BUS,INEISISI

RECORDER

DECEIMiBEIR .:;!·~,.201!O

B,R BA N K:I!N G REVI:EW 201 a.

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1- Flnandngfarilttyup,to 80% of P'~irl!dpal amount ,2,\. FI1OO'~ Oe!bi't Card i<sSll!J1aJFlce.

),. No MimilnUlm 'liatanoo f«I,uimme:nt in c:heclm1!'l9 acmunt

4- :2 Free Pay Orde'r5H~n ,a mon~h.

5- No maa4mum li~mlit for ~nvestmel'lll

upfronlt P'roflt on ,d~posit'o"e'very'OO,'OOO, ,RUP'I'SS' with ~ . askar.

Minimllm deposit Rs.:1DO',OOD 01' j'n mUltiple of 100,001). ,Ad.dhltona~ Benefb 'fer OlJsmme;rs~

Fo:r mO.fe immma~n:

TrjI F£eeNo. " I'~:n~,

~. I II.~ '''-~ L k

www.asMn~nIli.iOOm~rp .

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,B,R BANKJNG REVIEW 2010

From editor's, desk

llhe plj bnm'JJ[~rJn off

lB@Jnl~ingl Rmliiew ~n your Ihand hastik'en plaoe ~n less '~han one monWh aftef '~he deatlh of pionoolU o:ff econom~(; and! financiaJ jOUlm~H~m im Pakistan IMI. ,A, ZUl~eri. 1h~s oooasion, ilerefo:rejaffords us an oppmtunily totaij{e a leaf out of 'tlUI Ilate d!oryen's boo k withl a renewed comm ~tmel'1lt to UIPMI:d-' ~tngl the lOfty ~deals, that he! espous~~ mrourghout" h~s Illife:, M. A. ~uberjl was 3[1 ardent ,ehamp~on Oif p~~' vme ,en1terprise~ ·tee 'tro.dre. andh.e maJmets, democrnticsys1tem off oov;enlment, and an uflwaverin\CI advocate erf 3glrmrian Ireforms". Aooord~ng~Q lhiim, the obje'G'tliv,es off fillTh8ilil,ctaland mOIil!stary stabiili~ shoulld o[)mplle" merit eaclil o~her ,~ii~€!n i1at th:efiim:mnf:aJ1 S€!ctor ls

be gii\ffin~h€!ftmed~om to striGtl~ pursille mcmetary po:liicy ohj~ctiv'~€Jrilum;i~ ated in 'l:he. SIBP Act

lit is, no Iiongelu a secret that it wa;s. d uero h~s coneerted and pilJn!takilngl ,efforts that resllJl~edl in pm-meting ttme p:miWiteIy(J,Wfbooand Olperated texti~e sector aglainst the . . t'f . -t'ro· .. r . -t' - . spa ,e r(l na na lila 1011

ilhd·.· h\,"7 A Bki tt, mleas "if;J . 1~'J (,.,., '. IIU . .1]"

Simillarly, many h11 ·the lJanking ind USitlrj -oflle 'OQuntry are aware of fie fact that it was, hie '\Mho successfu.llly peffiu,a~edl 'the ~he n lPires.ide~tof PalkiSIaI1lI, Glen Zliaul Haq, IilG,tltO dBS,troy ithe i)ankina struGtUim ·of 'llhe ,ooun'try whtch vms, and ls, based on intemational miles of economics: and! flnanee, through hils f1aw{J!d, myopic and] Or~scu rantist viiew o:~ r,en~

an iimp{),mm oom~orbemgto:n.

of the traJnsm~:ssiijln lit is impoltlrntto UJ ndermecnanii:sm ,zm,d ilmple- standi that siince ti113 menmentartilon off monetary e:~ and fLsclll policies policyuiI"3mework in the: are si:§nirficant determi:COUl ntlrY. He would often nalmts ofth,8j '[lUI nrent make iit ,clear 'tiQflhe: actou nt b@jlanc.ej deficits auth:Q.miIDir0S. that the COUl no' needi tOo be accompaniedl ~rry's Centra~ iBank - the by limpro,wd fiiscaJ disciStare Bank of Paki~taJn -, pllilfile. l1'Jie;m has :3!lways sMulld have ilhe pull$.e of b-eern a plausible mtJluWhe economy and mUlst ment thaJI: the effective-

nessanc ,cmdilbli Ilityoff govrernmenlt PQI~ei€s depBnds lcruoially on the av;~iilaJbiilliilyof t~mely and accmat€fli n'tllilrcial and marn8ig:emElt~lt inform8Jtion SIUP p,llementBd by a framework of finaJnci!a~ and accQuming IPlim;iplies des~glned acclOfd ing [0' ~ ntennat~onailly accepted and pracMced SlIalu:b.lJdis. IMioreover,a SYSWlnll .off IPubll[c:aooounrta:b:ill~ty~ that ~Includes: a sM"cm,g and 3n ~ ndepende At ~eg~slative oversllght ,aJnd audit funeton ,enSUIPe$ 'fisr.aJ1 ,d.lsciIpHne by' 'theeXllcutive. brsneh Stre ngthened and prude ~tfinaJnc~all manage ment practices will always increase thE. eflf'ectiveness of develop~ ment ~mgrammes· end lrellate:~ ,exm mal asslstanoo.

In PaJkistanr, like many other ,d€ve:lr(]p~ng JOOU n~ ~mlesj ban~i ng is a hi~ h~y lregulated ~ndlLlstryj and government re'Stric~iom3, on flmmdall ac-tiVlrti:e:s by Ibanks have vari'ed OV€!r ~ me and iliQca~i!(~'n, The IPWl:l ~en1t day Dal1lki ~g ,(wh[c:h is presently sufferingfmma h~gh iincidence of N fils ~ n p~rti'clUliar (lwil1:g to ar va~ie1ly ·off

BR RESEARCH TEAM

.AU K.hiZS.r Sohaiiib J:am,t1.li Zuhair .Abbasiii Haider Na.wa.b Mi\ln91111 Iq ba,1 Sijal Fa.wad

Abdul Mu:s,aw1er Gulzalr

Head o:f' R.es:earch Rels'eil.reh Ed~tolr

Re.sea.r,ch Ana.ly.st Rresearch Analy,st R'e!1sfil'an:::h A.na Iys,t R!eS!eB.r,eh A.na.lys,t

Grap,hic DesigrnelF R,ese-arch Da.talba.sQ' OH~cer

fac10rn) is {\:hiaJmcter~ed, lairgely because olf techril~-rj'··~ j·cili'l lhi, .xwgca .nrn.ow. on, ~'1

an in:creasimgIIYSIophistiJmmd proviisf:on .of book" ings:ervices and an B}.1pansi)o:n of COinS!] mer f:redit.Bankfln:g laws []hal: regllUll,aJte~he ba[llk~ngl industry in Pa.kistan are mo~ dlirerete areas Qf Ileg~1 p~i m:;ilples which impact '[liUi bank~Ag~mnsactjions and on Wle IbaJilrker-oustomer n~latronship. lin mhat ,oonse~lle r,enn of oonking" the Iloca:tjon at Which a div,Elrne ralilgeo:f Iprim:i~ pies· iinoorsect is what we

'fe I t·c- hi nk"o·· I'w N3. _ ¥ _0818 uaJ . l.ga.

n€ im:lllJsion Oif 'f.aiir~ ness rea:sonalblly and ,eomfornJJty siitswiitha hank's eXiistiln,g obllioations. Actingl eth~ciillly is mo' morn than an oltJligation to act! farlrty ,and non,~s~ly,. IBaJIilI~ilngl law is a wii~,emrang ~ngl and eonSfaillitly changing aea of th,e I~aw, It fOCUisies on an aG~ivl1ty wihich has beenai tillJe heart Qjf a stro:ngl Cilndl 'Ilibim.nt 800lil,omy 's,~mce aJncienttimes and which irrutersetls w;ith the ~iives of most indIVIidUr;:!ls ~ an.yo:ne wii~h a btlJnlk aOOO:LJnt.

While he fav'Duredthe idea of a sou rid bai1l~ilngl SYSltem~ !free from unlnec,essary' :gQfJermmemrt intervtlnition, Ihe was alMa. g Feat prop,onenlt 01 ~ts ,effec~ve mile ii n emmlningl lJiaJla[ll:led girowt~ andla fa~r deall Ito all segmenm

of socimy. foJr such a strategy t01 succeed, it wOO cOI1l~,iijered vi,tall to eXpaindi the outFea.ch [)iff mhe commeroit!JJllbanrks to mral or u n!bankedan~a~ in vaJr~rO'lJS regions ()if the couln~ry throu!Jh policy ii rrntelnlent~OI1 0 r mmall surelsionr by Ithe GeOilmlljl B@Jnk, The 'lJiS€fullnessoff such" pO~licy has, be8!~ evident ovem mel ~11I a. Inumber of \llJayS. IMiore deposits cou It! be mob:i~ ~~zed, andl Mglh I eve II G,ff ~OMg ooulld b:e ,d Is~ursed ~ n compaJrati,,€,ly less deve~o;ped areas or the: cotm~~ro enhance theJlr gmh ratgs, and mturn their socii,al strlLlctures. lIhe eX€Jfc~se coulld be m01weFruuitrui iff ~:ocal educatsd p€ople!,whfi am familliar \WIl1c:o~ditions off ~heir respectirv€: area&~ am indluG1€d iin new ~rnm:h~ es, ~n short, tile spread o,f Iban1k$" to unbaJnkedar:eoo coul!d help c!harnge the! II life s:tylesQf peoplie residingl, p~rtjcu I~mly tl1mseiln sm~UII vililages.

The foul],der=Edlito[u of ISUlsinessPioc{mfer was higlhl~ critiC8!11 of S!LIOOeg-. shm 'gowmm(jntg! pm,. clivity' to' use banks pUJ re~y .for flistal oo:nsidiera~OI1S at the cQst of ordlimuy s.aJve,rs, It Vll3S . ... . .d·~I"""" .'tt.lh ·Idl' ClfgllJe : .. !"~ \1111.11100 Inlg

ttax. on imltre!re$t Ii ncome and p:en'[lity on with~ dra\M'lls b.eyon~ a De,rtaiifl ~ount wolJlid discO~lu~

age banking haJbit promote consu mptionl end encou rage ,actilvi~i:t3<S il ~~he; infQml11~~ sector. Su:cha pO(llic.y was all the more risky willen l~tes OT re'llum were .@JllmMy lrI€igatifuie aJnd the country n~-eded to have a mucn hli:al1er savingl ra~e it'D ,~Itmin selfsl.ilffic~eI1lICY.. IEv~:Hlll 11l10W~ Crl wll"rir'C -f th .. : ntm aJU .. 0 ... u:!s 0 .e CQUUY,Y

GaJn benefiit ifrom. h~s ~deas to ht!JJnu~ss tihe capac~ty of thlBf~mmcia~ S~fst€lm iL'O improve: th~eDo:nomy on a soundffootin,~.

ln cOliellllJs~on, !BUJs~ness Re come r wlish.es to U I11derlii ne thefactt 'uh!@lt alith£Juglhl the. falll ii n €Hec~ w,e: eRR {CatSlh Re.s€ll1Je RallO) often adds tl)~he market II iQIU~'d illy, the

ex.ces:s.~ve glovemmernlt:

bornowf ng! from the Central 18arnk is usual!l~ a domiina"m: 'rnGtDr that offg sets the iirnpaJct: ot" armrO'UI~ other '~h i!neISI' stilGfI,g prllll.atB sector fi ... .l ~t,L m; d A tl hi (; w. lJe .. an_ •..... 9 ..

mone'tlry policy reg ~me notwithsmrn:~ ing, thie baJllks., nev€rtneless, are r'8:qlLlirnd itn Ibe mom sym~ pa~heticrowards prn1ivam ooCil:or, whrl:c~ ~:s un~oubt."elll, rill' - . HAir,,"- ,: nl '. i - · ~uy a.y oo __ ! iY} s eg.rne

of 'g rrOwthl, an ~mpQ:rritant creator of W€llIltil, a~lf3ditiona] provider of m uchg need,ed capitJII to pm~ m.ot[l iilill\ffi·slrnent and a ~,ependa~'~e sou rce Cif emplloyment 'for peQIPle.

Balll1lks, IlIreed '!till) !sh ift 'ge,talliS ." .••• ,.' ••.. " ••••••.••••••••••• , •••• '.11." .,.,,, ••• ~., •• "" •••••••••• " ••• ", ••• ' ••• "." ••• " •.• ' ••.••• ,," .'., ••• an •.•• "" ••• " ••• By Alj K.ftiza]' AsIBllTlL 115

IKardar bafllkilmglloll glQvlellinmenl rleforms •••• ~ An inrervie'W' WlithSbali'lkll Hafiiz lKa~dar, !JD'Ve~I"lOr~ S1a~e l1iSanl!( o~ flal':!isMlll11 Iii

IlBall1lki rng iiln,dlUs,try ,SlI ,a g'l!ance" •• ,i', ••• ~. i.", •• i ••• ".'" .~ •• i ••• i,i"" 'i,i. i'" •••••• ,,' •• '., •••• ' ••••••• i~., ••• "" .,ii, ••• ~ •• ,.~ ••• ", •• ' •• , ••• "." .'. "" •• '.,.. i,ii" " ••• "i'" "ii,i' 24,

Fa,!sa~ B',ehil,Qi 'fUIQlliler e:x:pI8lIli1Shllllii •• , ... ", •• , • .,. •• ", •••••••••••• ,,, •••• , ••••••••••• ,,,An fflli~eNiew·will.l~a~ A. Khan" :Fa,y,s~ 13a:~k.limited 26

State of alnU-Mo'D,er laUlfu:ttr::IiEll1\gl'aiwSin Pakistan, ....•.. ' .. ., ...•••. ' !.,. •• ~ •••• ~ •• '''' ••••••• @ ,.~.., "'""'.' ,8, Mona Klil!an ·28

IEaiSt~o be 'SI"Dwtlh 'Ol!fllre for II·U!i,BC ,."' ••.• ' .... " •• "" •••••. 01."" •••• ,, •••• ,.. ••• "'."."". An Inl,e;N~ew W~Ull LJo,yd Madtfoek, HSec: Pa:~lstalil ,ao

SM:E hill Pa kletfa n:: It,'s :1 ca'tc::tJ -22 •••• ,.. .~, •.•• , ••.• ", ••• ~ •••••• ""'"' •• ' •• , • .,,, •••••• ' ••• ", •• "" •• 'I'" "', •• "'" " •••• " ••• , ••• '.", •• "" •• ".,'''. By $o!h~ ib ,J,a:rnH:lI~ 32

Smailllba'lllkJs mus,'t lbet 0:111 ds:ki:er assets, ••••• .., •••• , ••• iI ••••••••• ,,,AFI iVlterviewwith M'ol1lsi~' Natil'HJlni. S~n>Olar:d Qll'al1emCilamit ,33

'TIII'I,! evo,llIJifli,on o,f baln king "I,a ~uatj:ofl t~11i1 IPakisNlil'l ••••• ,,", •• " •••••• """ •••••• ""' .. ~.'" ••• " "on. " .. 01." ....... "." ".. By Kl'fUiJH~ ~'qba'i SUtd~qllmi ,34

i1l1a~I'bailillk:s; IlElredlO IdD,a .,Waf analrysis •• , •••••••••••• "., •• ~ ••••••••••••• , .... .,., .... An interview wUh A~if LIIsrJiillni. Citiilbaflk N.A 35

ConstillmelJi" iboom 'Will!; ,3 disserviice flo s:ocii:ety ,., .. "."' ... ~ ... "'~." "" .. ''' .. ''' ... An illitenllew' wl~h Sin'aJ,u,ddirn A1:lz. Barnk PMa'l~hail

Goi 11m tb,ra;flChl~ef$s:: [P',lrvlng way f@:lI'lifllalflieilal~ i I'1IJcllWis ~o I'lII ' •••• ~ ••••••• ' ••••• " ••• , •••• , ••• ".", 6f~i:s Maha 1'11:8[1 Ahm~ 40

CIOn~(!flilitr;atlll1:gl,@O'tnd:e' 'Ii nil f:IIG8 •••••••• ' •• ~., •••••• ' ••••• '.' ••• ' '.' •• ' •• ' •••• ' '. '~"i' ., •••• AnintaNiew lMith HU$,s i1ll LaW,ai" SiJlrflmit 8anl< 42

.As:ell1l 'fr[J;etwerril( i:s,~trI,e k:e,mr ibr_ametll~e'ss Ibal1l'ki~I~1 ""' ,.,,.An ~ntervrew,wil:lhsJ8d Irfiln Alii" DimCite,r! IEU=-A:D', srBI~ 44

How Parkistfalflj'~ balnlks D're log.gnJJ'If,alil1g iineo1me ineqlu,aillil~ie\s •• , •.••• ~ •••••• , •••• ,., •• , ..••. , ••••• , •• "., •• , •. ,., •• ~, .••.•• ~y Ashrn~' JaJ!"!J!Jj~, 4;

................................................................................ D ... E ....... CEIMiBEIR .:;!·~,.201!O

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MAGRO OVERVIEW ,B,R 'BANKJNG REVI,EW 2010.

~n~e race of~e ti~w;)ia~ sedQr .growtlll andewl).!tiQ!Il, tile d'iOOOllti· IIIl!1ii1J1 a.M lun~rOOi::t8JtJjlily ofgO'!let:n'Tl'mnt ~~i[;~ ~ Imp!: Palds-t:lliI1 lfar Mhimi [[I.1Iii~ dMIi},pin~ and Blilerg.illg ~[)'flomies.,

Uliilire others, the absetnoe of debt ta~il:a~ m~tbts andlh"e liiidl!t' ral(le.1th of []evelopmet1l~ Ff!1a~i~1 ~mtiMiiJns Mv0 viFWltr shmooal~ tliJe :fiin~n,cin1J n.ea:ds snd S;3.!)Iln,g inslru:rTlent$ an ~e Jpla~.of com-

me:roiallJall!ks. .

liliIe COlil11rlrerc~1 oonks have lll'lru:le \!Jinafafl gains U'1ki llrivatlsaooli! oflliehrgbam:s, etliie~nC!3i of new players, and gr[O'J,mng fmm-

~~,~ d~;~~:k;~:I~h~

But IIIa1Iooolirotl~n Iliaslls l1i1J11go-ver:lilIe b'anks I1ave indnll~~ !tUQ[ 'lazy 1i~i!DIJj( d'u® 'to a IiIilSl: of maS(m~ inoruiliHllJithe mOIil~JlQ~of bfg ba~, exoossWe 1Jn.I!!~noe of ro~,:n baJll§, aIiid I~_pk 1)f in'~iaiive lofindia niclile.olil ~moftl1esm~[~ ~pliWfl~.

Lack of a~\!areOOS3 in '!he m~ es as WEll as: re,1igious reas~ns hs:ve' Ihelpedtlle ~lg baiilks raise< low cost dejJ'Osits. 0vet85 pe~t or brurlk.clepos:ilJsrnre cr! less than tloo-'~f nnhlliiy, \wioll d@eslil'l allDW oonksfmed[Inl .~ !l(]i Igr' kllil(J"term Jlrotocrtf~~GllnJ].-

The sticky UJatUlt'e o1~ll~se delJl!.)slts f001Ii~ the t.taIiiks to 1i0000oo-evenl 20-y,ear projects In SQil'I8~ -t11!J~8[OO se~nl~n the last ~ or S(l l-killl'e'!lef, im?I5trul;rttirefilll1iflolnig tIIiil: lfE!q:Ui[!!S public prrlolirte partllarshfp'and rangtel1ll'l fuooiffljlfrnrfl1)hEl ORIs or dllt:d: fllIf1[J Iak.ingfrom r,mpf!al I'IWikfM ~e~ rmail1!tl ffilMitt

This Pr11Diem mainJl~.skll'lils 'r~oona Illd\ [of~undtl1igwe~~,U1e absetlCe 00 j)OfrticaJ. \'nllb:l reform 'HIe Ilnlllllc:lal intlllJ:Stry 8iI1d '91ie: tied [If fillnrnJUtlC1:I1.

SirIDll tHe lntr;]5lfOCtu;rB, iocilltling I)Qwer amd ~ndlJsIJy' $u,ppl¥, Q!Duld IilOO nlatCh"tlle d'emaoo of~he bO(lm ~ra.t~ IC1Ulput ga;pl ~alilcJ. ed, .~ ,evenrually lbefilloo by impmts, TiMr UlJ@er,oo the ViiOrSt ecolilumiDd@l'jlfliljuminthl;!G(lunmy ata~iflliiewlOOnithevj'(frld aI&J Q a drea<lM recessioo.

The ~st '!;wID years 01 ~ in Paikistall[)rimarlly emana.ted ~1'01!I1 Ii$l~ mllts ruttI iII1YO~i~ gtlvemliIle:nl p:olici~" Hi3:d 1!lIB had stmlng 1IIiJ~ s(}phi~eo1 ffirranci<!1 fm:er~ mOOiat1~n, the .gralJil'ij O"I~l:ie crises ClDuld have been rt:ss.

