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ABL Bank

ABL Bank

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Published by Ali Raza Sahni

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Published by: Ali Raza Sahni on Feb 01, 2011
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07/12/2013

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INTRODUCTION OF BANKING
“Bank is a pipeline through which currency moves into and out of circulation.” 
Bank accepts deposits and repays cash to its customers on their demand. The Bank  borrows money at a lesser rate of interest and lends it to the borrowers at a higher rate.It is thus a profit-lending concern. Bank cannot lend all the money that has beendeposited with it. It has to keep a certain portion of the total deposits in cash with themin order to meet the cash requirements of the individuals and business concern.
Definition of bank: -
“A financial institution that is licensed to deal with money and its substitutes byaccepting time and demand deposits, making loans, and investing in securities. Thebank generates profits from the difference in the interest rates charged and paid”.”An institution where one can place and borrow money and take care of financialaffairs”.
Post Graduate College Of Commerce Sargodha
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Banking system in Pakistan
The banking system is passing through a difficult phase mainly because of excessive political interference in the working of the nationalized banks by the differentgovernments in the past. Hence the political interference in nationalized banks did notallow them to carry out their business purely on merit.It may be recalled that some twenty years back, the banking system was working on sucha solid ground that various developing and under-developed countries used to takeguidelines from Pakistani banks.A little earlier before the creation of country, the role of Muslims of the areas which werelater included in Pakistan was of no significance due to their restricted participation in the banking sector. There was only a small bank namely Australasia Bank having a few branches in Lahore and its suburbs. In 1942, the Australasia bank was housed in a garageof a trader of Lahore who used to trade at a small scale with Australia during that period.However the only Bank was run by the Muslims of the sub-continent was Habib Bank which was established in 1941. At that time Quaid-e-Azam Mohammad Ali Jinnahexpressed his desire that another Muslim bank also be established in Calcutta which cameinto reality when Adamjee with the assistance of Isphanis established MuslimCommercial Bank a few months before the creation of Pakistan in Calcutta. WhenPakistan came in to being The Habib Bank shifted its Headquarters from India toKarachi. A few of Habib Bank's branches were already in operation in Pakistan. TheMuslim Commercial Bank also moved its headquarters from Calcutta to Dhaka and later on to Karachi. At the time of independence, another small bank namely Bank of Bahawalpur also started business from Bahawalpur from December 1947.Before independence, the financial sector was in the hands of foreign banks some of themwere British by origin. The oldest bank operating from 1883 in this part of the world wasthe Chartered Bank while another bank namely the Grindlays Bank which was alsoworking simultaneously from 1883. In order to expand its business operations, theGrindlays acquired other small banks and merged them into the business of Grindlays.For example Allied Bank, National Bank of India etc were merged into Grindlays Bank.
Post Graduate College Of Commerce Sargodha
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 Among the contemporaries, Imperial bank of India was the largest Indian Bank whichhad started its operations in 1919 which was discharging the role of a commercial banksas well as the Central Bank for India until an independent Central Bank i.e. Reserve Bank of India was established in 1935. However, since the Imperial Bank had the largestnetwork of its branches all over India, it continued to play its role as a subsidiary of theReserve Bank of India. In the Muslim majority areas which was later on became the partof Pakistan, small branches of Indian banks were operating and soon after creation of Pakistan they shifted their branches and headquarters to India. At the time of independence, two major banks including Punjab National Bank at Lahore and ComilaBanking Corporation were working in the then East Pakistan. This trend was so obviousthat the total number of bank offices between June 30, 1918 and August 14, 1947 werereduced from 631 to 195 only. During the early part of 1949 the number of branches of Imperial Bank of India in Pakistani areas was more than of Habib Bank. In the early daysof Pakistan, the government worked hard left no stone unturned to establish andstrengthen the banking system in Pakistan. These efforts resulted in the establishment of State Bank of Pakistan which was inaugurated by Quaid-e-Azam on July 1, 1948. Quaid-e-Azam flewed from Quetta to Karachi specially to grace the occasion. Originally theState Bank was scheduled to be established in September 1948. Zahid Hussain, who wasthe first Governor of the State Bank, devoted all his time and energy to streamline theworking of the State Bank. In normal situation, the Central Bank of a country is onlyestablished when the commercial banking start working on sound footings. But thecircumstances forced the government to establish Central Bank and the task of stabilizingthe commercial banking was also assigned to the State Bank, which it really did.
Post Graduate College Of Commerce Sargodha
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