 percent in comparison to last year, a decline due to waiver of interest charges by IMF from January 2011 to December 2012.
The AGP also observed an increase in exchange gain of Rs 42.83 billion during 2011-12 as against Rs 1.93 billion during 2010-11. Exchange gain increased due to depreciation of Pak Rupee against foreign currencies and served no other genuine purpose of depreciation eg decline in trade deficit (currently Pakistani economy is more import based). Rupee lost its value by 7.9 percent in comparison to last year and by 54.2 percent during last five years. Since SBP is primarily responsible for management of foreign exchange and currency under SBP Act 1956, the management is required to give reasons and explain measures taken against instability in Rupee value along with resultant economic impacts.
General, administrative and other expenses of the Bank increased by 28.7 percent during the year under review as compared to 2010-11. The audit team said that this increase must be justified and efforts need to be made to reduce expenses.