More Ulal1 half of tile banks; enmin[! tiSSt'ffiS SliII m...ml~ amlllnd afe\v ~ig names in the (f1J,~rnate tJe~r,: 'This w.emviOUT 1iI0<1 Olllilt freeps oorpo!atfonsr~JifI d_ goi~llOilhe DYers, bu~ ~ aI:;w leaves Ilhe smll 8ititl mOO'Jl!Jm _el1Pfi~ rl:'t.fD!]ly om of th:i:eqL1®-

ti~n,

An(lther prllbleml soon in the ooolifling d1fYS [00 lhil tl,st ~ecade was th:e lad: QfeJ:j']Jerlenood ~f1ItM, at lliEi Iii~rml of <lJff.alrs·, The lask of dkJrIl(!Stin Iln;in~nl] Ei'~p~ ense ~f! the prWale.~:~the emll~r:w!;!es of 1~feign !laJilks • esp!OO.ia]t1 the Cillioonk - ali'l100tmn [~mignt J!1lf1lP,. 1ill loc.al liDllilks iJ'Ildi hEtIiy lP~rT!iIil)lIillSki' galt tfiJe rl!i1ii1f man iIiI.

Tlhese 6)Hlrti I:Iankersa1it.e~mJt:e~ to fel)llcateN'le Clii's g,1tll:iI'lJ IbaJn~ingl tM~6!1 01 prograrnl'l1lf: lending lii'OO liheCllnSumeir S~firajlf(:I 1iID]e'Jy b:roass~ the SME ~. rniI\llilt Atew '~1iI itrle(l the SO~rB!'llooe~, I:!wassing tf!e Know '¥Our Costu mer modell tha!: ~s mOllie o'll'lJIIiruit)le il!1 PaKistan's 8M!:: SBGtor.

While titlis worked well li[]~ Ulr.l1fflWd eool1omfc cycle wllielil fntlatlDll W~ row and grovcMl was h~:11, It rell ~ilke ,a. pact llf cards as tli~~C>iin[l:myoook. ill. ILI-.:tl.mll in "tile ~1~ ~,,€SI: [mOO OOIlMoo.

G~d loall15 ~I~ mOl[lnNn@ :m~ are s<til~ o!'l~he rise. Whileine ba,nks are te:ft \Il',tths, oo!!!rafliertacste [of aggressWe leOO1rt{l tOt iDlle c~ni:;U rrJer segrrnellir.an!1l ad/(rMl~ m SMEs, thBy. are INEIiI bBagrnlilti~ sh,y of r~ndiIilgffi[ the filig na~ afte~ a 'few !'!aJl'leS wnt dO\lllIl wiU! tl1e eool1lOl~ic C!low{lwm.

TlhOO ,comes a lIIaw ~Iayef illn~ eq;uaIiiln, the g;ovemmBm, M~ ~!lllwilTIg nood<!! Wld S£I\Iemlgijl nature madl'! it jjflB biygmiilt OGGU· ~t [I)f the :iiI_sseIs sicle or batliks' oo.'kinee sheets.. Wrtl~ low costs 0'1 d'~ptlSiIs. Ibitl !J!anlq; SIilrteti mj(!y· in{jl d'~rtt sp~s ililffieilMJ1i~ shflrt-term gll'lJ-ennlilll'lnl bml'()w· i~s, an KleaJ c:ase m tile risiJi!~ interest .m:e Soe!ililJiio,

lIWm.l'ooer remaiood was; tll1~11 U,p[ 1~'1q,Iias;..lm.l o~ratjo:ns: ill'~ 'rbrm ,QI IlOVler s-er:t.or 'HliiaJlCi~ to Ill!!!! the 'Gimu1i1roo~1 .~Jil~ oom· modlity O;P~raliOOlS lor prQoure' I'IlICm oHCi!oo oQiml11lGd'~les Il)ygO\lemme!ll~ .agencie.s,

1111i!l ilS hl~h[1y fmelfj'(;~i'I~ as, drc([lar detrl: illiiaooingi is tlunEi' 1iIle:f!E· iylj(]l fl1uI] ~Iilh dffif8Je1ilOB lmhveeHi the'ollst and the rowvery of jl'Owet" g~efun iI.nd llllm1bmicm, While tl1e IInaJ1lcflng of Wlloot ~roclks bY tli~ g;o.v€:i1iltli0~ is ctj)g{Jing thg liQukl'It') ifl ~he systenl

Tihe tlan~ (fem!ln<led Klb(lr plus three pe:rcefllt on cOlillmodity nnan.elng, ·a..s 'lhey mewtlilal.a~ 'U)e time fir repaym~n,t,th!IJ r(i~ns WOlitJJ tKi mlle,11i [rnltr. 111'1 ~.nG@. it meant ~I)ng tEHm teiildilfigl -to 1iliIIl gQlLl'llflllmm.

TIle stud\ IIq!JKlIty ii;; fo:rc[Ji)~ intelWt rates 1iI~rl:iS arn:ll'l'laKilll~ iI: ~ narnilrfor tnll'p~SOOOOr M bOf'l1jJ,!i. M: t~ saJfrIfi~if'lil~, llack

of oonsisteOOy of gOV>e!ifl!if1e!'!t poaU· ~ as well as IDe ble~_k'llaVJ and order situaJiQl1I is also keep!!llg ~nl'tilte '[;o~pmdliiJrl$ at lliIay Irom m~l· ruing n~ Il~Gts or @V<illsivt1S,

At this juncture, due to 1ih!ll~Fl;Iw· ilg fucal dEtficit amid IBdk of malilG.,gavEloues andlii;Jht: mllootary pQ'licy, lIiIe lJafaks: focus cmgovem- 11I1eflll)apers ID ~ij.re~ to ,oonmoo, WiIlil·H!ie. ~ ~{I~ of'!be SiBf ~ iliIll !l,(l\l'lmlJTJent wil mw to liadu~ ifu. Rs1,4 ~rmi[m GenlJal ooni\'s: ~OtT\W~ln.gro'IO ~nt ~. Is 00 revenllJeS il'lM years.

This I1I1eIDlS an lJ'/erage oHlo~diOg of Rs2JO.250 bmiolil ~~ is on_ G3fds fur the mrAfu'e ysam, ~Wii~h w!;)u:id sig_nilicarnly in~ !he' ga'lte~tlI'liienl'$ reli1!liire "Of! cmrlllnerciaJ oon_k$, Tlhus, 1l1ftJo~'h the ec~OOI1l1Y ~ ex~1ID r€ll]ain

The w::ijsl!1llg Iian~lng !'IiIode'l makes sense Ifor gJams wil]} ve~ j(yW [cost of ~umls"r llut 'r,(,l'~O[Y pllIY~ffi,lbB C1)SI: of ~ul1ltlsis: l1igli,so thti'jr profitability [5 Sijoomdl ilil 1J[JfTI~il;nl'l wflih bi~ I):l!IyErs - ,

SOrrim books aJl~ ~1iI markad with oogartive spreads, Thls,can!!ot oOfllinuefor imll'lgl,SClrtlleare lmergirtgl an.d a few ale avrula!lle for acq;uisitions" HWiiBve~,.,it is liiard ill ~ililCllJuye:rs for~~.se, anin.g Imllks. Tlh8!,i' ~ "to 0fE[!te a nklhe to SUT· vi~: for ~~~Ie, beoolninYi a regfOlIlW IlfIl1Ik, I'm SM E billllk ora :Sp.OOJali$OO iQri bank a~e, just a IISlI.ll [of !he oritions..

I[n lreGeflt yerus, W{l have seen tw(Il b8nlKSj:umlllng ontha h:dd~r 10 Ileooml;{ mediu!'ll~d 1Jii!!il1ts wltll1 a IOCU8 ~m trade· ~ioonce and warm services to aWrad ces-

sliifp ~rlUiie country ·w'hkih wa5 a majOO' steji.ping"$tune for IasUraell\ arow1l1l in I'ndb and 011ins.

liihe ll'al'iiSilfGTI w[ a ~ectJetl9.sOOi :ilOOOCIrny sorely ~ ~sup· p(l§ttw;! !Jovemmenl: oolmwitll malt! budQet ~liIbJI.ward5B!lil· 0il!00f!( wi l1on~e'lt!:ss.rre fioaOOell sem.rfl"llID'f$ID play its tuI'Ie.

The StICCW 00' El1gr.o's RilJptya iit'lay IimlDe olE.err Dig l1iaiiTl~ to ,gll[ direcnIM to savmmrhlli'~lmnJ)in{l rn~Bds" Soon IlJIaoticlJ'S \!Jill I!WSh Uiie oonlksto IJE;l hnowli.ve! and w[ taJ'pl the SME ooCblr 8!nd coneSmnel1ll'l1l0re,

Butiit will 00 unfui(tlJ pm:"illllli~ blilllnes em I!)an~, as sIo~lI ~mfotoorin8ll~ >[)frore(l!I~FE' iaws Iliilutes Uiie Ilressuro:= Or! futcllTOllJers an:d make ~!'!ks shy 01 ayg~e:ss~

its Course ~nJS Ite~lY, ~ner CJiO\!.rdin~(i1ll1: 0"1 ~rh1ate med:it is immiliBlilt

II:"s goiOO to be a hu(pe challenge rQr~e State IBank t'o d~ a poaU' Cjfor ~Quid!fly m(lnag~i1t a.s. ~l!i!11 .ilS· ~1IiG~ M:DIiiun tqr Il~ lsIlIIiin[J. AliI ~u.t·of~fh~~1)X ~olu· tion is -1(!'(J1!I[redto .s,or,\I'e this puzi4i,

II~ r& llertililentOO[ 1ll(.rteta1at 1M&; ri~ll:mge is oo!1!nfiled to on~ .oor:. pm'aie ten(llut[lruldl·nrnrre IifiaJilcil'n~: bJ ~nsm€ c:v:rnmttrci1l~ Dalflkintl retO:Il1rlS 110 laP I:'h€i i.tflhamedl pm.. ~savers and DmuO ~~he ~ndflii~sWr.:h!!~ Irwlai'dS kililll· ·term fin'otneinSl, there ,~fe other sefL'(ltlS ch_a:lle~es roo.

"The ,8BP has til dOOse OJ oClrflb}"a:lfm'l or atlllf1jn~tivtl me.asures ami in~~ to dill1f1:eillB !Stronghl)l~ ofth~ big 1\'f!JI;!banrm~llI(I GOrJoomremPtemio.ecshllall :aOOI meaill!flT sized ~all!ks 10 create ~1e1r (wm niche. Today, mC!IS'l oonRs, irre-. SP~cn1\,f1} oolfimir sire, i3irn in~h~

S3Jille b!il5[n~ of lemiiliig to .~B'

I ent ,ami run,ninri ;iller a ~ig QlJJWo:rare !iI~me-s.-

M'Iil£i'S. Am~r n1Brgedenti~ 01 thme smalll banlks is wotklflg ~fI the SlfTIB f]ilOO~, Then,. u 101'(1) e;<j$1)J~g fur-efgo bank, -after befrr~ . badt1lml1l by its ilig~ressiMe 1!lt'Qgmmmiil lending, is mrw foCUSLilQ oO:r1!)iiin in~ (iiv0Cl6ilidE ~f'(](frli its reaoh in Olfer1 00 QUU.rui8S,

M. the' same fflll.0, the' devJ?IDjl" fl1iemofa.oo~rate Qe'bl mar:ketiis Irnperaltii'o'e. lhe SiBF' illl cmmJfnatiOl1J wifti1l~l1e SEep s~mukl incentiviw (;!lmpOr.ililj]~ ttl lWPass niB irrtll11ll1ooiatiCml rol~ ·of ClJrIlmer-CW ba:nbro~ ~heirmn:muililg needs"

There' ~s. s. liee::l tlJ 5efii\afate i!\~t ba~ioYlfro!'llille ,~Hll of ,corlilrlleircil1 bMlKB as ~nvwtrMrrt oonks, IJBiI1Ig iI1IdB~ndBIiII: id'en., 1.1lOilIldl ~ in compBiiliDfil llI,ffih O[)JlllTlBlf(;ial ~nksfur findin[J tfieir nKlhe and wow'ldi ~ rlis1!ru~ rmental !iii the d~llment (!lIllie 1)(.lJIO~ate ~eI)t mar&r.a an~ listing o.f Ilew mlltil]S'il1lthe ~q;uiy market

Thi5· wm SQwlfim _s ror Uie ·~9v.ellf)lllillll(l,t trt veot~lre CiI~ita'J ~illffiS' and gri\rg:tee(JuJIy fmllS, It 1,fj'()l!!rd aJsQ[ fo~ entl~!lt'loou!-

le:ntifllg in vo:n&IJmet amlSME5.

SBPshoukl j~in hands wflh~a ~ov.ermrumtm WQI;kO:H belter lam to salBiJ;uam lli~ iiilltrtst of Innlks in ca&e [0'1 d:efaltlts.. iBalIkss~'l(iukl ~a.vetliieiiliirilll to pass on tlle Ilu~' ruBSS to IilE!W ~(IJl1e ilil oase of iail· ure of 000 to Rlpa'!).

MloreMr; b81l!te~ z"ll'liliig and land I~W5 sh{)lIItd 00 illl ",race IDlap[ 'thifl miU{;n'lfIe~oo m(iri'gag€l ~nilln~I~~, HftJh it1lt~res~ me IS il!nolh~r inl;peQ'ilmen:t for liiouse rulll"81i!ollilg tor mE!'fit ~h,-8 rlsrng demaJildfOr the kiw and lup~r Ilnidl:l~ cl~s$. ~erLlililinoeJaciliHes \'1.1l1:t1 ~FC and [(lth~r ~ullilate[QJ ag~liJt;i8S shootd 00 otrtalnoo fur adIl:lStiID.g ~herm.e~ toots in line with t~ retm!~ yields"

lilIIese are mooflilm 'til IoIil~rJIIll wlutfons, II'I'~ iml'l1ediine f;11~1it- 1JmiIii, g~ tht (;O~raihts ,o-IlltliJr lltw "rid order silimtionl ,,~ grow· in!]! !Jove:mrmlBlilt n~s Of! wm· lil1eroiaJ bSlilks, ~bie OOliiO_tiOO sJnouJdI ~eurwards reacMl{I1 ~l1e lmtappe'f~~.

FloOO"s. .should be seen as a win· d;o~ll 01 OPMrtlJl1ijly lO tap tm gro\lli~1 W!!!rai ec,oQ~!iflY a;nd 1Jile Ss:p ~s;f;ogiillMnl of it, as ii's worlkc i~ en E'l:iJ)ontt Reflnaoc:e Schemes ilil tI1IllliJ~.tJ.hil areasfllKll pmlJ1ig lirst ~l)SS;gll!aJan:~ to; tandero atl~nr.iii!!lcred It 00, '!OO llooo·hll: areas,The foo~ f~rol ~n:ouk::a:W a {;ultu:re 3mon.gSi: ~links 'to pe'ner lrate the' mf<ll areas.

But then 'ag~in~rOflhls id'earo tM)l!Irish, 'OOGUIiIl_OO m1ih~ 900[\· tlmf Is il11lp~,AIti!o~h&i: gUNemmetilfs ¢fum; I!n$rth~ urn'brelII Qf1Joo IMHo illllpleiffenl: RGSlfw:lII gj) a loogl '1Ji'a/ff il1 doCUfIlBnrtaJjjOO 0'1 tl1e OO1lnJnl'llY, otiIlertedhool'(iliJ~ and insWiullooal U~aOOliI furr land tib wil~ 11el~ fill .gMing comfoti ~ lenclernand k!wer'ihe OOlli{lllflng comaGwellas~bafll<f~ inHiIe

unb:arW:i 3Jfeas. .

A~' [}flEW wilh~. ~ !be ~ood mtiwh(lurto!lf!Sl!!te ~ deltMery in small fai"fll,pgl ~.finan,' Wlll>' 1liab:la tor oomrrero'ial ban~,

Br3nGliless OOnmg is: tlitB Multi ill tllinkl'> • a11M{iy me~aJ'e a lew rwducts irl~l1e market includin~ e<lS]IJlsialsnd IWBL Omliii wi~ !lIlaIiIY 16th;er prQ;diu,ms olf othBr !:tanks Un tIlB pi~liIilB. Willii lliie pas· SolI]l:l of til!ll~" 'ttle Im~nch[1ess ~alf1f(i~l~h~ukll~~ uflfer olliier prod· ul;it$ such asoolilSu'mer <lS$B"I$ uhilE ~ttring,rol th6 S pm 01 BMEs~gnm:m the SOltrrlf: tiiil1~

T[hegl)'Jtef1iimetl1~ and '~he SBif'! sh(lll!rd wo:rk dlose~ to make agri 1e:IiId,inIJvliab'le fur banks by 'eUf]1[. nenln.g~l1~ l'lllll 0-1 mid.~lg matl - arUll~W;mtlfjl.mes. sJ~ou1t:I be made i.W8iifa:li.lfe alnd COllllffiOdtly excha:QgBS sh~ukl be established to mlln~ ~l!Iisim d\)Qumtntatitm . .amI hed'ging m~~rulil1em.s for banks to oover ~, Cl'tlp[ iflSuJ"" 8!l.OO ShQuid to:llow.

[n 1i.n!!imfll~lI, 1ih~GOnoo~mliml1i' 011'1 iooJusi@ ~!as 'ID I!iI!lfloortheci. The. verhil:'iaI _mli1lr1 01 produ~ iooludflu"g de~OS~', re!f1dmgaIild in6lJ1F~ $1ioukl mOCil tIoo filr-iTl!Iflg ~, On'1OO ~r "'n, Ililfrns1iur> rure-fimmcing col!l1paniessooull:tl tolrow·ilill publfc ptiIIite [i!ar!i!lershi~ rnOOleI; they' sh(lut;! aG!!!uire IorJg~ imIl tittll'lDin,grTom lirrtermtiolMt ag~ t(), Ilro.\Ild.Ii: .illf~ui1\l3 ~nJra·

mCll!lredo~ltr, .

Ti'mJil again,~h~ 1I~,ge$t"irnp8~[1. mefllt tp MliStan's !In,ruAhi Is tliJe -dJooo:nlinuitya;nd! u~PJlI:~i~ifiry of JGWri1l111ern llol[Cies, 'M:. dliere is: hope' that the democratic p:mooss Jh1i~ fluurish an.d tliie ~PIi1ii1o cal gools. ((f Musllames, wiE c~nver~ wiflll00eCill~l(Irflic: needs Clf1Jiie'm~,

'Tim wrfWr'CilJl!Je I~ at llli.k~-mail.,(;om

INT EiRV]l5W BR BAN K~N G REVIEW 2010

- - - - - - - - - -- -

I)ECEIMIBEIR 3~, 201(0

Kardar banking on gOlvernmenl reforms

An intelVI~ wilthS.hifd iH1afii Kan:.lawf Gw'{unor!. State Ban'k off P,aklstan Alii ~hizar·~ HlaJder NaJwab

lin hiS' fimt, deta(iled ~~t~rvie:w til.a, Paij{isJ'an ~ IPu:b~ I i'tauion, after bec€!m ~I1I'9 l~tle £lIDNJ!mojf, [K.ar~ar . Ita ~IKt$ c,an dIidlly abtJ'lut hew lh,€: gQVeJnmEmt~' ']aill mem r:efform iii, rnising obstacles '~1'iI U1El G@llJll'iltr:y':s path to' e&o~ rn:@mio ~ gro,wth. He .a;~~;o· shedrs II ~g ht on ~hle eul~Li'rl~; 'of h1iW "ban ~fn~ . in [P"aikis,rnn f wh iile s~1'aJItI1!,g his view ~.h the il1lte,r,es;t Hlite. O'u~(IO,k and the prlvale, S.!H:'~OJ ~~!!dJit 01- lttlke" 8$,llow ,a~e 'the;edi~.e~lr:aLn~o~l pt$,

limn p r(l,j'H:~$: hlilll~ll!Ildhlllll iliil~irastruC~'[ilrB trlil:S!liI;(lili'lg, bu,t late Iy' tliilllse I nls~mhlltlo as Ii1I3iV" ~sjmD~Y dlllBldi IdQ,WIiII. How woulldl you ·fOflilillJl:l.tEl strat.elllll' tG' revlv,e ~~e lilUlCh-

ij~ anUty of debt 0 r the rate ave rse, b wt a ~SQ there ~s IU~ is a~ (fit] 0 n,s~ ex pe.nd nu fe 0 n at lllhiiflt:i theJ'~J-e will~ng to tie 3ppet~te fOiW IOIll:~~terlll1l SIl(lIHity <llildnoocl r'e·late!1 raise (]I ebt, We tUfl ieve, the lil1i~ ne I ng. lIl"Id'er S lie h c'l r~· re ha t11~~ta:UCl.I'I, ViI hat nee cis M ~n ishy of Fi liIalilo·e i ~ ,~dI·e - r:u mstaaces It is ~Io'i t1{11 ~o ll'~ 1;(1 b e seen ~~ the extent to '[JlI.ale~y elll!~Kll)edl tn take alii IUl}l1Ii~~ task, :il!f least ilil the whJ()n the IFIl~eral -alild this ~e<(;nsi.olil. lore.seea11lle ~[]um~. IH11llSS Prov~I1C:~a.~ GO,I,1IHrlmerlt:s willi

IBRi~t [l,DOS Iheavy lIioiVlrn ~ tire siitl!l~ti(]lln (; ha ny es tI 1'11· be .able 10' .~d j~ st the deHcit

II!IiI.el1l~ bOiffClWlllllg hllllldle!r~he liI'I~ti(Ja~~. UI[]o~l'sl.i'ch ,cll.aU€IiIQ.ilrn@ dr·

Illong teirililil Illili~I!i'iilS~rutt;!iI ral BRliFI; Vnat ca!i!1 Ch,i!irllJ'f)!

f1111I!Bincil'llil? thlirlOiS dlrama.tl:talliy?

SK: "{as, ifthe nale IDf gQV- Sic.: The Ilm!~Olrchatngies

e rnme lilt Wp,$ to n~cedle then that we are limp in g f,(llr are: yo 1I ~ll~lIJ1ld S~e a vOiJlr~ety [D~' a) the amendments ~1iI the developments that V!lo!l!HI Sta.1r:B G·aiflk Att~ once Ilh0Y'lr.~ i~u~'i~~tMe th ereatton ota in pia C1e , W8 wm Ii,e- ~dc~ markelfo~ corcerate debt, (lIl!IaMy eliTllHlwered ~egal~ ~~. th·e g evern ment is ~!i.lk!en to -G~HC~ g !)1/,8r1i11i1l en r b 0 r-' 10lUt 101 c:omm:odnty f~liIa~a~n~, rowi~gs: I)J So sig nitieant

·fiinancingl.

a.lllill if 'tI'i6. gOV~l'In FlliMt red I.!otion Ii !II the g.()lv·e~n~ gove·mnllilnt rewnues,. IH,(lW red uees il;s re I la nee 0111 ba nl< 1i11Ie Ill!' S f I sea I def I ci r. mu,ch wllill th'9 g(lvlllr1il11ilill!iIl~

bmmwing .am:! pF'()h~oits tlmHlgJlh. an enec!tive Ilmple~ haV!Bi tOI M:pay:il'

ililStijfl!lti(]lna~ imlf~S1I(],[s~n~ rnlitHillaUom 01 RGS1I' which SK: Under the A~tthje

OR ReseaJ'chl; IOfis ars pl[ojett:~ with a !!:l,ng q,~sta" ~:eve~.(lprliie~t (l,f a m,ar!il:eit ~O!" pension flu Iii a,s. to Invest In wi~~elilabie 'I~~ gO';illtrnnH!lflt Goverlillil'l~n~ o,f IP,likistllIII S,1!ilIPIPOsed to bl~ f(!J'f hi)lli!iGI tion per~ods, require three lena-term i~ina.nc:i~g ilii the the NSS, neW (]'P'IHlFctl!ln:itiest(J' redUl;e its blilflr(JIl.,>,ilng, neeusto otno,ad the stocik

th~n,gs: first, .a !)ta.bie ponti" slTlap~ olf a enrporate ~'(Hila. wo,uldl be c~~,8~ed. alld ()) a ~i()Ik·!1Ip ~1iI ecpnoml- (If SB.P's- I~rudungl ill fi\!'e

Qii~ aad econlll)mic: 8m"ir.(]IIil- B_fIR: Whaltis be,il!UOI ~IOIil81 Thls wm llie~lldeve~op a ill diOlivilies·ye.ars,rmm the date o'f pa;s~

m'elilt~ SB()(]IliId thce I;;oliitilnluitYabouu it? bodY'llt GQrp'orate ]ml'est(l1J'"s,lI~ SUi!'lHmH~~e,. U'le gJOV- sag's' 1[I~lhe ll;ot Just tn giVfi

and pr8~i()t:ability of '9011- S!lt \!V,e M\i~ .C~fl<lt~fl Ger~ ,seeking Np,;t!'le.Unu Ullrough ernment's he.avy bo~wwirJg y.(lulaw example, 1he smck

6 rlil miHIIt pol ic.i,~s. I n i i'lk , I . . I "CQII"Il e rate debt: ~a rkets. Fo:r is illiCIt he~~i ngt he' 'c:!,e,a;tj,[lil ()f M'RTI".~. 1[1 n t .. ,.".· ... "' .. ~p.. t.IiI·I"

111.11111 . nstltutll(HI1l'lJIWUrluS, IJ~ III" u ... ~ ...

tM:;; isan a rea thal i s ~~.g in· exa m ple, . thH .g 0 V!! m m e r1!t of a III1I.uket: to ~ the eo rpi(l~ l'! "'. "'.~" " .• ~'."'~ .. db'." ' •. h""

find IiI@W thCl g.O\i:Elrlim,BIjII .. ,.,. .. , ...... I""'''~ J .I~"

I1Ilelliciliedi i!t)iJlIlll~liEinilii plro~!ect f'li~R to i)~c()mtl mOFe Il.asno pass cenaifl tests, has. t'a.iserl c;mmlrnliQdily ral6 Mc:tm to riil.i@~ ~(]'Il!l NiaUcmal Assembly, WlIS:

'fll"III'i""1 " ... .., e fit re flit I~edl, ~;"n~,,, ~1·1iI·· g 'n' I ". ". "''''' ~ ~ ,,~ term fliila .. Il,c,in n .•

" "." "Co! I lh.e .g.l)\lemm.elil·~ has pa"S.sed ~"","I". I '. II <i"""~ ,,~ " R.s1 ,35,5, biU~on. So by the

Sihai~lld Kardar; There are TI1ietl]~fd area is·' COl1~ one~.eSl,t receflitlly, For exanil- Rs39C1 bin~oli1rrofirl scl1B'~' BRR: ~aivil you ml1{)O'~pO- tilil]eit will b~ ~a5sed by the

two issues ilnlJoh'·ed here. ~e~f1edl Wn~l 'Ulie de\lelop~ pie, it Ill~,S nis.ed n'Mmey lliedl ~alilks. And I1Ili,Orfl ratedl IRiljSTlin 'yQlJlr IiI'IOlilil- M,atiocrHlll Assemb~y af~er its ll'~'8 or~~y institutions avall- !'JiHmt alii~ '[ulncUoli!i~,g lot from Sukuk, whereol!lt oif imp[)[il:a,[lI~]y. ~I the .s.ov,ere~gn t1lifY poli'~ modlal? a.p~nnr<lill by title Sen.at~, ·the able ~ftev tine ~eath of IJr~s capitsJ m~Jkets., wh~cl~ is the' Rs B~' b~mo!l ta~get,~s I~ tmmwllinglfrH suclli OiPelr~ 51(: ¥eswe @m ~~l\Dillg stock mayl!luclll Rs1.5tril~ are the 'collllme~cf,a.1 banks. I~nked U(I the ~~edicti!bWt9 5.2 tJililiolil h~lJl8 a.~mady b,een 8tlons at loot uncler 1,0 ~)cer~ that Res.T will be il'll~le~ H(]'IL '[hat w~11 lJ~lIpe a huge

'nil> is tJe'Ga!lse(lOmmeHlii~~lJt Il[lli(;~es, the gl;D~erlil- m(],bilized" cent, l1Iatura:lly 1'Ae prhl'ilite. 'irH~lltecl: we Ihi!ve~bo, dlemi'llild 0111 ·!Ilefirnuc.la~

b" ¥." _, m~nt·sfill.;IDno~all IiIl!HJaijij- 1·..· Ih' s!lw~ijr wiU ~filily be :"able to L .. ". ,a"e.·... "I·t·... '1''''' P ac·,· 111 "I.lr t d' .., ·111

.alli t\:s W'€[B I lin (;1, 10 n I rig MliJ '111·er~ ~!i a !ill m:' g rea,~HI.~' "u "' '" 'L .. sys, em iii n . ma !'lagl! lII~g ~ll,r!!,.

Iliad be·en p~lv(l!tis.ed by tM menltstra.te'~y arid its dlegrllil lof ~l1ga.g~rntBiilt :!lind bO!frloW ilil a premium., rec,em [lJlllilletal~.'i Po,Hcy Oil il.(;:haU!lIil,g~liIg, task,

ljrrw DFls W~~-e wOlmd !JrI' lor 0Ifiorts· to CreaM <I yie,ld the.! n .. ovemmentls.··' he~.n.' b .• OIrrowinn.· [s.' StaHm~rDt.

,~ Ci]FV'8.!()r ~s own insUI!i' til "'~J" ~ [IliAiA: If Rs:250 bililliolill par

IJ;e<GaiITIll dysfUlm:;tiolil.d. li'Iiiay f1Il,BlAtS. not Ihelpill1lQI the creation of a market for BRR: DOyOIJ~ihillilk tMit iUUllllilm is, oMl'@ldeid Cllilliv,er·

w~ re mill te ag gn~s,s i v€ ill IBRI~t ICal1ll y,a'u ,elilil!lolr!llte the corn. a rata sector to raise IOEilg.'. term r'ed U()il'lgl tl"18~lrrscalgla!p' to age",t~le g O'"\ll8nUiJile'!lt wiWI

ollelril1gthetil1ilil'l.cln~g beil'lQ ~ 4.7 IP,&rCIfl'lilt is tOQ opt~~ naive to IlIO IliIlore to, th:e cOlm~

on ~hll Jj'6ii!,['el.a,pment m~iltle sought. yiel.tI c:l!!lliYe?

51(; For ,ii!. \l'il.riely 'of re,a" dis,OUi'S$ioll ~€twee!l SIEIP

HlmNHver, (]l)liIllrrm.nda~

bali! ks, by' dHI~r1! iti(]!ll, navaJ an a5s~t li~b ill illy matl!l r ity

to l1ave ,an aiMIH PIl'OUlfl wb ~cl1 is 11 Olt C'Cl.1"IlI P ~e'~e 1'1 D,IJ[ oisync withlthe matlfrity JH'o~ile Qlliabil~Hes.

liI'Iistic?

81; la.~ re·e it I(H~l::oS $0 1iI1e· Also, [he pac1e of growth what ambiuiousilt til is

ar'a I[llil the: r~sa. hQivilllg reall) hed R s5,0[} bmi'~m, wm .. this kilild or risk pm~ne amid hl!ilv~g ov'ilr'lil rlIi'ent ~ 0 rnJ ~\I'

rHgim'e al1d liTlobiHze <ldditkm a~ res'll !.IWQ:es all d I hOkP'~ that it wiiII be a~'le till d eluve r o n~H~ f rmn.

camsteaces. Weexp·ec·t that as we move forw<liWd, [hie ~e ma rliO of tu nds by the glo,l,1e rn me nt 'Ir,om ba nJ~ willi begin to decelerate.

IBIRR;; 'Wltliltlme ·am,9Ii1d ~ n1I;ern:ts ~in S.BP A~t inplac~. gQ\remmeot b.~Hiliowilll.1l filium !Hiillltmi ltli.lllill<. w,oll:II,!!I h:8ive to oom.e IdoWfltol11 0 pieroant a~

mefitlialll ~~a.l!ilk$, h'91!l'tl(!, m,t! ro crowdllllllO IO!!iltof prh/a.lli seCi~ 'wlr, IhlesliI't ~hat add t~'ile woes?

:81{! Yes. Wlhen tl1lie .A.(;~·s am0ilil[hnents wer!: <l:ttl!ldy t:l ralte-di,Ih eb OHlJlwun gig were ~Q'Iiler. Nlm1l.tMt the Aot isab 0 ut t () be Il(l:ss.ed, thie sto ok hatS p ~~ed U f). 'S,o. t'oday it won't belli! at e.asy. We win have to tluulIage ~~Q~

i~g hlom b_alilKing s.(jlurCBS, Pa.rt o;f 1h~ r~~solil for th~ LlldUy witlmnseri(llusly flotiltl~V 1.i!FIi Mnks risk· slippag,e ~111 t~~ fiscall dti:flcfrt crowdhll~ out 'the ~r~\ia,te

~:NTERVI EW ,BR :BA N KilN G REVI EW 2010'

DECEMBER 31,201 o

sector, Qi~CI rrn ~d a~'le c:lnl- Stal1e Bank sllIId MailP? BR.R:: Do yOIJIhilnl( that t I~!n[t Ih ese ~lIIterest rates" lel1lge. 51{: III some eaaes y'e<5- tlfl:e RGST lhas, Ibe,e,n 1.I1i111i1E!C~ irs dHt~cUl~1Wcreate a mar-

DRIFt W'h'ElIlII wOlillld y01!I1 For lnstanee, we mentine'cI essarl~y deia_Jii!l~!? ~etto~ houlSjing nnanee. i8l1t

think: Ast wlllilltl& ef~ective;,r ilil Ql!lr ~<Ii$t iIIllJillBhry Jimlicy SK~ Yes, H~. has, taken there ,SJ'e" otliier issues (IS

SIT(: Full uedlt ml!lst~oul' statement jhat sJlliHiethe much IOIl~Elr than had been welL F'lf eXiilillip~e, the

tbe Flillal1l CC M i f1Iist~r am:ll ~is govel r mil ant r a lsed Ie ss ernris:a!g,ed. ~ I!It Ilonlk at tn e pn;rvi IlI'C i <1.1 (Iii" I oi~a~ go VElrrn·

team WIHl ar€ pdlotiflg it mOI'Hl!l than 1M targfit JHISn~V~ side. rile ~1I.gIH;~il~ ments 3.m r(:un~ired tJ:D snsu r~ a. d!ecel1l~ syst~ rmfo r

Htlfi \18rllcntl/, pmv~di! p~l· I1n a ry i ntrasnu ctu IF!: to enable developme'ut O'r lall~ 'lor hOlls-ing. illl wh~ch netthe-w th e Fed e rail G oveflil I'IHHiit linn t he State

lhm!JIg!h tne Pa,rU~mel'lt We: hnpil tliI~t Iby mid-j:il.llllar)!, ~\I'i! will be re<:iIlyto shirt ilITlplelllJentll1i·g ~t

BRIR; In t~le last six

[Ml d.ewll1ll!i1ll (1,(1 lIl1 c6Jllau ctl O? d!.'!sp itifi h ig Ii,Bfl) arl:it i· rI3itlOIll tn a pfeV~0lJ13 H~ms aUlcUolil, it added unneces-

Hem hss Ib'~Ullfl jpills-sed by S!1lmlt~ and n,~re is 8011 ag reement iHlJl0llgst the Im:1V i aces (I 1II~9 pe rcem {lit

!i!fH:mt~s (jo"!!'ef1!IH!i!ient b'or~ rowillllgi hl!l_;S 1,IrWreasedby mo re~ihll,llIl 11'19200 biiliIIOfll,. w~,al1eas eocterMI flows hi~e

s,uy pressure Olll its bo,~-the issueSi, a rnlncr n1IffUer ro,wi!'lgs from us. Our vkw ralllHl~IIlS te b'e re5.o~veOI and is that YOll eannot fix bot~ that shouldn't take long!, AI~ I;IU ilimity ·il.~HJ ~'Iri()e s ~rm,I~t.a" th~.t f~ re Q!.I i reel is ttl!;! prellIe~l!sly_ Nr;DW tb~y are ~eS$im'g tif]iJ'8fQ'w lit: t~ ble <I.iI)~eptiflig Ol!lr awg.I!lIille<Il.t~liId passed by~h,e Naii.(m a ~ rellin!lillllIled Il!Jclkl u!Sillrl!l. Il1Io'w

wllllhs'lI,ov,Brnm:ellillt m,anall'iI it?

S!K: ExtBrliial tic) IoU,S <liFE!" not w~~t had tJ9~1iI Ilmd~Dtedl - , G,fElate r C I arilty ~s requ ired Off PQilelilliaJ~ flows. rer

We aJrf~ a~lso p'roviid iing Ii rst loss 'I;) U!ilU'3JlI M tee 'lor agriclUl~urallle!~dtng iin floodaffeoted alreas" We a r'e hop'~ng 10 i nee ntifvise banks to develop, some products ..

Ba~r.; nas alilY r'!lle.

nen tlhefe is the ,~~esti~H1 1[lf th:8' struetu Fe gfl<l](aIR(I'IiI; starap d uties, IHIJ).pllrty tues" charg~sfo,.. semmert ra~ dllilViil.opoinc r1t,fellt COIiItrol iaws. 'loreclloslJrB, etc.. !rlves:torsWW r1l(lt develop, a pro p,erlyfo r rental plU wp eses i~ th,ey G:a!l1 net g.et a tenant fo ~a (l~e.

O!il the tssue of to Fee 110· sure. ~t'~ just IiIO). tne ~ega~ as gUlDt bill alsn t he De hay·

v:elnt~nQllhe wheel. we wW try te ~eamn rrem Iii! eir ex periences. We lost tine OIIlPor~ tuoMy to ~evelorJ a 1l(lIUS;iflg Ii Rill rll;e i nd millry when i niterElsJt n[~lJis and i f1I~1 atlcn wef~ low.

B R.R: Banik lailildi no tim b'lliIl corp@lii!tlll Iha:si bl!l~n crowdl~ IlllIg olilit~~e small illlllo1lliJliBa i~ ulm elfi!~erprlsesi. Wha,t 1~11lI1 be dOfle to' hllirnthie s,itl!l!llion a:rrou nd?

aress WUIl re laxe£! pro \1 isiQ!'l~f1Iig ueqlu lrernents for Clve ~dllU e 'HlHHUl:tS.

S.irl!~e the banks were reluctanr fc ~8nd ln the 1~l[)ol)d Iii it 3 reas vie ha 'lJ1l a.s·k@.di lh ~ II:!'~ iii ksto Clo.lilthl" us d@ i 1iI~ so,, ont n'B p romlss thai WllWm ~JlFo'\I'lde them :nl ~,en:ent gl aara ntee nn firrst ~1Ji~rs. So' initially, thfJ' scheme wlll f),'I,Ier-,comp',e'ITsat€ the ban ks, but

We are hopirmQI that R,GST willi be implemented; we have also, we,aved its i m pam i iii au r treca nt M on91tary Pollicy Statement.

S:I:t We fefJ I th,attliB IfIl ill sf rnB,g ~e"C1:'~d pont of 8M Es ~s the 'M' put A nart of t:l1e . S' is hei n,~ c.ueredl by lifli,c~lo:~1 nam ee I) r othe r 8lm jta r C'o n ee s:sitlFl.sl ~ ell dI i Il-g , But we t~inK .greatest p.Qt,e!li~~iill ~~,e<s: i nt he '1M' IP'(lHrt alii ~ that; 5 3. iii ~I)h e tnat WI!)

wit h a \I e ry c ~eaw ~tnl.lU,gIY t:hmtil.s we RW"e~!)rwaJt:I till is ever-co rI1lPefl.sation w~11 ne phased O!IJI illl a. year .a.n~ a half lor tWOI, !lillld help I.!lsde'l,lel'Dp of her i nee iii tive spa e.ka..g e ss" ml instru ~ellts_ Havi Fig learnt th is fmn1l nur expe-

llHH'le ~ lhe C (),~IWo'm SII p port Fund i.s one area. ct)~!ru\. o,f $2.5, bilnon are beifL~

!NTERVI EW BR BAN K~N G REVIEW 2010

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I)ECEMBER 31,2010

te ch,~IfI,g® thiB milnds~L lam rOf mllr!J~f8., Wl'Ja,r'~ Glos,~~y li!olPiililg th<l~ with thesE! r!mlilit'Qfiiilg~~'em -am~ are im~enltive structures, we wm cl()nsc~oll!soit it. The rnest he aible to c h,alil~etIllH way dMfnc []n ;C1liS6 ls or pili ~ ~~c tile hanks \l'i~wSMEs .. sscter balilks" C~m merc~a~ banks arlJlI!8' that tra.r1sac1iolJ] eests an iii ~g h ~o rl'~,emto deal W~Ul SMIEs.. This ~s ~,azy il)la.lrlk~nQi, as t.)i(~ ay b a 1'1 ks ere n et even ljJ!olk~fligl at {;mpIOr~Ul Gilll!lIl~$, all th,eyare J11[) i IfIg rsri~lli f1j~

We I')e~d til) lind out what ""I·"'" M.··. :"',n" '1"'1' ".) .,,,llh' ~.-."(I-.I.m- ~.'

tiM:! appeUlll 01 govCnUfflrlHilL" m ... no Iii""" " '"

is liI1Iaking h d imclillt tor AJHI once lhi€ t{;U Ii O!rbfV them tQ comply w~tb ~he

~tCfl will ~~e weSi~ ~si flgi tl1l,at the

'hH US, M G R ~8 i mj)'1'l rtant, Mmlt ]Llrisdl~!l::ti()IIIS work

We are ~ookjng to launch iExport RB~fi naaee S che m as s~",~cificailly IOf SMEs, thouigh the mod!aJiti:Bs and flhB aU ocanons mav,s not bee'mI decided yet

revives, tJalilk:sw i~1 have h:rrsvelrtag.~ i n teth e Il riv,ate C!!Irril'i'lt ijlilvitOI!1 mMt ~or

Liusmg ()a~itall ls not

BRR: Do youttllink there 1avoliJrable'. So we are look.

m~.g tit P I.ac:e Fli 0 re and So m e 1lI1~II hit ~1 a ve less emp nas ~s on .~t Also,. smil~1 Ibanks, with ~ij 1111 i te·d c.ap na II ,face

arsas beualJ S8 til e bmil secter is now bo·ol1iilllg. niB t tlhdl SrOlLlth:lI1! .Is: b ranc Iii ~es~r an{i mobille banking which,

:mOrl{l ~Iil some f31reas. A~hll)lJ gill, $0 far tn is. yealr, i!lld ustria'l sector glifOlllUl has beelll wea:lt, serne s:u b-sec-

glrow~1ii d uete the b!l 0 m ~n rura: areas foHowhlg the IlfIcwrfa:s,e in p ruce!l r&cleh(~t:I tlYlhe·farmilll~ commuillity lor th·e~f rice, cil),tt.<m~nd

i nld III s~ [y g UJl\"~, n lfI,am:: iilJI 5 U!g.af calle, Tih ~ i"!lM.til seetor sen,l'i'OEls lItHI! 3~SIJl iIiUm~a6E!. has a~:SQ been showing BRA: 'COl1ltinuOIllS m.one:tal)j dlecern growl:!!, We need te ~IQlirtel1l1irtg Is ,ail1llooat cUlUm~ tie (;aJ~fu ~ ~ 11 d nlrli!yz~jIJ.glhli~

'to me, is tille rutlll re, Ingl im'lllitiOiIil throlhIQ~ dSilll1iaMI di~r;;1i fM;!l s~.Gto r by seutnr,

Filla.lly,. tighten~mJl)f men- liIila:uYB,me.m, B~lt Cl'i~ro.s arg:I!!Ei ~I')dilu$trial :gro:wUI hi not

ehu)' ~olicy lI~illl also bringtlflat Ilnilla:l.hml In P-ak1stan Is p~~ tak:ilig pl;lice a~~~e P<lC'8 pri~ iCwr re n c.y inC ~nlll ~afi 0 ~ 1iIIla'~llif dueta Ih~Qh parwemelill V3.te COil su m pt in iii us gmiV" (elC) blll)k to fila s~sti8m if !l!iIQIiI~ rCiT-ePitiOri anti ICClS~ pushl ing.lIh,s.t Qlap is worrying I!!S we p@ck it up with admif1l~s"fiilClol1Si, ~, mooamny po'l~cy aru(] clooi~ put a sln~1lI on b:a IlSl':dto acld~Il!SiS '1iIiI1ISfi t hit! C III ne fit (l1l;:1C:O UIII!, W hl~cn iSSfi!!l!S. as o,ovemmem may will have to befi~anced. oDn~inue iDOlirowililg daspltreithe Hm~d we not ill:ljlllsted the Increas.€1 iffl m~es? S8Pljs IliIiIan- ill~Btest rates, 'rb~ IiIB~~ to datel ilS to COl1lmJ! plioas while iilil.[i[1'I6e the ~il.p Wl[)lI~[J h"lJll s,purl~illlg .G~'OWIh. How do .YOIiII a,adietl· S!(lilile stress,

:uldress mrs d1tOOJiltolililil''il' Pri,VllitJe di"e ill'alli ~, w~ lc h is

SiC: tst.'s Ilook at trrne~ perhaps net .Mly S"HlliIJ8d ill d icah:Hs. A~~h 0 I,)lJh ~ ruv,~te by t~ e 'dID, mestij,c seeter, may investmel1ts riMY have faU- I~ave spi~~ed over ,on the ern, I dun"t thililk llte k[lll)w ex.tefil,a.~ aOG()ulflt,~m::rei3!siru,~ en 0 II.Ig hi about P r~Va!t:e !JO n- the gap be·twe en imp erts S\Ii Inp'Uo ~ dI ems unl. lfI,rlv.i1te II nd eX;Plo rts, AJII~olJ ~h Ws SL':Uor c'rel:lH has @rowlil ill oilif'bg Ilanowei:l down l:Iy th-e Ilast nrnonth nr :SOl p-ar- hit:!.her enttan pdllHS l!h~t t~ a!lly diu (l 101 the s.n arll' II re blo o.st i III g eXjH)1 rts, we illcnliilis,e ill the II r~c;~ of eot- are wa>tc h i ngtli0s€ £Ievielol!J.

tun. nm'ellts ~~ I):sely.

trat i V'8 IlIHl3.SU rt! s, Billil ks' {iie,P(Fs~'I: ~1l.l'es: wi~ ~ also Ihmiva to Ir~sp(IIM fo it na~ would mean lP'fiop.16. Iii 0 ~mI ill g G~ sn WOIJ 1\1 see a d eC!lI'lt return

been predicted. 8m-eater clar~ty Is

reqru ~re~ 0 n potelilUa~ fhy~vs ..

perter (]II H:,. ~[lt81'1}5tililgIYt EIJ{j,mis [borrowililiJ from tlu e p LJI:J,~ i e at a C hsa per rate tliialJ th-e glQve Frlm e nt is bn rnJw~!l~ tow cOJllm~dity

Willa.! we In eedl 101 do in (lE)ordiin,ati(m with the :g,IECP is tol try aM ~L1i~d acorpo~ r,ate delJ'~ rmrar~8tWe iii eed to Lln1El~h,e C (Hillolmte sect,oJ

We are workJinglwftl1l the l!ntematilDnal Finam::E! C:mporat[on 1(IFe) on a mortgage refi nance fa.cility.

t{) rais'H () ap:ltaJ If rom tli! e

IIIlaJrket: il1l a val'ie:tv Olf WiliY'S. MGR as .~. m8~sum is iJlJlP~f"

Bn.R: smnOr)! solitile 'D,f til!!! atfrve M eOOUinl gOIO(! CJlIa~lty small ba,ntktare 'yet to me,et c.all,na~, althoul!J~ we oaj! 'Une MeR reqll!lim:mel1l!t, tliii91'1!1 (Jlsclls:s the d.~nnition I[)~ is, likelty !Gase o~ more meuu· W~H~t should constltllte cap" !Irs :alill!l ilullqll!llsiUalliUl,. IiIlow itral.

need t(]w(lirk in certain a reas, We ill re ~QII}~ i IlIg a'~ tRe wh olle ~s$lIe [af orQ ~ ins.\:! Ir· ai'lce 1l'~!!Is tMto nUlpit or wa re I~ollu se rece ~PiI8, ~ n t:aJse

I[)f~liarHhI;lI!lS'e re{)eElpts, the PalMi~t.ar~';S e6OrnOI1fl~G c.md pollitj,oa~ fmlvi·ronl'llU!l]t.

root of ali 1j:llrotJ leITls. ,C:~.rn ~~. IKaJrf,a:r was .alsor .1l. me m ber ot various, com m~s·s ~Oli1S

IElA.R: ThlHl£I ls a. Ilot o~ !~o~ell!l~i3J1 IIIiI lellildllllQl to liigl~i ~ oull~l!Iresel:,tor .. How H!re !f~ iii 1llllIeikilil!1I1 ta, tap 1~.1

trac:ed to 't~Hlg OVefl1llifle ~t p(]l~ i czytof&x III E! ~5:S ue price I()f wb ~1U.fo r the ioUi'll i r~ SM.slem. IF~xaUo n 'of p r~ce$ kHls the ill ~e ntive im the Il r~vatll sector t.o> build stllr.mge. So

Pmfiil'e: Shahrd Hafiz Kardar

IKa fdlar 111M server;! ,at \i\ariolu:s ministeinallpO$ijtiQI1I:s, in '~hl~!l()~m ment, iinrclJU d]il;g fiirn-antCB:, ,excise and' tum". tiro1fl,. b~ef:O're His r€!,[ent· cap pointfil1l'€,nll ash~ ~ !6~ii Gov€rnpr oW &ml~ l~anR of PlalkiSmlri.

fA. ,ch~r1~ni!dl at;toilJnt~tnt. ~nd ~ 19lradualt~ f;mm the UiriJi\(fi1rnitn:d.'O'Xforo in ~oiliti.lI:'s" ·~;hilnso:~hy an~'eGnnom i I!lSI 11)[j:~ HI 1),1) ,1.l,u'liI1:Ol'ierd 'th tr't!!t3 ~ooks 01t'11

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aJnG gTOij{!imm e[lt 180miJlniifil:~es and laslK. fo IOO~:S S!l;!~ UIP b~ thle F~d(eralj .ari'd .pllmia.b~gIQlV!emmenm am v~r~~us p o;inms in Ul'l1e ~ilrnij~ Urer m Qd ~ "9a~s,

Actd e:c:I 19 ~ ~s diverse .$:xperien CJ.e ·a.rle 'C!olisulltahc,y SarVjeers_'lor iflfl!U ~tillatl:!r:all :andl b~ lateral dOI~G'r,s I iil(~' ·the World Banlk,~he .As1a1l1i ~!svelopmoo;t BaJII~;i and t~e D~p~rtme:nt ih2lf ~nteirl1l,ationall IOelll;elg,pment (bFID), UK'. He hs.s ,1).IISiQ lied Siever a II pro]ecrsancll stuld[e'Si on k€:y .sGicitJ""~icormmliG; ~S$tles W'acil1lg UH~~country.

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CONSIUME'R BAN:KING 'BR BAN K'IIN G REVI'EW 2010,

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D'ECEMBEIR31, 20110

IConsumer bankingl - the boom and the bane

lfhe~ exa ~Wd {II ran d e.u r of eensumer lii!ll'iki!l{l il'! P!lk~shifil W'a!$ \!'e~ shortlivl~iJ; IIh e (l1!l~:I·e~~ MfiI<lx h~t ttle eeetor ~ 1'1 2008 amid tai~ ling eo Dr] Q Il1iI f,[, girl)wth ali d rlsl filg ilill~ r~S'I: tares! an ~ thfJ r~ was 111~ comill~. bac~: rO'f cnn$U mer Ie nd ~JiI{J. A II tlire ba nks Ii,avel bl1l~n busy maH"g1~ rng (;0 IlSIi m I'!w ~'8 ~i n'QI UI6l1iC i,es: s~liIce Ih,en,

Stilll, w.ith all iits III [:IS Md Ii! (l'WTIIS, am! tlllSP ~til the pause '~hat seems he re to sl~.JI {'or a f'l)weseealbleMUlr'e, the IbesJ daeys of CI;!!nS!I rnie r ban kill ~ iln Pakfsu 11 II i~ ahead.

~Il.ail'l 0 . .5. p,erClent olf~t1e 'Iot:il~ I o,~n pn rUo liQ' ,of ba oks, a,ccmrd ing t~ the StatE! Balik ,(ff Pakl stan '·s ,( S 8P) ~a~esl 'QIWs.rterlll review oHIl'e bank· ing system.

Le~ irya lore i![lill ~!l!1J k, the pro.g samme- D~se,d, ~i reet sales IiflO de!, willerebiysales (I{lerl1$ \l1era (:Q IifI~Hlln satEf~ ch i~frry ~!Iliailn at tlfl® In IJlmb~r (Ii tJra.n~l!ictrorls msde, adopted 11. V8'ry (lglg re_$si\i'~ sU;arJ!(l!! in a rfJ~.a:thl6 ~y m.s;c~nl marlket. Maw raJl Iy, with S,Ii.IC~l a m.yop ie eva~,u s,Uo n oriilie rla, the rnotivatiolil was il1'I)!r,e tngHl:b the maxi f1iII urn ~'Uj IlIilbeu: ,oJ c ustom ers, with,olut pay il1ig mil c~

Anecdotal lrvidences Ulgges,ts, th!sl a J I),mlor offiGer at: one bank became the eonsumer Ihead in anotl1ler bank in lliteralily a

snap of the fingers,.

1 '9909 W,ai$ a. ~,eri,od~I~~t did not i!l.ss~gn S ~ot 'Off va~!.Iet~ C'(m,SllImelrtililanl)~1l g, Qnly tM ~:m!JU mare few had th~ ~IJIXU ry olr ca rry~ngl crediit ca.rds i!1 ttl e~r wa~let:;:;. BUita sweep· in~ tumawl!lndto!)k '~laG~ afl:e r m isfo rt!llrl~ Slrluck tM mii 1'1 to,wersi 1'1 Ma tlh,a:~l!m ~1fI 20011 "~],o.rd n~ Paki!.)talln to' play !I m~~ ~11 th,e war agaif'lM 'ternl~ that in tlJ m IP~"ed way for a W,S},r:e tltrtiif~ig'f1 i~llow$ ilil the fl!)rlill of illv,estme nits ?IS WlB I ~ as W.e m ~narM;es;

llhoe eXi[]e ss, Ili,t:! []irl ity

IHO IlITpte~ baln ks in Pakist:all to k.'Il (ll[]k tlh ~ dm:Jlrs (Ilf what was IHevio'us~lI bea!le(j as the U~~y diJcknrng ~ thec'I)[]$·nHI16r se'c:t)()f. A series o~ aggressive mariketl ng camlDiaigns C!(lffimenclld, with ~alill\s ~ell d i filg otn 'w C'(lFlSlImers a~mosr ilnc~sg!lnt~y. As Ii. re'sult, th~ share OICCHI!.H!!'liielr l~al'!S! ililc:re;as~tI ~'orMfil 9'.4. p'~rc-ef1l~ ill 2004· to, 14,( p'er>cen~ by 2[1'01 wlt:h iRs357 Mlio'lIIfonMi n~ the tota~ iIlon!SIJ m~ r porl.ioli(J' by Se ptembe r 2007,

Of thE! ~i1J'Il m ai n c(lteg I) des 01 IO'8;IlS In l~e C:OIM!imlcr sec:to r" perSIOlHll 1'081111 S Ius ahvalls tl~d U~e ~ar!}.est ~~ir::e Q~ the ~iH, ~!On[)lo\f.ed by allltm 1[J.an's, Iir1lo,rtga'gc Iloa ns, cffldit card s, 1J.lildlcm1S!!I me r i:lmlJlil,le 10 ansi nl iliat mdHIl. Of ithsse, the GOI1!SllmBr dllr,al:iil:.sc;aF,e· g!(lry has ,it v'ery Sl'Ilal i sllam o~~:he to,ts'! CO !'I 00 merr [1(,Ialn p'I)Irti'{]In(l, with aSna[H (If less

hili:B>tI 1:fJi t~tl~ r il1dl1J'id!u~ i risk pllOmes,

Th is lin Q de II did W(I,n d'e~E di.Hijln g UIIl bi)(I'liI1lilng ~~Y'$ [)~ ttl,e eCOlllomiY wheniinterest rates were ,sit he i r elblb. flme()d ot~ 'e'll'id~n.[J.e SUgg~51!s tJliat a. ~ urn ~o r ~mc!:r at (llnll l)anik be'came the co noo llI~er h,e'ad i rl anQthe r baln k ~rn file r· a~ I~l ~ slilap. ~~the~n nigers.

," f'aUsHUfI i ~a nkars we re f]1 (DSU\!' co'wp (Jrat,@ ~<Ui kiers; C(llns umer ID\alil~Jf1Ii1! was mit tIlieir forl:'~. fhfJ.r~ was o'nly OAe l ru(linla:r~o.ma~ ilistlillUOl1i tihat naJd Iral!.Hlc]n,edl Co nSIJ mer l:iafil\il1~, an£l ,a. large m~ill)fity assnc-i:1lt~d with CClnI!lLHll€r I:ilrlkllil,g ill any !lank in P~kistai'l hadl IIlBIl ill tnti li'Ied by ~hat ililstitut~o ft 50 thty 11:111 hlldl Om! fb:eti busilless mo(j,Ma.ndi impll~Iir1.~liIt€(1 tl1i€ ®J1m!l iliIod~1 witho!Jt knrlwillg it ttl Illy wEiHa,nd how Ilt'l'i',1)1JI ~~ pil; rI (I ut/ tle sClril:ills Atn~ Bokli arru, Pres!d B:nt~.nd GeO Ufliited B,a.f11k-limul!ltl.

As[da 'from t:Ji.rg lIll ~ rid ~FJ.tI 1€f1iiJ~IlI{11 by l:ialilk:s wl1ld Wt'l:r€ CiililLig h,[ ill a rat me'B-Gal ~®tI 'woo 1~J1itlst,he lIn@st', risilng i n:t~tost r-alllS w.a£ ii. maiof r~asOlnfo rrlle £I(]i[HIl 'D.t the ISilctor,

JIli.e mark-ull' rates ClHUne~ by maoy ~.ao~s a~e ~~gg ed v/~th 'thl;! Kil:ul!r, VI ith ratlBs hoc'ote rll1g ar,(lU i1{j.'~:lle rang.e o~ 4 t(l 6 lyercel1t !l'1fe, Kib QW. W~tlh ·the Kiiol[)r liIelllr~nglM pI: rC81lt i iii th,e ,Iig hire iii i n.g

starJ<cc' 'I'aiken, by[~e Ce1iiUall ta nk, ~(l'IIS ulmer I,t!a~s, have been rerndered quite Ilrifoe~, rUIi;j he-yo nd the reach Oif Ill~any. Fu ~ther" w~ttJ~he v~~i~ ab Ie In atlll!r'e ,tl1 ~liIter'est w@f:~~, (;0 nsu fiI]'BrS' a.ni .a.llsi)·(iI.'!l.Il1f'n'Jd by t ne U 1'1 eerta i OW ortne i!iit.e rest expense they'G Illa'lte tn bear in a ll!art~Clu ~arlJe riod,

lhe ~ iglhililll:res.t charges, qui'lle ~lijiioUlS~lI, to'ok tihelr to ~~ 1'ro I'Iii PO 011 GO fiI·S~ m~fS and] Ihff ~1iI~8CtiO iii raU(J~' 'of CCHISIJ FIiI'e r leans soa re:d eonsidlerilib~y since 2r]00S, and have bee'lli 1)111 a nQ!i1:~\!lalf([ lr'a.jecto~ s~nc,e 'IHm, TM infeoet i 01'1 r.aUo of t~1 e co 1iIsum er sect(!ifSO,aJe~~r~ m 3.2 Il,ercent in Mar~1ii 2007 tIli as high as WlEH'Uily 15 pel\ceml by JWle 2:m Hl

lin a.did!·ITUl'lfl W theSe!, . thie '!Ililllit\!, D~Se:~1;' lees of ~Ol:l~ SiU me r ban ~ilil'~ Ii as. also wil'rnel\isedl SO'f(]IE! d eteri 0 ratio fl. '1008 8'(1 nk i IiIg 'i]mb udsnl an Ae~wlt of 20.09 ql!loted t'IUl highest number Qf co:ml~ pla.ilflts from CmH,llImelr ~mducls,areutld 23 pfm:ernt uf [h,e[onl rill m t:U'lf of co.m-

,out is a (irwin reee I!IfSJe ~{l[he law, e'specia:Uy in casesW'ai i []\I'~ ~ve sl gil ili(la,nt <I m (I U rn~ \It llnlancllflg, silch as In{J mnrt,gage l'Oilin s. IFh;),we'!Jer, flrQ I'l1l balliks' PHfSPoe ~tiv~ i thet.lJ~y i f'IiI p~tlmtllltati 011 (If Ila'IV frs to be Ibi~alll1ledfo r th,eir reitJ etance't~ g i'lle e !!It h 0 use loans.

'~I thil1[l; th~ Iilws ilf!

P,aJ<;istafl> w~n ha\leto' be far rnI,or~ ell.a~~ i nlg tn ~drngl ,~bo'l!It .alfl<l:d'll!liln,c.ement of mm1l1:a@e ~i nallic i ng lnthe co UlllIlry" The pre (less o,f rep ns sess i on m ust b(t! swift i1!ec;;Iust! ban ks 'Wiil Ofl~Y hmd ift tihey ,m~g c.mn· ~onViMelfuu the t'.Ia4nks wi I ~ be .a~ile b;l reCtlvelr ln case Itlf a d~f,al!dt," says $u ~~1iI .A~~1I na, Ch,airma.n, Hll~~b Ela.t1i{ LimHed, ~d~ill(J that a 1~lk ot [lOng term hJ1rnli n:g so IIIlrces ~(lir m 0 rr,ga'llli: '~i rnMC&" wlh ~(;h is a l,ol1Q-iNm II (I,!UII lliab i I ~Iy, is: a~so s reasnn tor tbe dim~ nish'e d 10 ani p.aYDut ~(]Ir tlo I1lscf~rna m:ilng,

111liit~aIlYi~healla ir\a.~ i IL~¥ i!lnd .e~Sll I)f~!Ila.I3$S tili bank i'Oal:ls ~p'lJI rredMllis,lIrn~r sp'~ntlilng il'l t~le co 1!I1'nry. n~s led to

Tfilofid",ln COfiSUfiOOl' liillllilChlig :

- ,

TdIiJ~. {Fl. '" "'l,(L~CI ~~iK.IQ['IIioH1!JoIS'I

SIIJal FaWid

ments . i con s urner

stoked i,nf~aU(J f1i wl1 ~c~ wlQ~ ~ le<Ji its WillY llac[;:tQ borrowing rates and henoe conSl!Illlil3f firnJallD~ rate',s.

lil'liU~, laekofe omdimt~i(m o~fisca~ ,and flli'oneta.ry p,o~~· r;;ues- d IlIwiru g th e first ~a~~ 'of tn€ I sst tle(;1lia~ has h<iid its ~hf:lJe Oil IJlatte r~i n'g il1l tn e wtlo,~e $aga 'Ill tille teem ,and h urst (I~ IlQIiISl!lm!lf li h,alldlllgJ.

'OUlnOOK

.CO'flt>r,a uy t'O eXile rts' I~p i!ll· io III, 1118 share of 'I):omll!l me r MnJkilng irJlh~ !DiglfiY~ Mnks is, 11 ot ~ ro pmtijolll.ate ~o the site ,(If the i r a:sS'e~s. iIl!e aver~ s:~o nl oUhe t()l~ l:ii1U'lI\1; '10 COIiI~ SIH1I11er 110 (UlIS c.an be e'xi)la i !'led ~y the 10JN C(lI$1: ,(If II!I mils !Of these banlk:s ,. whQ(lh IJrO Iil1 gDt:edth,am 'ro lentil!O thi~ less fis.ky ,c'olrpQ,flltkms ,and th-e g'!lvemmlmHn ~Irdew to (l!n)joy hi,gh8'rSjp're<lds.

EventuaJIY,5m~n OIn~ !ille-di~ U!'li! site~ IhlJIi<S, with the~ r Ii! i:ghOope rat~o na:1 C1osts" IN i ~II have 110 le\lert~~ c:om~lIl1le r I~na ntc111 g to pro 11 IJ p~he~ r Il FOifM:s,a.nd IFI'II~ht e:r'!d ~IP' taking ~x()8SS ~sk,lhi~ top !i ba nk5 cany 49 per~ent o~ the t~ta~ sh are '(I'r eon SIHifle r lo,ans while tbe:ir t()t~JI aclvan c,es ~m are Is 53 ~e r.ce flit

pl.aililts. or tMt, thG l1igllleSl ii1lGreas~d(j~m,afld '[or 1li1Iaily iii Limb er 0'1 CO'iin P I.al nts Will! ilFi COlliS urmer fi~en'ilS, the pri.c1e:i; th,ec red~tca rds c,ate.g ory., i!>t w~ i,oh also i !lcrellsed ,c.on· whii{lh m,aJ!le J!I ~ '63 penlenl II)'( seq lIIe rdly, ill the ,a.~s~;lil'Dle ot thetoto1~ c::o.IlflP la~liIts rfllat~d a(J!i'q: lt1llt,e sou P IJ ~V llil ha.nc,e·

[0 CO ~SIJ mer ballll{lll1ig.. me nit.

The laclt.' o~ conSlllmelF ed I!I- A 2'00'S ,el:J'~ rt lJiy the

ca,ti 011 {lg~nrV.a,redi till ~s p ro,~- Co n SWfl (;l( R.~g ht~ lem eVen IiIl!Q re ,as mil)st l:i(l'[J- Gl)m nErl.s!> i ~.In I)~ P:aik~$ta!1l un S~Hllers were Imed by DanKs' spo'll.sorstllip vmh~he As~a aUl!"act ilre offers_ I ~ most FO'lwd,avi (l!1, a~:Si{) sa~d, ~ne cas,il--$ ,the IiIse, (Jif t~ Coo uc.all O~ml;JIHI ~ot ~[I:Jid fiI·i.ltw()'~k!s jan,Jlo'!iI ~ fl b.,tn1k~lHg wwm s .Q~d a rldi h!e~ i Ii!lI~NJlrts has CM[Ht~'Ofll!l pre G~ IHlcd th mr I i'lcreas~d du B' t\() g rowti! hi

c(wsllmersrrom UL1l1erst3f1d- OlllJtofiUlillm:il1lgl,lnIese !:Iev,ell- - jm~IVlilnQ tlHl1' then is,s.tllill ing the nilly·gritty o~ ol:lt@.~t1- IQpme !fits ,h ave am ove-ralll ~li'Ilo,ugih Iroom fo r l:iig lJ1in~s ililga ~.an~ ~oal'l. or., th,e co,n- i~na!tioil'l li!I1~)iactr whicl~ ~s to im;rfl!lSe their ~ol1s!!lmer

sequ em::es of dlehll!llti ng anect~ rtgl the !Jill r(lil as i [I'g pUlrtlnliOI"

agal ns-t it, ~Ill '!~e wo,rsl case c!.lp'ac~tre's m the p(wr: ~yo WI neec! sea~e m title COU}- 8C'8I1l<lWijO, GQf1 seq ul~ntlli', tl'leiaJli lure to Slllif1le r lbo.t! SlY III!'Hl,S," Arn

Faced! whh r~s~ilg tldnl~ set L1jl 1!~oHCluatJe' ilnfrastm~· UismUlili, GOluntry OmllelFl(Dr qllel1cies,' bi1JI!k.s' o'I1l~Y wa;y Un to rn6~t Hill r,~guiNI' Cml:lanlk '(N.A)IJ,I)~r1its ,[)lJt

,HI9h IntBI'Ss1 ~ate1> ••• Hi!!!!, ~atilnil !!Qi!!i~ f!ne"~ ~.,,,, ... t"'~!i\!!I!I!:..

I I

rate !il1v~rOln Iir1lcnt p esss.a b f,g challlgRge, the consumer secter CII)!1t~ nu as to be oi' i nil ~l[)lrtalillle as ~t serves the FMail oM of 'the ma.rk-tt and !'Ii!a!li)l pecple d I) heru~~ft from G'!)nS!!I nm~.r lill~1i1c i IIIgl serv~G· !l~,

Con seq lIellifly, St1:lIP,fl; snmil ~d be[lIr..e~ to reva:mlll ~li!i5, seetor, a.1 belt, C;;U!lt~~ L1S~~; SSP wm f1ieB[J M il1l~nleii'le to ~i!-ajma!tel~ rec ~oSiI.! r'e law!.) anlIi s hQ 1lI!(J !iIJ,tlfk VlHh g,tlv· flwHlIliMtemlltills I,I) hMfI -l:ic:t· ter laws,

i'lln: Just Ill!!)[ '~'he le~a~ as ~!Icl b Ult a~$[1 the belhav· i 01] r ©f '[he. GO utts," Sflys SBIP G'O\le~flQr, S hali! ~d Ka~d ar l)lrI ime(ll OS UlWe' laws j nlP1ik~st'l!n. He ,atldls lil at tli€: ftli s .a~sa tli€! [jill es~io'n o,f l)l~ i ~d ij ng alii d zoning regulsUorls;(lol'lsid· e rin g that the FE! is 11 1i18'8 d for I!~.m fo~ middle and il()w~r incom,e households, wl~lch need to be ,acldress,e'ti ~I) SUIP'· p(]il"~ mDr~glagle iililalnGing llus~llI·e's,s in the co 1I1i1~ry.

B anks w~ II have to d'I:l' tlhe'~r share by devel ~ ping SOJlJnd IM~ ~nQl stratt{l~es to m~.i1Jage th e~r irisks lJ,e~t ,A, Iter aU, 'i'we have- 170 mi IHo rn [leo ~~e vlh 0 arB' p.oi[!i.lmti~~ GO "smn ~rr ~oan

ThefaJi 110 re to set UIJI adeq uate i nfras,trUlc~ tm'8 10 meet the rOQUliirements of: the ,consumer boom stoked ~nflatloFil.

clIstomers,'" aC(lo~dH"g to Slii,a~ kat TlIl'~ 111 , [) ir'eGHllr, Siilkbarlk. Aliitl s~ iTI p~y C I'osing ml e dlo om 'Olil ill I1fll£r:ke~ o~ this size may Ii ot b~ the ~M):sf stlFafe(lIY·,

The writer can {)-e. reached at $~]JUawad@j;)r·maN.C(!Jm

I:NTERVIEW BR BANKllNG REVIEW 2010

DECElMiBEIR31, 20110

Betting on serslee

IBRFtWhal ;!!fll :Y 0 !!I fO,t:iusililg '(In to aclllj~e've In ig Iii !I r is'~~*li31ds:?

Si: I) u r toe I!H> ~ S, to

i mpreve the GASA ratio

An i_rvlew' w,ill S:hauikat, ranll, D~rectorl S;ill~l1k Ilil1iteifl All Kll1iz3!F &, Hf:lidsJ Nawa1fl'

111r! his,'cpnvers,ation WiUr 18 ~ RJ3sea rch Tari n tou;~h,e:s his Djl~n~s '!to, eXipalndl S,~~kbiJI[i]ik., ,~Mle retJU1ms he: ~yes 8JI cI how he ill1ltfl'DQS to 1I'~Vlll~ail:e o,fi hils 'ls'trne ngth s· hl the 'C'olr'l'S~mer assets segrment. If:! rilnl also glhlatll'8$ hi~s views 0,111 lPalk~\SMnr's l1n!aJcre €,OO,~ , 111 oml t ·s~tuati 0 n,~hle 'turn fliHll!J~n!d gf pu ~Hc S€Gt~~ el1ltl'ff~l}s aJilltl tile \f""X.,:"~",,, " .,,,t,, m Bt>lnw' . 114 .. !;,Ij~I\J1I1 .. y~' ),J~!.. _~. ,",'.

are ern ired trafllsuipils!' of '~11Ilfct~lnfvetsH~rrO Ill,

Om Hm lllSsets side, as vie ~1'QnJi~ato 'O!!Jf ~Hll1~~Hlir· ~onll1~rngl ~,o,ans, aWidI ~iurodute n ew IHI(I(j uets illl csnsumer iliAd SM!; se~· ments, ()IIlI r as.se1t yield \ili~1 tlflliiillllC~ j)y alflolliHM 11 to ~.I} percent,

OR FI,es,ear~~!:: YClJ.I!llliidl a 'of OIU V ,efflll~(lye,es ~nl Uie !i!eed hJI IlYIer!;) rI ize cnngnHlt ~io!b 111 depos~~ !i!l,~bi- 1.lIay they serve uus- SUlmer le'lldiunr.l, Others OIrelizatian wliJille Y"QllI w,erriSl at to mers , red [j~e pPDb lern atraid olf dl[)~[]g Hl<l1t riglnt H.Bt lin the 901$,. CiaJl1i W10i 'O,Cc_un'BflCCl ~lfId tMiSIJ r'll a mow,. ~ut Wi: klfl@w how 10' expect ~HD'lilu~tlillililigsil1illlar (I!lick, and tlme~y resotu- do, it We've aO'fl,e it at

I1IC1W?' tinn. Cit~balilk Clllld l!Jln ~iDIII. so we

Sh~!HIk;!lit larmn: !BRit: What 1K1~lnmIQ~' areecntleent we can do H

DeHn~te~y, we are conrnililg IliIilIilIQV,ilIfil'QIiI 031111 S1111!1~lbank: hale as wetL We can

"tl!. d ~h, t 0 .. 'f~II''' .. r<') imM@\1~ OUlif yi,eld on! U~,'

up W~ III IlfO_lI"IJ:'ILS c",a awe III ... r My IDbJec~tive ls to

• 'Trk M.~ fiSSe:t siiae by 2 or a per-

Iiflii Oi.l'al~\,HI.III~B PfOIW!II~m Sf: Uere is no IItaglic actiiev~ a net spreadl

is that ,our {j.ep,osit base ~s d Iii' . eent ,tlf! the eli!ti~e bOIlO~, Il

.. __ .I' leh '.'y "'k·.e'.". 01,.... '.""'~.'r."'I~. waf'!: dw.ej·'f are .wll)r~['I,g!~ IQ'getller with redw3ti1olll" ln aco ut 5. percent, tn

"tI'" ".~ ~ U hi .... y" m1l!IiIy 11.·ereIilIL p,rBt,i3.S 'IL(l y~a.w~~, i~ Il,y 'tllat tl rile we

I • d . the N.PL.s.

GI:DSl'j lime ' . .e~(liS~ts., f~r~rngIVf]~€f illild imp[l[)ve haven't g(l'lIH;! thruu gh 11.

lilhereiQlle, 1.lIH: an~ intru- pIOG,as.sEls. lhe~e in maUves wil ~ nl!H~er olr an am~ ui:sHiIliUl.

~ucillig u nliQIlij'j . .aln tI ~nliilO- Olil the ~iab i~ltles siae,U.lke us Hla 5' lP,erCoBFIt 0111 t®IP' of tMt we ~):pe(;t' vat'ive C Illsto ~ew cennic we have to eSlalllH:sh ~H!~. slHead. Thien \lte alS(II <lbo!lt 1perc,elill~11IrotJgh pw'oduots to ~!!crease ou r :s~lves as 11 tlUl k t!hat P F.'D. have t'l) 111' Q rk Q f] 0 II r QtIH!1f' il1!<o:nH~. nat (i(Wl"

Ci:lnel1~ ,S IIId sav~lIIg vid~:s I!'XC~~~~iflt s~nJ~Gi\I. il1.UWllflled ia.ti (I iii GH1S~S; bif]edl sh'cH.!id ,erl,a.llcle uslo

aCi;:O!l!lnt de[)os~t base. Ou r (;lOst Or~ dOing !IDlusi" they ,~arn Ii ot be m'Dfe cre,~t!:l a. 2(1 tl[) 25 !perGell1t

Our rlilOUO I~ere ~s that Fle'ss has to come d~wn.[~·an 200-25,(1 hs i s rehlrn of] flQU tty.

We nee£! tlll d ~Ull1Fel1tiate ifJu r cos1: Qlfll nld~ w~11 not !l,[)irnts, bBC1:UJ$B I'm left IllR,I"I: is SHlkbarnklo@k~ o I]rselhrl!s ~m SllrV~l]e, tie as I~w -asUm1t cd the with rlO'tlli~,.g to play with mflg to OIilerge tU ac,q!l!lire

;:~,cl~~:tej3 ~:~~~:t.8eli::e:;8~~~~ Sml'e Bank require,s banks to write aft 60 anlot~!e'f b,alnk?

If' Sf: It is. (lady dlays r~ght

iG:a qU1I.I.ity.AHe r ~ BL, IpemBnrt of bad loans fr.om the SME se:G~ ,"O~lI. w~ U~ f'l~t ~(lok~l]g

other' bamk<s aiso crea.ted tor if it is not n. 'aiid wi~hl~n 90 aavs., .. , ... ttJiis <It p,otent~a~ partneu ,aJ

Cr'(H"epaH sclHHlles that t" 1 this ,'J'I()int Fi~Sit ,fltagefcar

were {ju~te S~H~CesS~U1I.. needs to be remov,sd if banlks are to lend 1]$ ~s·h beG()'me prof·

Bin. whelll we CI,~ate~ a to. small! businesses. itao~e..hd !:lU r tar,~et rs

Sl'IrviCIl ,~u Itlllnl ~rt Unhll1 to, w,e po [',t pmfiu In !lxt

Ban'k. Iwi ma,~y ~~slinu· if lillY 'i nteHllec!iatij,01n ~ear,

UOlns '(;!Olliid mOlten (IIU r large c.olif)me~{)ii!1 tI,l'll] ks, c'os~s Me aiflY IHg hu, As Ollice we ,~rl'l ~N!'mati'le.

sl'lrv~~e de!i'!.i'ery. out we ailill a~ ~rin:g i []~ we' ~ 0 ~~(lng, Oil r "Hi r ttl b I

,OUt aV6rag® 'cost: ,oflliliids .s~a m'g up .ea III1~e

L~,r .. ar" ~'~'I·"I'''''I "''''r.i *" ye.aw 81 rateg y is to s .. liie .. E!.t wm. ~. e 0, U I.' lIle_)i1t n.· rio

~h ,'~ aIL, .. "8 Ill .. U Cui dtlwn to b,elow :6 percent ~.

"re""t" ~ "n-""'I<'r "1I11"llIr'" ,~t ilillllHo,",e (Jill r SIP,read Iby ,o~it" .. ·, l1ote. nliy·. 0 r"'ian~'(;aJn,\i

.. ' ... " " " , .. ~ '" " I, ...... 'I'ro,m Ule .e:xistin~ a !)e~" Y"d J

SiiiklbaJiilc We ,an pllItti!lg ee!'lL. 1iI]i!k~ng sUire Iu!r ~ie~d can but ,8ho Ulfollgha rmnger

ina I'I)! o~ reSQllraes to as;selS ~}'I)fl ti F1IU IH; ,~(I ~H IUHijlU isitlo!') 'I)t a~wtliier

hi!'~~ change the IIIl illdset Om Hre il5set side, we ilHlFe~se. bs,n 1<. ~f it ~ a smaller

bank. we enu I~ a{!"I!.!ire U IBRA: R'ellllttal !fields are but i~ lt is. a 111 rg e r b Elm k ,too ~OW .is~h;lllllh,e W19':lrSOW! th'Blil \lIt! w~ Ulid! Imef~a. wl1l:y mQlrtga'poUn(l.IlCilillg

BRR~ How will you be doelsn'~ _ pmcll!: IUP' mllil

beUe'r~ha,1iI1 othe~ Ibuks Pakilsta,l'I?

because th elY we re mot prepared: tnose vll,al were pre(lared dHd Y/e.lL BUlt IlIJi one caJil dell\!' lliillf,aJ;t that alii o'VcrHl~ werh:l, 60-70 percent of 8. bank's assets are tn t~e ccnsu mer ~eg~

linenL S'(I Wfl GS,1iI it ~e IiIlIUl(lh, d~Her~l'It tldbr a~~, Wifl haVBi H~' IIfI i 111~ol1 panpte Wllf(l are p'()'ternnal COWlsumer loan eustomers.

We bi:~ill'!lf: w~ I<ln,owth~s liF.Ialrket and we aliso how thl,at bSrlk:ers aweslhYClf

lee,

peo'ph;l: preter' to pay rent, But M the dWerellCl3

nmolFtg<lge !J~ynmilrn~ ~s 1iI1111il" lrnal, Hlel me rtgage Q~UOIII wW make mara sense.

IBIR.R: CIHlIilmenlial b.aiililks Ufl I.Is:ed to COm~li~1l ra.1 b,a:sedl'ellil ollillillil,. h.owa.re SIMEs ~1I0~l1Ilg to Q!l~ fUlfld~ ~ng ,mloS'~Dii thl8 m are too ell!il,a;U to hl3ve any l(lo~ll.at9 r&.1'1'

Sf: If s g otWfII 'evefll wo rse 110,111' [1iIa1 the sure Barl~ req IiIll res banks to wrftli on 60, pel'Cfm'1t oj' Ind ~011iinslHI'ifI1 ~rlil~ SM i:

S,IICHlI" if It is 111(11 lJ'aitJ with i n 9'0 clays, TIli s ru Ie was i lin phWH!!i!ted diU ~~n·g [lL Akhtu's tenure and I lil6 ~ it n~e<d s tn l)e

DR FI,;; AIIiIY sp,e'~inc Plriel d ~ r ~ m 0 \I e d U b'a 11 ks a re to or

a !lI!ct~2' len d to ism m III DI.iiS~neSs-

es,

whir;:ll has nowgori'l!9 up III IhatsaJw !! 100t !of ba.dl SJ: Yes, if m ClUgr'a!ge 3~-40 pe.roenL We want a:S:S'9~S illl th,s CUmI8In,~ e;co,- rates !HI bleycmd 1:!1 ~Elr· to take th is III pto '~O,~1{~ IiIlolUlilIlC crlsJs~ ceat, lt t~ase:S roremaln a p,en;~l1it lnths Iilext c~u,IJ~1!l Sf: Local ha nlks II[H~t I:msln,ess ~)(H~ID,os.IHon and ,of vean~. That's anetrnnt. i()IU r cost o~ h! nd'S Ih'as: a.heady dropped oy IHlany 1 pI;! W(l(mt dill rililg th is ye<1~, An~ we WOlllld liikelo drcljl' OIU r costs by illflolher , t~ 1,5 pewc!en~ i~ the

advam£i~g lfians 10 ttl.

8'0, ~'!Ier,slll weare ~!:nok· (lQnSUllirIsr market, SOl w~ inglatabolut St~ 3,5 ~Elr· wm che;rry ptck UUI best cent g r~wth ~nJ yield in castn me rs ;;lInti p r[lll idl~ '1 :2-13 m,olflt~s, will ii:n in them witll plr:od!.lch~lhat my 0 pi iii Ii.O n is uw! i.},~,dl, th~y In e,e~ and an ~(IirI'sijd ~~ing when;! we ulnrmlilt(]htf~leV9~ of !H!rV~ started.

81: We are g I)illlt] W do, persorn,all Ilofi.ns, cn{!U c,awds, aUld home '~'(ju ity loans,

~ be~iev'B ~~a~ before thus rul~ was ch~nged, banks h ad stUNt! hm{! n ng to SM[S. My own sense ~~r that baflks wm revewt to

BlAIR; Ills l1I~nH! !l'ql!!lity IhIllIS:aJ!lili'~ as mortgallt'fi

1IIIIliISiIACIlI'? lelild illlg! I!D SM!:s [llifl)!:l tihe

rules. IDf~liie g<llllli~ are

5T: WI 0 Iill e eq u rty tS ra:U,(lrn!l!~i!l:ed.

overdlralt a!}sjlllsts prop·

rM'ly_ ~it·s iI IlH]ldlu,1};t v/e~11 A I ~o ver the wo nd. s!!IUed fi(lr sma,11 i}!1Jsirn6'SH, gl [l~81r nt IIilIlIl t5 ~ lay u

Ou rlotus [s. to imp rove the CASA ratio which has now gon8' up to a.s~o per~ cent. We want 'to take this up to 6:0-70

percent ~n the neXit ,coupl,e of years.

Qw[]erS lookingi for il1SlfllilFrlUlal rolE: in Hn~llcin g. We wm ~tart n I)' P (l rU rlg th e S M IEs" IhEl,te a nid as iin mM~(11l W hem Iwas~ h e F~ naln ~e

eases ,tiff and ~ nle rest M ~ III ~ s'~e f, we

rat,es come diown ,. we'll1m ,HI!l!1 0 Ull ~ eel ~ ret'! ~t

dey,ehni ~'rlJ'd !JQts h r ern Il~ln C'E!1IIl e 11 tim I] E! III·

Iifl(),rtg""g e nlnallC:~ as t.~\I'es .iJm{l v ,e: iii HI re C fll)i-

~V€ ~ ~.

tal ~Ii! llll,e bYelgel to

10

~NTERVIEW BR BANKllNG REVIEW 2010

- - - -- - -

I)ECEMBEIR3 ~ I 20110

sll~por't thls sllglHlllnt.

the las~ blJ(j,get was sHent 'IHI both a,C'Q(lIUlli!t$,

IIUI,lfI: Wh,at is 11011[1 r view on~hll. balii:king ~industlry"s !Cons,oUd.a:~loll ,and liIolw 1m a.ny b,8I11l ks,d OyOIUI th hillk sh ~!I!!! I dl ~hie!we !be liillll PakWstanl1

Sf: It's ,~. mOM il,oiirlt. ~ (Ie n't ag ree !/Ii lth thuse

Sf; IJ'FI s snuu I~ liHH be' who saylhere shol!JJlcI 0 r1~Y ~~uflg businesses. WJ!) set be 10 Ibuks. like IJI ~ J ul flit V,elilhll r~ MaJ~aysia_ Th~ nl!llmlJer Q~ ~ l1'1IHitlif\@:i'lt IB~lfIlks 'to hi 1m l:Ianks e,~ n be mora, I~

ORR: IOFls an a oiyln;i

buslliiltlilSS mill P,a>kils,tal!!

wnerea,s. blinks al~l~

t~,H~~SS i nOI (I n s h Girt ~iEl!~n1il dleposits. HfH!I canl longl tie fm i iii fmsn u et U fa:l~ 'flllnarlcllillQ! be, gelli1lelr:a:~i~d i iii: 'tIn is elflv'lronilellill~?

this Wi()~e, but untertunateIy tliJe:r have IH3COlifleC(lIUfl" m6n;~~~ banks whefl they shnu Id hiave focused an cr'Biilltinu a !.)Om] market, lhey were su PIPlose~ to 'fi rr1alllC'e 110 ng term p rcleels i!!iId to' <lQ that they needed {I tNofld lifI,arbt

What HI 1111] now? ~

ptanned two orglat!~zatiml$ fliH i I'Ifwas~mctlillrerU nclnrng whiie ~ was lFiIn al'lc~ MinJ~K!I'!'r" Hey are .sUI I 011 rne drawlmg oOi3ifd ~Ik~ S,OI many (lIther prolec'tS". lhey i y st l1e'Eld to be Ii IU silled thl[!DIiI~h by ~hre ,g(l,v,er!i!" ment,

they Cain tlnd a t'Ilillrk,et.

Mi(lreO'V~r, we sh cu ~d !'lot Iha\l~ MGR_ We should

hava ()a~~~al a.dHq~aCy

ratios that 111Jr'B fisk w@:igMed. The G'IHHra! ba'nk can stan as~,ig n~l1i~ highEM' OAR.s tier (jUfe rent illstutJlH~lis. Mergers wiil~ hapiIl.elil, I:H.l'G3IJSI'l' 11Ifgt1f banks 1l,i\1!'4l aG~e;tr a~varl· t!i:'!J)e in cost of flilll~S· Mid the smatter balilks VI~~I be uaable tID CHlllTlpete"

IS R.lfl: COIl!! ~d 'SIIiIH) IIII IDartlil ks eate r ~o n I the 11iIiI1&Jke1s

where ~!arlJll' bank:s aren"~ aSfQ(l:uss,ed 7'

BRR:: 'lI'ourllie'\ll 011 tbe P I!! IlJ ~ i,e p,!rivarte partner~ shmIP$~i)lr pUlbli(; 'Sect~r IJliltifll'fH:?

Sf: I filifl o~ Uli~ firm bel~el that pu b!ic secto r enUHe'$ ale I'I'aHo flail assets, So stwateg ie p rivati$~UQ fI II/ll ion ghl'es ma)fl1l:!IBIifI'E:THCOIlHOI to We private sect (I r ~ s wl1 at ~ ami' ~nraVO'l!f er.

in th ree years. I~ sh,oulcl ratesare IHO light down~o tax 011 !ligr~cultllre means I'e~o,r~ d ~recdy til) the 8 to ~~} percent by SBP, 65 pe.n:~Jllt or t~@ Il:oplu I~· Prime MllU~ster'$ office_ banks wi III be a1ble to [:If(J'· tlunan d 2:2 psreent 'of the

IBRA: HOiw do, YO'liIlth!nll!i \I'~de omnpeUHIIB m Oft· GOP ~s; n(llt pa:yhl!g! any

1:t1lel cu trent ·elconll@mlc g1l!g!!S to ~tfOIJ~~ and you taxea,

Iprob:lliB!lms: CHin be; 'ti)!!ed l1Ii ~~ sa:e a I1lYriamic n~lii, you ml(fv6 'On to' 'flr'tl.g'J1 a pallilcY' p!nSi~e'tla chang)e. 01:he~ C()IU ntrtes the service seeter, wh ien ·t!ve7 h~ve em~lllye:{j tnis modell is ,55, p,~rcenlt of the (] Of! as well, suen as Ca,~a,lIlla.s and tOlritfill:illte~ lonht 18 off Ma.laysia. and fan nle

Maa and IFredd~e MaD ~f the lUIS.

ST: W~ If1o!.l1!!1i to havea we III UlOlu{llii[ out ecorlOf.tlle p~al1l. m:e !he !lil1le point

agenda we pro:~os·e(l hr But then, who is glOililg alii e~I!I'i~ab~e and sustsln-

We need to pass the COlrp"olrate

Ret1Jabi I iitation Act (GRA) Q llJicklly. o nee this Ia.w is ap proved, we cam

s,at up a ResolutiO,Fi! trust Corpa ratl on to consollidate [UU ~liIdustry.

to d@ it The rmiin lsnles have the lr ow ~ \,!'~s.ted laterests ami they wamt to use them tor v,ar~ous PIiIW~ !loses,.. 5'0 my alan was that lh,e t,<I~~l1IeI eomrnlttee sn ould 31l'fHlll1lt direcNHS wh,t! wOll~d tn tarn

apJ)oinrt competent manST: If they w,pint t~ sur-

We need to have a holdiing oompa.ny. simil- r t -, "lIaJa: . -ia.!S.· K·.·.h··· . -I a . hi' - h- bri-· - __ a J.l !i,,,, __ ;YSI__ _ _azallLt WnlC __ ng5

tog;e1her all 'the publli:c sector corporations, under one llImbrella.

BRR: What dlo you "a,II:11 tllJl'!lSCQPIBI I~s~llir p rl'!l:a'~I) el~uUl{ and ventll!U'e c:apm~!I:11 ill Pakis:tarnl?

S1; We l1eed hl pa,ss the C{]JrJP,onte lFIeh(lbm~aHOln Act (CiRA)' Q liickly. Chlic~ this law ts, approved I' we Ci!I.1iI set iii p Iii IR:'esollm~orn l~lIst Corr'p(Jwatitm tli) CO!i!so~ idlate (I 1,I r ~Ind l,IsHy. 11"11 is wm prol11l~ tllBjJlri· vatesecto rto 1oUow sullo

As j~r right !'lOW, 'Ihe~e are' J"lQ ililcemtiv·es thaI' the gl'lv~mmelilt oHl3ws till HlEl IJrivat~ sector. As Fimmc~ Minster, I had pmpos'e~ [Ile ,e r,eilltionl IQ'f '~WO tu i'Ids in U're blUdget of Fls2,l5 bil" lion .e-aah for SoME Capita~ &J Crc~:it SI.] pport, w~t~ HI~ m'C(]11iTl mi:fida'lhon ll1at~lfIi.s:

I1lIJ m ber shiell! 1([1 be .dlub~ed every year, Ho.wevew,

v~\I'e wit~ their~:l!InelUt :siz,e, th,ey have to sp!lGia.l· i2C. H tlil~y llm5[;!}nL1IJcUi'll] l:Iuiltes~es tha:t are pril'l1ari~y I!:IN b,a~8.lilce sheet then Ihey C!3.!'l ~ulrviye, lM if they co rnle into mairJ· ~trll!llm llaflKifl!J1 tliien 'Ihi~y luve to (leal w~~~[he cost 'of 'hl !'leiS.

aglernlenL

II n thrae ~Nlars timBo, 26 percei'llt of tlllec·olrrl pany w(l'Ulld beso~d .i)fter cleaf!~ ir!Q 1.1 ~ th!e IHlaliloe sheets arid (]'peraUOIiI!L Thlus, '~~e (;.elJ IlifT)' Co 1!J~.d I"Btil~1i about~luelil Clu.arters ~·t [ h,eilss e~:s~.~'I{IMu re g e 11- er,aHol!s CO.IJ 101 Ibe!1ef~t.

NIOw, II lbeH eve 8 '!.len til at wOllild !'I01 YNnk. '!/iJB' !!le'Bd [10 have II Ih!(lldiI1lQ.cJOt'I1 p.aliIyisimill,arl'l) lMah.tysiil's KhiLz~.!'la, wli! ie h bwi'lilgs toge,ther a~~ tll e' 1Pl!lb~i(: . sector cOlrpof:illiof'is under o nieJ t111fl Dr,eHa, n'·6n tile

pmr~'Ia!J'le QI~e$. It S:~lOIU Id haves. p ri'l!'ate sech r bOilrd wuth a ~~lifIited Iillan~

BRR: Wli!fal is the sustamllll:altl hlll lSi,2ie for a. 10;8:11'1 k illll .ci~'l:c t.o llU un tll1e.!)!l~(;i(l1ifl p.87

1h:e m i!dl illiIiI~.eJlrIilil11

Scaliing UPI thiS bailanae sheet wU11 be our

~iJil~xt pri:orUy,. not onlly o~gal1liicaUy but ars,otlnoug:hl a merger or I!cq u iis itiOin of anDther bank.

ST: .A Rs2.0Q billilDn ~]oal· al:ic~ sh~ed alfld 15{D plus iJnlrlC I~es.

<1b~1l ~,corlomicgt(]Jwthl in the COlli F1'~ry, liD ®taut witlll. ev.erybody Ins hl Iplay taxes.

'WfJ< HIlled to raise Jth~ t1I;,:-fo,"GIIlP rallP UI 15 pewcen~ in .5 years aJl1ld ae p,elre~nt lin 1 0 years~. The~ we have' 10 cut 0 ~r exp~n~es a~d IQSs@s in .p.ubiiGsIH;to,r CJ[lIirlj!JfirJi'~s. This wm glive us the ~i ilia III ei alsp'.i) c'el (I sp e fld on '~e\I'el~ pmerH (If the .soc;i:a ~ se'~t(lrs S lJIGh as ~ove.ny rlilthlctioil" ~(jUIC:~' tiofl& hea~U1. This wi I~ 31:8'(1 ~m p~O'IJ(l ag r~cu Iture, IlHIJlilu1ac!urhlg iII~ well~ as: ~lIiIergy se~lors, ThfE! S·UI~· .p~us wiU also ~u,ow illS 10 'SiJ P po rt, hnfrasHlu:Ni rE::. C ill P ~ta I. ma rlke'U; aWl cI a~mi!l!~stnrti'(ln. nert! la~!'i nil sh'ort~llts~

n.~ Il!UUH ctlal~elllge hs th',at we luve to norw deve.ll!(lp ~'olilgMrm ftll1ldl~ng I~r the ecor!'l'omy. We had Iilid the ground: WQ rkfor rlflll de"Niilopmem o!1 <1 IOiJi'iJ Hlr!il1 blo IfI iJ mar kct Nl.f tlh €I COIU nt rev. Ilii e S'tili'le B,,::tl1lk ~al'l play all~!'lstrlU Iln!l!!ta~ role,wh·~rll ut calil gll!IiHatl· tee SOiliTHl of these bonds v/nichi wi~1 IHlclom~ bench· !lHIr'ks. Tilen people w~l~ be !3.bieN) U8~ them 10

~itJlild long ie HllaS!Hlts, lUie-s OIrolllfld t mak'e straft~· suun ,as 30·ye<IJr IiIlI(lr~'· gre iS8J~'M 'lO tliie priVat~ gages.

sector ,an~ self--dlemuct ~.~ ~OIH,;vterm borlo'J,'*~!J

persentte tax reve.f1ILHI. 50 37 perr,c:ern of tne servlee seeter is lil'Ot paying

BRlk W~!a~ is V'®~llr vi~ll!w

ClIIII~hIlEl' liillest de'vel(lp~

SI: IFIG,Sir is <If !>it8IP' in ·the FigM directto fl. rt b road ~IiIS thl~ tax nR Mo re iFll pe rtanUy, we have to increase tne tax

taxes, That isa hlJ.g:s an;!a fOlv imp rOVe!ilnmt, whe~e b 0'[ I~ {;oll iH:ti en @IHI C ove V'-

age can I:I,~ ~1'I~Hlilced, Stoclk market inv~~;t~,s a re In 'ow be i J"l'g taxed J:!Ill' capital gl.aiils; I tMrnl< real

Measu res such as th~ 1I1[H'HI~;a'x iii r~ sq HI IHIZ i Ii g the same 11001 of peep le. ~ don't s·ee w~·y a.g;iCUn~Fe is stltl exempt, by il!!st saY~r1g tlii~tWsa ~rlov~n~ clsl tsx, PrOIl'~t1lce$ an: run by thll same poiitic.al 1l'31"~ ties, s() If is on Iy @ matter or I ill plemsntatlo n,W.e la'l!'sa"re already UHlf9, ilh Il Ire are two taxes, I[) UHl b(lseti IIlIU Il,rod ImUon indl~x .and ~s·€iCOlfld (m inCOIiflf! ,Why' is ~.~ tlha:1 ~h pr'Dvll1ces are IilOlt coUec'iililg tax,es? No~ ,clo~leot~!1Ig

til III Lirlre.l W~ i !!lW:Hl []C~:t:I CVT Q IfI real of! state an d I aruued that H was a rEig ressiv~ tax, Now Hl1l.! NlFCl has b'IHlliI .SiglnEHI, \lie Caf! ma.ke taxatlen 011 real estate transactio I'IS progl res s ive a nd tax ,C1I p ~u~ g,~im;;_

F~l1ally, aU thetaxesare be iln IJ C(I~ ~ected at the 'r,etiJellal ~ellel and tlhe iP'mvilU~es ol"lly co~~ect :0-7 percent 01 tUl P i f1I taxe s. With t~ e new MFG, il'l: Is ~m~'llnLtivll thil.t trim p rlov~n CeG im p mve r,m I'h,ejr tax c'o~~ecUon as well.

A bus~nes~, I~lrnduatif:!~ who maIorl3id.ih~lnalnlC1ei Tartin sfartelt hirsc c,a/eer 1 n f975 WiDUl1 Ci~~fUllk, with \vni,ch iM~ rn,~d:'a,llmo~t 22. yeats ll!t ~~$sonliatra~, ~Jtb IQG~I~ Sin'd i nlte:fili1Jatio~al! I~, IHe als'QI SreW,Sdl at II~adm g p.o$li~ tllons ,at ren oWined. ~~n ~ ~A the cuuntry ~sulch as' Habib Ban k, Uri ion Bank (Ialter snlld to .s~lm1ard

C·Li."!lI'*'''''ZloI ell'll"''') 'lin.:! ~'o;:,,' 'Idl p.j3~" nO~m' 'f':I!!I,l'lI'iio::l11 liI'':Iln'''' '~:!~I~[""!iJ· ~~~!!I.,_ '~I 'U ~Y!U _ . p.!!\; \.1.... !'IIIC.o"", <i! M~. ri.

lilmin Ihr~s a~~~ ~i§en tlilB ,Qhalirman [If' Pakistan B~lL"~s ~ss_ot]atimn andCt:iairmtil!l (If ~tihfl'~a!j;ac.hi Stoclk

c -. " -_. - - -;r _. ~.,' •• • _. - ... - r •

B«tbJElJlg€,

lHmin o.8Jj] ,a~so(l be~n ~nstrumfiritall in ~iariQus.{jI~~mm~;nta~ p"GS'ftitJi.Ql1!s, ha!vill1lo!J served ·as the' FilliMae

. ..-. ~ - _.

IMlirn,ister in 2®[)9~2011 0', One of iHs, rwtewQ~hy

·atnlle,vellfl,e.nIs was tine SUIji::esshiil ;eonsfm.:sus (In th'e r INa'th~pal F.iloarrme C6!11trn:~~i(If:l1Aw,arl~, Hie was awijrd'~dl men Sit~ra~e"'l mtl~ . aW'iI.d IcmaiiCI~e~i/1Iia m I Social M~da1 A.ward tar his .s~lVice:$.

la~in ICI!JII'tently serves' ~iSi a DrreclO!r Of .~mlkbaaIl1IK UmiwecL

Pm,file~ Shallkat Taril1

- - ---- -

DEBT MARKET B,R BA N K:IIN G REVI EW 2010

DECEIMBEIR31 T 20c'JIO

Bonding the blond market

~t! S d unit LIlttol find an r~s L1~ UUIit title COl1l1llumity ,of t~rllmciers lI{lfee !lID'!) Fl. BllIt ~mEl thi!'lg ]ust all() u~ ever; tOI~ level decijsio'f! make r on thle' lii'Iarke<t agrees: r,s th,at t~e !'IDle (It Ol]llil'lmiEm;ia~ I~.alllks is ~Qt t:(ll lillilanl;iIl ~ongl 1tillHIl projects"

Wltlii IB i1HD~t ~l1h<istwGt!.m~ and die''I,al olJ,n;,e ~u pro~e·Gts. in the COil mry today see!kluWldiWlQtrQrn a cOIHHln~um olf ClQ m me reta I b a!1l ks, each Il itc,~ ~rlgi lna slilllal~ 1P,~~ceof the ~'ia, 1l'hey are merely fillulIIg in hrrthB lack [l~'a 1m1llltu r(l G~Hll(llr.il.te- de M market, COlmm8fcfia~ Ibanlk adv~I1(;0:& ars f(H:U s:seo t'(lWilnis ~Iig ticker muIWlatlo~a~s or El<sta~,~ishedrnirtl~~y emp ires.

AI~oullld the WOIf'r,~,. hyb~id Iiflildiels: ol det.l~ aliid eQ ~~,ty fUliIl;ln,!]ililg ,am em~l![Iyad wheln 1~lIm;hung proje~t$ l1J'lh~f.e

ge,srrrUol1 pe ~ i !)tlis extiB Mid

.b~yolfldi Ihe short term, lialljll gthe eX!l.llnp Ie fllf seUlilllg U~ al1 indListry .. c"QImmerc:~a~ ban lois iss Lle~e',J)II: flOf t~1e ~n~t~a Ista,ge $., b 1I~ as casllnows ~ta!1 r011liiliigl ill. the compa rlY Issue$ d8!l"i ihJ $l!Isb~n ~~)fl!gll r tel'liIlI 1;1 p~ra1~(Illi1s and g oesll;D I' a p LIb I nc. off~rH f'Ig of its il·Q i.li~V throiJg hi C;ii pita~ market.s.

Mto,r,eovM, ~ighly rated

comjplanies have Une .aJil,mty to

MiililliilOli, ~"ilimalfl rl;amla~dC(ln· temdls t~1a.t a bm~{] ma r~et ~rfer.\; a me re eI!fiicienl~ avenlUe ~olr asset a;lIo C"at~oli!, ln a" eel() Jlolmy skewed towar~s I>wnI<Jl~gl. credit declsiolii ell.· in~ i~ (]dHl~elllhat!3d allm;lI1gsl a ~~VI ilndivid u:als,8.1"l(l"tliie riiSk Il~ 'emny ~<italism' !li1l'OWSI~xic aSSel!i IDi remal n 10[1 MiTllf;:s' ballllilce sheets." ~1iI contrast, bO<l'bcl 1~()lders iimmediat.e~y IPeam!1'l if a l:HInd is nollle~f1g ~'fVl1ced an:cI Callii no I@ Ute foSiS. uer 'l() a·cto1uVlt," w~fI:e~ Hame;ed.

SUIlll~llar~y, llIamk lan~if'l_g is tYIl i~"'1!.IIy o~ $ hQ tte~ term. a f,oolk' atthe lJ,ankin,g '5ytSttfrl'S clf~dilit a~'I.i'arntes 'the laM year sh·ows that a 111Il'CIS't 0 ne 111a~f ~:~ alii a~vances are use~tor W01fkiln tile ~p ~taJ req u~r,e~ rll-elllh •. · III veshll'ent at.tracts less t1l3.1lI halt thrs,t ~r~ p~ rtfu;D n,

G[lmlP,arattvsly C 1:I[l1~.pef ·than ~Q uit:yfiniHl~~l1g!, 1'(lllIg tel1F11 b(md is:"SnlilllfT'C18,S provM ~ ail emcf:er.t 'Y'e hicleror 101llgter1lTI pro]e.ctHlla lilt ~mg, SLIt h as f..I3iIrflS, higlllw,ay,s, 'r-e~li~i~er plalltsa.lIldSlo Oil.

Go rlJ(llr<l!lt~ b [l ~d markets :{I~S(I' ad as i3. sitahi I nziliij ,agent tQIF th e eou ultry's finalida~ isysMm. 1f~E::~~i~ln olf c<l!piUI ~rom .eq lli~y to, ~()IM mar~~1.S in tllefi 11i8nC ial meltd,(!"wn o~ 2008 is til,e 1m) st recent case.

I I1Its'mstiinglly" Engl1'O is Iblll1owjngl'fmm the pubnc at a Icheaper tratethan the QIOVIBrnmont is bOlrmw~ng "or commodity finance from the commerclial banks.

!Jlse ~h e ~trellgH'h otUlreir ba~~ ance sheets to glo d irectrry tOI the p~~~ ie a~uJ ra~s.:e ·flmdsto r ilil!J:estfJlleilt I)lOjfJctS.

~ III Pakist~n, "111' Illen ,It lilIr'l]le M r,a[~liJ c.o m~lll,li 'Ii m:~d s: t~!:la'l'ci Qg. it~lO'e.s ~i() af! A~ ~ted tlan~ ~lrHlhikllS .i'I loan,. ~!II thle I(ll!tsidle world,s, Iililg!tl ratee!. ~ A.A.. ra~8di C(NiIl paJ1IV WOIli ~d take it as alii i nsu It t:(ll gil) "[CD an A-J~t,ed IIJ,ank lind a:s~ 19r i3. lo'afl," Amjad WahlEHld, [; EO of Nat i 0 ilIal Asset F!I~ 1i!l111![)IflAsse<:!i Malilag,ement t()~d 00 Research in !Ill ~~tef'" vne·WLl<ameli t!h is; yeO!lii'.

A well fUlllctionJlng bond rrarrket ,al;M1 Slerv@ ascom~etiiiulII, to r ,i1.Sse:rs ,to the !Jan kinglsystem. When i !lIVestof$ ha\i'e~he alli!litytp seieik otlhe r ;3:V1E!mles t[]1 piac.BtliieiiJr fu nd.s, ~;mtsi~~of IJ;~Hlk JJell~sih,. they ar~ Ill:l:t:t~r :!Iti,~e ~o m!!l!1ich ilie iF r~!;k Me! [alu rn p rQ~i"il.

~ 1'1 ,~, 2(106 re~earch f1!i1 per

wriltenoor 'Hie Mill iM:rV I(lf

ne lack l!:If deve~o pment ~1 d!e:bt mawkets i rl Asia are cite~ as 0 ne o~ the reaSlJIUlS al tllle $.(!v~ruty I)f the t:i3.s'l: A$~3[J ollsis [)~ 11997. S~ nJ(,e theH,tliie

6CMOmi'E: S 0'[ Kmea.

Ma~.avsia, UaUaliHI and

Ph~~ i PD i nes: have "Su c!Cessf!llllly e ncolU r.a.g,ed Ci(1 m pa n ie,s~:~ iss!Ue d e;bt c:ap~tal.

The develol~meint of debt markets in IPakistan is stllil iin Q1a!j<C<Hn!t sta~e$" iI"h!at beiln,~ said, debt is: not new ito> the marikilts·. As ~1li~ly as 1M 196:Osiil.lTId 70s,. ll'f~jJlr l~ nlaUo na I ~zat io III (!)'~ nlllsnciai i n~t~~U[ioi'ls, detlentu res were listed 0 n tille st()ck eXl;;h,s,!'lges with I~!'ll ited ti!'ad1illg ..

"Til:!'! leila I 01 ~rnm)vatio:n Ulil tlhe ~iln i3.liIcial sector iln those ea rly £lays .1l!t!f<!dB-d p'olhty makcrsholilll all O\!"!]l Mia; ~Il.at leader$l~ill' ~s !fIQW alm(tst rlo'nexist.e lilt" An Raza. Preslldel11t ot INS p, said ~11 a !'ecEml ilntendew ~ll)r the

BaJrn~ir1lg H0vielv 2m o.

Pubilic sector I~(i)m~ilrl!e~! 8ucl1as WAP[lA, Ji~tectl TiFCs -. bond eq lI~valernts ill Pak~$,taln • as early as 19Sa. YUle Il'tij~ v~te secl).'IDI;Ir slell p·ed ~ n v~itih the iSSI!I<llntO 6 (If· ,~. priva~~I'i ll~acM He l'Ill ~:a!c.rmge.s Li m it'€d in Fg'bm<lil"y199ti.

lJe'!lt iS5uanc~ mak on ill t~e 'f!i rst I1Im,lf O!t~l e last d,ecade. III 2QO~., P IIA I~,u nched the ISJgest issu,:;!lIlce wit:hl allcM.Jmtalildin{1 a I"liIIOU rut Ql R,s15,<1 bi~!uonJ. li'hie- !lvar-

i3.g'ejU~(lu,g~, remained

aioum:l iFls66i:1 mi~~iofl,.

ac(;oif.l1i ng tn SIEC P l:I!l!tll. iss uanees ha.ve been lirn ke~ la,rg e~ywwill"(fs till e 6- m,ontlll K~lb'ol' im the aesenee of a ~o'lIIg term bern C;hi!iflliUik rate in thle

iSSU!artct ilnd trm.MisfBr o~ d18bt ,sOOIU rfrtues.· "Si8C:P tr,as .negoti~J· M a ~o,werlrlig of stamp {lUllj Wf1l1l title f~die;rall 3ind ~rovililcia~ gl;Doomments to []1JIlWe rea,S()iIiI· <llb<~e. ~e\.iels ~ ~ an eUClrllo e!i!CQIU rag:e' ·compa!ii~esto ~&s'Ue the~r r;!elJt 1\0 1lh6 IPlub~i~," ~htl. SEOP o:Uicial ,~{!ide'~.

be~ rig takM i FI terms or (;(lII~ l!leti ng ~i1I10 ~ mat:h)11II by tIre SEep, but they a ,eta~ fmlil1l bei!'lg eUe"ct~ve ]gst yet

Clwk!l'lg liQuid~ty trem

h(ll1l~f Im:llwkill~s is lhll !l(]iVem· mant 's ~e,~,]sio IlitQ· .aUlo\!.!' il1.M~tUlti 0 111111 I 111 V!lstlorsm in Vr3st iAN anen al :S.ai;l'~ rig

A bond rma:rke:l: off,ers a more effic::ient av,enu'e fo,r' asset aJll!ocation ... corpomte bond markets also aet as a stabi~izing

agl8nt for ~h,e fti narncial :system.

Liql!lid ~ty, or the lack fne reo of.! sn d the L.II nld ~rdHV,e'l(]ip· mllint of a seco rtiilii ry ma rket will e'm illVe$t(llws have the

Li stlfldl TFC5 tssu ea to pu b I ic

-------------------------------------

-~~I.~

-_oJ_(LIfi)·

~ec'er"diarj1 market.

CO'rlseq UflIllUy.,. hi~ h interest rate e:rnvinJIlIIlll eilts, h~v~ pla.y~~ a mie in! .sl~w~ngl thie:

Ill.u!illbe r 0-1 nlew issues sl f'u;er 2m}7, 'I Sta~h:: mi9i(;flO~COrl (I FliJr ie and p ollmcalen.vimn 1!ITerut is 3, p re i1"e~~1 ~3 ite [(II t~H:

Jjevel~ plfl1~mt of de~~ maril(els then. 011 ~ ltlelii wj~ I CI(lIiinPil" Iii ies !Ill ove aHJe~d witih i:SSIU ~ng debt irnstlFtJrnellts," an Dffir;;ia~ at the SIEQP s<lid ~rn 3. 1'800iGllIl (;na~ w~tih B!1l R~sllatGlii,

AIifIQlilg oHMer faC'tws c~~d as· t~e hilli;lw{lmle to ~o~efltual issuers ;Jire admill'lP,s:uar)l~e hie,... (:L.II~S tharl: illldude p'ro!h"~bil~llvel:i h~gl1cosro of liiS1ti!fi{l. UI nlrriik'e mSJny olther CD!JllltifUes, Pakflst~1!l imposes a .stamp duty olfltM

OPP 0 rt UJln ity to tl'llJi;le th~i r ass~ts o'Jfll'th'B Co urntcr ·iJJrlfl maJor iMI!lM. ~ rnd nstry ex pel1ss!IIt]lgUt that w I~i~e tra.(Ilng occurs 1J:~lhe ~nstit 1It1ona~ leve~"eve n if at low V(jl!. !.limes, the rer ~s f! ooolltral data cl(lUect i oln (Iln;N!1l R,at~(l1l that 1,lIQ lI~d enab~1;l beU~r priloe dis· C(]lIIery Whe n! cilicu ~ati ~g !let ass~t V:3!IIJli--$ {NAVs}.

An on 11~lfIe tlOlflo Uad ~Ilg syst.em il'lltmdLlce:d .byt.l1e KSE, 80 ndl Automate d Tr,ad ~ng ,s.ysterTIll (BATS}, liIl'igtIt rmt be -em.Hli~ hi to ge'tfi':o:e~i rlGO rme tl'lIden. on t(l the: system :sill os thefl8 is In 0 '(}(llifIlJu~sio'n . , n! shillrillilg the Iliata. ~1iI 11 ~aHly basis at: the mo,me IfIt fii:s·{ SHIP'S irn tha~ d ilrBctl 011 are

sc hte rlUBS, a glo,v~ rn msnt sp 0 IIIslOlI'ed sa\!' ~n~ scMme! wl~ich ,C.{)fI1Il8MS wUh ~rlvate sector de bt lssu es,

lihlis il~~ been(J~sai~llowed jn the ei3.r~y YE.\[HS o~thl8 IliiS't de~ade, 3 tme 1.lIhio hS<Jw t'he h ig hfl.~t msm tie r or d!elll£ lssses i n tJlie III ~sti(ll)' of~h~ co !!Hltry, averillginlg 14 iSSll!3iI1'Ce'~ per )le!lIrfro III 20Q 1 10 20M. A,t 'ihe same ti me, NISS ~~pd:sare USl91Hor b'Yd~· e1aJY iI,WP po rt, s,@ ~ r~v·ate~,ee~ tow Il rtJI.~8iGt:s giet ~lbl[)WoBd I(lut, dUl~'· the risk free In~tUlre of ~IOV~11fl me,n~ delJ.t

LIiIilQ, tl'lIrm SO'Y:f:l reig 111 (h~tlt, provides tii bene 1111miliwk raite IOlr the~lld1ustry to p ricEI S~II1l~lau £ec~umes ill the private s.ect(llr.· Ilhrr()rtl.l~ ate~y, iill Pak isfan, ilTte<re st raJes (111 P1I!klist:!llll Inv'e.:;;.lrmsL'lt BOlilds

Haider Nawae

paltiy iIJ:e~usll~rfer mtllS: fOf PI &$ in reeent auctl~)J1s were lJ,ein~ ~e,jecl'edl. So when there i\l 110 liIe;f]chmarik availlab:le lor S(I1J" er'eiigll de~t irt hfnd!erstl]le deve~· Dpnnem Q'f a marnet ~or ID~g· tarrn fill1iJI1Oilrng iln llie .s!hape of 3. t;i0IlJ0tFa<m b()!n-dL" S8P G(I1JernOr; S!h~~HI Kairi1rur ~ord. SA: RfrSBaJlth 1111 iI. IrtCMt hl00Niew.

[)es.pi~ the FIl:aITlY issiues toot' hliiildlelr P riv~te se,cmrsfro I~ elltlHi !~g t:he Mxed im:o me doma~n, E.rugu:o C,orporatio!n has sl!lGl)ess~l!Illly ~ad oil debt issml Th1i~t W<I:;> direGtJly offllred tu th,s retai I ilnvestor. "~Vill waMed to Iliro'lli~i!all alt~rriaJ· tiVfl 10. ~epn.siIOirs," ·~ai!tl &iI:afsa Sh~ms~, wM rfH'llla{llec!lllle IlIl.m~111 011 Efi!JIITI< RUID,irya.

Rlu~iy..a oltl~l~d aluxM mte. ~f i U psrcerntf(wa thnle· yearteno:r and ailill'e{l 10 rra~se Rs2 bl~lIi<on, with a {lImen snoe D~Holfl (If aaother Rs2 bM~~~ Ill. To IP'~s,cate ~W1yestof com~ems, Ihe com ~aQythl'!ew ina ~Iut' 9~Wlli tMta.llolVH! illv"srors~o rooeemt~ejr rffil\estme!l~ at a 98 perc.ent o;f[hel~cel'aille.

ii ~fl't,e'resti rig ly, EIil'\J:ro is bor· rowing fHlml the IP'U tllia at a ot18a per rate- ~hanl tlheg_ [lVem· rlmllln·t is borrowiiflg ·for O(lm· I1Illo~iW ~unalilcll fmlnHh~ t(]Olln· ilBlrc i;llil ~aJll ks" SB P Govenill)r cloml1i1lelll~ecl w~len ask-e,d_ alb(wt cOlrpoml-e iboncllssues,

Even th.oUlg Iii. the marik.fit was apprel1lElllsYve, the Iliiluncn

C;~okling IliQuiidirtyfmmr bond markets Is the gloverinmemlt':s declsion to aUow iinsti~' tilltional ilrlvestors to imlvest in Nlatlonal Saving Sichemes,.

(PIGS!» a.r~ IiInt .cm:ir~l~y MlIr· kef {jrirveJ~. T~B ,gO'\f\tHrn lIn€f1It Ilnlust Wikethe Ilead i n ~Iick:~n.g III p ~t.s doe tn~:ro I'll the rnarket instead! :Of l}olrro<wl ng directly 111(1101 t~,e' s.ap .

"76 ~BWflnt ol gIlvemm:aril dlJmBStiG debl is shoiri terml,

<ChIna 75 .. 6 U7.:a: t,~, 80.4 5.S 3.1!.~
IImdbl 3,1,4 :53.2 '~O.4 78.2 19.8 33.0
11'II'd!;:H'I~skJ :30,:0 34.1 4,-4 30." 0.1 20.3
:Ko'liBaJ :3:2,6 66.·1 '\'1,:8.2 818.:2 44,.:3 '102.0
IMaIBI~8 1.01,18 115.9 ~OO.l til,; .0 61UI 90.5
'Pa k!t~(:ll III 23,6 34.0 6,1 35.06 29.0 29.1
IPhilippl~QS 24.1 46".'7 20.6 4El.7 2SJI 38.9 was sl!Icooosf!!ll .afld .Elngl'!;lis ruOW half W8J'l' till rou{I:1iluni1~ll,g the glreelii shJoe O~Uo!'l."Tliie tlxllfJr[:elllcli \!i,as. \liery rew!lrdl· i i1lg and we ~1 op e it will serve iiS 3stel) pingl $to nle for lot~er CO'Ffi lJllii1lleS~O D1love 'rt(!!WaJm," Hallsa. to~d BR Researcli.

A we II·structu red plf'odlu'ct ~ro'm a! ,e~!J!ted (XjIilWiliny i~ {fe~inlitely 'iJlolill{lj to wl1:ettihe a!p'll~tilt1: of tihB- retal~ [;01'1" SI.Hlll:r. Uatl~~snillirom Il,olit;y l1Ualk:ef5 ~rn st)r'eam ~irnil~gl Ihe iss UlarnCIl rI~'ql)l imments and W'ornijlil9 t(jIlt/~'Hds.a st:!lIl,le ,a.!'ld pr:edictab lei maCHI"e'l:;1!:1ITO!lilY wililgol miles, ~n cle'Q'eliopirl(j oC;lh ilfllJesWlr t~lin Iildel1 cell ililf the d~lit. l'T'I!ark"et <of tlh"e (;oIJ rltry.

me 'tIriter call' be' rescflfld ifffh'aicler .. f1ii1w~b@Q"f·majJ:.G{!.m

I)ECEMBEIR31, 20110

'8 R :SA N K'IIN G REVIEW 20'10

- -- - -- - - - - -

~ NTERV~ EW BR BAN K~N G REVIEW 2010

- - - - - - -- -

I)ECEIMIBEIIR 3~, 201(0

Home-ownlership, must for better democracy

AiiI ~Mewwill ~I Ali ~i Presidem-& iQiTaiMna, ~na!i SUk Of ~r Ha~d,e r Maw.ab

lin thi,s ~1Ilitel"\i'~eW', AI i IFia~a fliiglh~ig;h'ts the l1Ie,e~1 ~~ dievelop Mnd'

market~, wil1iille ~iEUllel1lt-

.. -.. . .' ... ~ ..

j n'Q -rulle losfye~ rs of

ffin~neti,alr lin nOlililtlol'l in lPaIKl~~iIl,ra~ Rii n;~ iI!tJo,[J]f -~hlE! nnanGil1lg s.tr!lHJltu Fe in pa,k"l:s-t'anli Rm:a _ SlW$,S,8S, Oln IPIU:b1 it:~pri~_ vat€< p,art",ef_s!11l1p~ toraise ifilnJano6cs -fo r p:f9I~ ects and -(.l~SO' to' e:xecute, ~h~ pro]~C.ts. lhe -'fo Illow~_ ing illl !t1'11f! 11l,~~te_~ a-alr'1- stripilS:

DR ~; 'PIease walk US t~mup Y~1II1' (ltlItOIllk: ,of the: bSJilklri~~

~i Ram~ iI"~e h:ealth (]If ttm ban~hl!J1 ,system itl; relatOO 1:ollTie ~te (If ~otlliJS~li~ aM OO~110!liilY. &I, if a COlln:try is flO'! ~ofn~ '!.WII, balllks don't do we[1.

Sklbal aC[ln;rnni~, Grises, high interes~ rnles illl ~11e IGCa~ economy, i1l.w ,ami orw s~!Jati(m ~ all ·of IhBSBc pressUreill 11 ad led to inc~ es iJIIl10lJl--iPOODrmioo ~llIi!s. NlJw, Take .Agrieult!JIle.~l1d SME lor 1fIIJugh liiie (lI:I$(JILJllJIlilumbE!'r is ~I~ examlple.. Z1rnL Isa bam~ttmt increasing, I \-wiilld ima-gJrMI we an} ex.clu,si'iretry~in8Jl1t6sll1~ ,a@ricuil· past. the IP!Nk ~rl N.PL$, twil SeclO~: AgrfcLllture bein:gl the

'ifw-o '(t'ars ullifirsm t[oo 000:-- oock·bcmsrn Pakisbn's 'BOOIiI!ll· lIIomlc cr~sis,lille Ixmkltll] setl1lor I'IlY -a:m:ll presenting lhe~ireatest hffiS d(lne relill'llrl\~M' well ililth~ growitill potentiS!!. Yet flwthe pacst UgM rn these 8trti~SM. ISaJilks' tlMl years iii: has b~nl rn a v,e~' dl~' numbers (lJre ~ooki'ng goo~ thlS!~iCiu~l: Hoonc~lllo~roo:n,

Scale iis becomiing a critioa,1 p,rerequiisiite n]lr sUlooe,ss iln Ih,e ban~li1gl sector.

ye--iIF C~IiI1IPB!fet;l to tliJ8 last,

Ther,e will 00 more ~nscIJid~ lion iin Ute market :Smiilll IlruaKs· liiave realized t~MlihefJs,~pck prtoes- ha\!le gXl!1e {lClWrl (jluil_e subsml1llMiIl~.S~me .sponsors. @I'e rw~ wlliling to put iilll morn IinaIilOBs, We ,~m ,ilready hearin.g aJboul a few deal~ but tllat lIflomertlI!Jml willi probooly IPjeik !JIP,

Soak! is bem:lrnilng a. crib~ prerequisite 'r!!;lr SUQciess in the bml"Jing seetDr,.

ORR Wlilat ~rnd l"Jl'SlfM11ies, or bi!$iooss n~ mFI· smallll!lru!~ Qfierill.mzy MIA sm!y?'

M: Btlnks that \!lam 1tl;iCE;impete need '" sfzeahlle bal~lJ1£E1 sIleetaml ~eIiveJY capability in Ih~ funrn or ~mn{;hrns. PI barnk thai:

hac~ Ifl$$ tITan Rs1 ©£H 20 billioijl ilil assets alild has iess~hail1' 25~· aoo :0 rronches ju~t ,CalI1In.Ot COrllpete.SOI, ilJr ~:mial~ b'anks to COI1ilp''fe tI1~ Ihave M i:ncrtas(! 1I!hgir iltl-SE.'t:Siillll:.

~[] PakiGtaIil,. we ~o Jim have sll1aJl~ baJnks ttw .am· .spe£iailire~ in !l!iohe' bUSci!ilesses.There a~e 'Iltlier seC'l:OifS cul'lti'ltly ill Pakis,Win \l/t11ere s~cial1red11bll.nks C8liI mkH ffiheir liIil::h.BS"

19:AiR: Is_NI3P; rme~1 in ibll!Y~ ling ,UliPall1 hank'?

APt We rooked at all t~e small" e~ fimmciail instltufidllS <litrl we a~ri'll'W at.tl1e oonclus.:icm ~1M (lG[Jl!ltringl iii sml!ilJ ballk does ngt ilrni V.alulB 1:0 - Our sliJ1Ilreh~lders. We ~lresdy have 125m brnnc~es. So if w-e buy a Mllk~hat has SQ tl:l'8irtCll~S,- m~tIy it) the same p-l~l)e!l as, UI!Ir$ -where ill the sy!lBtQ'lf

We aJreslrliiost .~. tritlf:on !!U,~e-e oon'KaIld WI Ibuy 11 IRsOO Ililliofil txln'k (which is .6 ~Wel1fl: or our$i~e) doesm't make S81ls,e WMiHI yO!ll factor ~nlM -Irncrememl eammgsfroma share1!Oilc!efs p(ljm ~f view.

Sooon.d~, yml have no tl'!l:e o;n a fiitr ,l!i!loullll o!fstaft. whichl yo~

1I~e;n have to ~tJuctu~ thw(lu~ll QlOrellfllrl~riI~sh.s :am;l.oe:nch:illlen~, whJch is n D'I a very 1l:leasant to-i!i!gro diD. P~us.lJ1le're ~ 't any lut"rotli~ smalf IJank witih speclall®i:l Oraltr.J£M JJuSilOOS$; liIi:chiEi m Urn market

BRR Your 'O,plllltan '@nfl~ Ilig ~re llill~~

.A9: A m~jor risil:tv UilU- et:onrtmy is thll.1· our l)u$Joo~~ are o~rty d~p8m:le!ifl I)n ban'k~L Raiising o,f capitll ~1'1 p:a!kfs,mml fe Mgliity fesWicted. A classic e:.:.a!if]ipre of that IS_ tilarw tn;t: dichOWmy In~e filllaJi\cflloorvices SBcwr IS rIl;aril~d" from ,200"' ... 08 PakiStan was Fegilmet:! as tile best pemrmin.g stOUK market til AsfIJ ..

IIIl :a scellari[) where tnB $fJ;!Gk ImIr~ was skym~ketillg, 1iI~'1 to!i'IiliP!3!ifliB~ sh olllldl l1i1Y~ Ib.e~n going ~III!llic ilil d~iJJt6s. fn Umt ~. But, during mat~ime.,~ere 'i\11\'re OIil~Y 6 WOs and 12' d~lstiITtis;,

Ba.ck ifll the I~:e 1I96O---S0s Pakis~ was ili Imtllur ftlllalilcia~ imnOV8:tlon in As[t[, Cllllmtl'fas ·ihllt are ~wer Iw-u~s 1II0W oo:ug~t ~\[O:rikiA_g re;latiOlilsMr>s, ~'!fJ~h Pakis1anl. But ov.er time, th'M imnolll.1ti'o:n Mill withered .away.

IIIii oth~r GOul1trn~s, £Ii\l'lirsi~i~ !3JJU~W 01 oOfpltaJ (IJ~ ~lraplil! w cOmpanies. Bank 'lifNinciftlli, (l[)r~ po~ bon~s and ipm,ilIoo I?qlu:iIy are jllMsom~ of the av.enIil9S,. ltlOll: miIDk~s ·1i!helifl ~omiEi~lithat in<sureted~o f:n~elest rate shock$.

BRit Cap~! I'I'iaIb!ts am, tlitml te alllS1Ner1'

. 0: Yes. lunliill1tli1ere is de;p:tih in Ibecajpmtl m:arlkiw,. 'nheore wi I~ Ii!~ver I>e s:li:wbje praJect flJ1lfl!_R!i" ing at.IiVity In IRa&;jlstan.,

8<li1ks' .appe.. for 1©11i@~rm ICians is lo-w because (mr' ~eposiit base is 01 a rather SJ'hofl:rerrll niltml'l~ ~ c1lpita~ marke,N; I ~olilrt just lITliEiari the ~k ll!iIaJrkets brnt 'Ol:tl~~ 1IVtrjJU~ aS~),!g-n, 'tihM Itflffd to 00 actiVl1lted.

15rul: Am oop!1all ~.~ the lpamm. 1o:r iflilh.Gtrucrural 1I'namc1ng?

M': Im~m:lillilfl~mlild c!evelo~il'lg i!1ifrastructiu1e m~'e tlig hil/i';a.ys, IXH1s, d~~natiolil pialllts, mlli1ing - ,~m- mJulti·~illii]IiJ dolbr IIlmi~s an.tllliB mOO'51 jim ~irnaJilcin_g 'is a miID'i~e of pu~ltl: [}Iivilte pann.erships aJld the capiM nttcls.

The .rOJa of the . .

corlilas Itlro Play 4years,. Evtn illlillY Pl3iit1!'ke, their lendtIng is!orthe S~Clliter Wrm.

~ lleaded nne M'iddtil East'1md A~ticadiMs1v1il m Bank of AitI!lirica. if! th~ mid tn 1!rtB. -oos. 11JfH!flll ~of ,1)1 i~rmstrli,!oture de'l,i\e~opme!lJt was takiltlQ pjru:;e ~1'1 tile reglan. AU of U~ew projects W'ere nJi~nted ,001 this moffiiU, Cap~~ ilIIruMts \MEire not d~oj)Bd E!'n(Jugh -ilil th:e MiclcUe East at tliietifil1e,. :ro capfUll m~~ets iii! L(mcloFl welie httrollJetl. m cOUrsB, all (J,f 1lh~ mUlnltries have tili:gh~-r credit 00- iFl~ and ~gwer (I(lLiIil:al r~5k,

Pakismn has high ~I)krtrcai rf6i1<: andl a ~oJl'ilf!r ~re-dlit 1"a1irntl Yet,. wtI need a~ O~rJ'fe-se ttllt1gsaJild we n:etid ~l)figll]lll am: ways ill get the'm;thEi ce<tl!mI~ tlii.llIk, tJIle ~ilila!noo rnilin~stry an;dl hir{,H ~ri'<!'atll oon:ks ougl1r~ fOi bmlnstom

IS.RFt So Pakisbln\s ~1m1 Il!l1Iarloo'I: filllOO: highlY ,developed, IDe! I]~, arredJ!jI1tg, ,Dif Iits dlJ1i~ ICU~. to Ii8lseIllilSl1!d1na hllill gJlDb~ al capHa:l ~,~ dCies6ile ,IlIilUB IIIEi wtt1iI OlDliIlmSrt;fa] ~, '!If lliIiIll!tir.at:eral agSllmies?'

Nt C[lIirlmelt[~1 b[jJnks Mvt 11 very iliT1ll)oo'ta!n~ Illl:eto ~1!lY iIiI thfl d-eval(lp-:msnl of liE! e~[)liIglllly" llhat fs vEl'fdiID!rwntko:m sayililg tiJaI:~hil! h~gh8St IHumity [If ill. bank'S rllSJnageme:nt is wllrkil'f!J ·fur the ~arehoil(Je[s,

~ml1I; NlI3Proct " ~ in 3flIDl~i~~nant!¥.> r~r r:<1HJi-A'kbat tenmiml. whD::lii i8 ~ IlliJJI~ ~. parblerSh~_We !lave fa'ken bollil ,eqlllity ,~n:d a ·$ike' f;)n ,the ·t:W!sioo 'ofllii~ ~mJmt W,noo tOO ctlSl1 flow S1:M:~owTf!lg1 In,lhe liro}eDt 'will go to!"' "rlIFO, -~~hat wil~ be .rlur ex~ 100 llie _eQuity side, Th~ islhe Olil~ fW IPro~ ilililm lilSt.12 MOntl1s..

Lo~king t(I'mJrds. multirruarals is 1l!~ile, bei::a!use thei~roooo h.as-In©w shjftad kM'.~ 1!IiJe S(J~i3:1 ~T" Tihey willi gi'ffl rIl(llil8ylO'l'~~Fds ~it· e~j, €~nJCa:I!i'mii an(i .ffiror~s, but not toMRis hUlilrJil1ig f~Cl:mles •

IBRR;Thiere [,s!!:p~lonm ~tmutrumunl 00I'I1< mal:llnQ 1ImI mtm~s. Wi1a'I: rs ymu take M it?

AR: ~mi:nk mIlch mom n~®,]s 00 be done,. n:otjust in illTr~aMnucb.!Jre [UlandlilQ bUlt' also !li!orttgage ~minilililcjn!l, UUlI~ we IlI1:COlJr~ s!]e h()me owne;rS'llii]!l, we wl]11 re!'llia~n a stake.J~ss Slooiety. Sl:lnrnB(JliI~ 1l'~nD d(lesn 't ~'lI'1iI ~, ~OnJSIli ,ifoosnl have a ~ in \\11ilere ;th:ey are Irving"

OnOl QHbe reasiins ~[)u:nl~es in 'Hue- W;esl \ii'ere alDie to take otlas irL\luWfi~e00J10mtes was' tnm i:f_g~t from IDe SOs and! '!lOs 1iIlsy ~<ifj S1faJrtOOi gm~vltl~f'tgl prml!!lcffi for home '~nan:cil1lg.

Mortt]a.ge Finance Corporation is esse:n~iat oonSllme-.rs lleedlOO' be alile to fix their- ~. Wi~h a. li'!ied l'liiOrlg~g(l!, the COn5i!!mer IViIiI kriJ()W wlJmlh'e expectOO rate is 'goil1!g tOI be tor a number of ye!!rs.At the -E!l1!d of tile' da.ylbe micro eo-ol1!ollllY is cormectOO 00 mat~QeCOIiIQIIIl~OS, And until, we res--oiIYe isS!!!e5 at: the nlilcru rwel, pu,essu res wM~ stillll'eTl1ai!ll

BRrt CD}fOOI th1nk NEIl?' sfiourdl bfI~l?

M: !?rnvatizOO? ~r by IPm:mza. ~kllil yQIII flilE1<lIil tn~f ths NIB!? sihol!ldi 00 hillld~ lloMt;ir m ant am;lh()f ilil~r su:c~ asthe o~her balllk$,. ~ W()~tqjarg!ll8' thi!lt tbe rIlm:l~1 Vi-B ara f[)lll}Wlfilg rlghi: n.ow is Vilomklng ~l!ISt ~ Will[ -

WB line P'-Bmmlllin.!l! as'IW:1~as llli~ IP:rM:ffi lJiilfl'ks. oospitll,alfll1l~ P~!lssu_rt:S:. ln o~r l1Il:oo~l. th:e go,\j\-e:mm.efilt ~s rediUt::ililg its ~haf&horjj~~1 llirou~lh iliB Sctoo1;;- lIfl~r~ ket Oillr OO@)rd i!> a Gonnlb:ill:3lio.n (if gtWBrmnen~ wn{]lIPri!Jm ~are·

MJd~rs. ~tihlililk it'u {1[lM mO!!llil.

IIRR:: Tieclt!nola.w enhanced wnkino sm'!ioos 1m s'Wted emergmg. 'What-Ish NBP' dolilg abol!l1!:mlS?

M: 'WeaJfll upgrading Ol!lr tOOh· rWI\Jgy ~Wfofl1ii. Vire a~ Mol11: g:., 10. monnliis a~ trorlir ami.Nrrg th~ toch noIGlll'iGaIIPb1fu!iITIS 111_ acq,u~6.tI by 'oor mllfl,P~ffi, 8M!: litie ,amou:!U we are, investing and litie toohlllolOl!W we are Il~nging In, - is proba_b'~ 'nI1i: lSi~'Ie ~{lesI: dlfterelltlialor. ~nJN.CI, II raml1JJ;1ng Cll~ 01 th1is project 'nyse~.

IBRR; In tiIt.a, fast ,alglii.toeel'! 111uirmliis, bal\l!;s.l'iaw, pallker:l HTI91r lulilds In '~mmmertl:semlitHes, willah ycHIIr~' on prnmasec,. tar clil.Mtflnu ,out'l

Aft l3a;n~ resJJ@rld~o Q'rOOil: demQ!lld" If the p.r'iva;te sernor is shytng ;JWltyrrom ttmlng 0111 more credit, 1!tra-;re lis nOi IlfUJchl~l1m trIIn'ks Gain d[)-ab~m it.

ij tne 1iI~ from tI1r~ private s~c:ro,r pi~ks Uip,whi::l~ j~sholilcl, oon'k will tlIDjlitare as tlley are i!il~me~i~les-.Tlte d'ematnd lor credIT wlU '!J[) if there is lr1'Ia~· Bcmmmic mbility. II Uir~ ~mef;fjll' tiaillbll1'!Neel1l lemUnUloo corpornte alldlso~ign is at loom: 3,4 peroeJifl'lhen oon'ks will ~~ looek. CUnelittyil: starnds atL5poercem So '~GW would r<t1:irer p!!rl:~~ir r1I1GH!'JIlV ~11 01 talire I~ risk,

Prof He: SytBd AU Raza

- - - -

.Pi seaTGpnll,d b_~!nlker wiUu mo.re-Unan3'O, y~!,~ Qif ~,;1it1kilnr~ e~xpertlence) R~zar ~'ilS been Mhie Ch:a~rmal~1 aJnd P~esident off iNatJiolrJ:aJl B~:lInlk Cfff iPaJkis1tan ,sii nGe jIJ11~, 2.cmn Plrih)'r m joining the NBP., lRaza nad MldJ ~e\it!r,aJ s,enj:Qr Dl!]Jisltljnns.- ineludrrng Frle{li:P'r1i111 I~ran~g gr, IPaIId'SmAI,- M~ dolle, EaSlt ~tJd NOIrtb AfrlrM. a!t '~~Ie\ Ba~ It: @f ,Amelri;(r:_a' (gOAl.

IH~H~lso ~tl~dg UJifei~tOifsllili;i Qf many ,~om€:s~iIQ .rmd i~tem~tiona:1 ~olrg.an.izatto;ns I~ lI(le H UI~ Power, IPa!kiS'tan tR~UneJr}1, Ni,Wtiprnal Inve?stmeJ_t:nt TnJi$l (rMlT), NI1Uornaii AGa£1 e:my jJf P1~ rf@_nn~",g Arm (NAPA)" II fnsli~u~e ef Bustlnr~s:s AJ] m un ils,trfliti@I1l, KaJFaJohii ,HiliglhsJi Educaitii on Commission,. and- tl1l,~ TSiSk FOlrt46: Olll 18i€ mittances:.

lin racQgnit~'oJI ;of hilS;" CiutS'taJl0lilhig ,ami melrit~,r~~ tiS se'Fvice!S ~n -MhLe, ba:l1lkiiflg'-!M~Ct6'il' (lIf P~kistaJn, IRaza ha:s

~ eBn lhlo nou IjI(~d with [Ill umber of 1preSitigliQ1ws ~a'Wa rids ~nd klc,col~UI18S by drrfteJrlmt fOra. He was awfir~,gdi 'Th~ Asia~ B~n r{etr Ua~~~rshi ~ _ Aclhlievem'~IJ1iit Award

14

- -

TR'EASURY V~ E:W B,R :BA N K,IIN G REVI,E'W 20'1 a.

Bank treaSlU1 V's role in Pakistan

Bi!iHllks' tf~aSI.UY depart· me nts I~ave a wad-evariety of fUII!i!::tih:U1S. T1I1 B Ii r~maJY re I~ IClf any tFeaS,lIry flJ IIlcUCIin us 1.01 Jinan~ge b:i3rbk's assetsand I lab lllties, and eX118tenrt ris.k srlsirnglhoHn 'thl~nn" The resuonslb illlY off treasu ry lnel ul!je"S enielent rna n~g ement iJ,f res erue.s, bal.an'c~ s neet I' meeti~ r:J t~e .b4l:1l k's ,a,a.1) ita~ aiiid II i,qu i{iily I'eq!lli f~m6nts,

A lIa_lIlk' s, trea.sliuy Ms,oagles ami rn 0 iii ltn rs i r1lhm~M rran rISIK, as adveree i r1itereS'~ mte: mQV>E!O[l~I~ imlpl~C~ the asset a III (I ~~a biUty si(le (lir' ba 1\1 nee

UI!y P:~i3JYs vila~ mle: ill estsbI isl1 me nt (If tnws pa re lilt FIJ nds Transfer Pwi:c ill!i{l (FlP) precess. which IS esseliltUai tOlr ban kS~1]I meaS.l.He the ~lJmjirligl Iutiliz.ath)f) meenanism to eVa!llJ.afe~lh e eU~cien· 1;1 0'1 the liq iii iel ity P rov~der, tUl,e use r of Iij'Q11i! ~cI ity and tne manlage r ,Clf IUlHls, A Ira nsparent HP helpsevalulaJ'e ptl>Gliilij and the pewlo rmancs ,al!:l1ie co nltri bIH:Of.

Bnn tli!~ ~~Iligasuhlallililge is m.ana~ ~nr.l .a IUlifllk's. risk i nVQ ~8 d in rEs Gap ~ta,1 pr'~~E!c· UOJiI ,~lIId fUlI1d iil{l of its b~aJ-

ms,coll1tli nuation of fo rward cav'ar to r import Is nota market friendl!y mlove, as it has adlverse~y iimlpa,cted !:t1Je iimJter~bl,an k fore Igfll ,Bxc:l1ang,B market a n dI money m a.rket.

s:Met. lI'ih e.tefm-e, 1M hi lilt· t~e f] (lit aheasl!IlY i,s ot cw~tica~ illI1llP'1] rtalllci: reganHe S::> of tM tylW~ .of i:n st itll!tion, ~,e tl f~uilcia I inst~nJti [lin, ,C[I rll orate () r Glentra,~ Ml!fllt

SinClEl mUlllg~ng a liIaJance s.neer ism. Iluue res po ns~lbiljly, almos;t· ev'ery Ihamk orfi rll8! i1IC ial ~ i'IstullJt~o 1'1 Ii as a eo m mittee, 1111 hk~h~s ()o,mIII1i4)lnly known a.S ALeO (As.setliUaMity Ma~agemenl GO'IiTlIill,iU0B), U6 'full CU(HI ,of AlLeO is [(I to ~mlJ late a risk ~1!I~dI~lrlll'6 thai ·G'{)1J~d t~k~ c!ecl.s~olils· ,~.ndl nHl.nag~ ililvjl$tm~nts IIml associ.@ted fi:;jks i,n IUIil~ w~tlil lli!~ illThjet· th!"e S ,ot the i!il,s;jitultio III.,

COIITi me:n:~~~ 1:I<li1i k'str'Ii'aSIHY per~1)rms sev,ersi Key h~iii'GtiQlns, Wlh!en (;illl!ild incl ud e DHlnag:ing: o,f ~~Q lli<litv Q r 0 ~sJh 1iI1(1 11111 ge IIIl E!!nt amd man~'!Jing off ,exctlaJnge ra!te Tiislk, FlU iii d liIlJiln <I!Jemlllllt tis amrl:her key anlaJUila[ re(j~ires the treasuwy t(ll Ii mactlve lev manage .so 0 (~. tl;l~im., mle!diurll.!te'FITl and long t'E::if1ffl il:lv€slm!!lit and nQ !Jidity roeq 1111 reme~rr;s.

Fmlilll an adivisolry pe r$!)!1ictille, con]mercial ba,nks IHl1Isl!Illles a~S[l Ipmlfid<e SIJ pPlor~ tli) co rpl(l rate fiWia,nceiln~ Ilmvidie unpl!lt on mler,gEl~~ an ~ ~cl(j.Lds.iti 0 Iil® !l:slId a h:;(jl w~en decid~n@ 1(I'Il ca~Ha~ s'l:rrIUG'l:UIWBS, In aiJ{lmoll!i I UaM-

alri (;Ii 's hieel!. ""1~l1Ice I ~'hler neas· Ulry head h~s ,ill h~ge ~esp~ln· sill~mY'1 11s th~ tr'lilaSluw~r, hleJs he h<l!s t.o ap~ay tin e m Ie I~I il. wart(;hdo gfolu filna.lilci,il m.anauementUl s.afeo iii ar~ t~~, Daln k's f~m.m!;:~s_

Tre.ulUiry head Il'~ a !J,al1lK hras tJ]l lliiIaHl~!Jt! alii types ()~ risk wll leli! cou Id iM~lIdI6(;1!l t· !'elilcy rfisK iJllt:e rest rate risk, Ii qiU i~ l!y risk I) r '(;n~n risk.

Sim ViaJll' , Iii! ~ Gil! nl~nli~

!Janik' str-ellrSIJ ry P~<lY!'; <l vlta1 r~le in the de'llelo~ rille iU ;lInd S 11m ootl1 fu nctio1rning (1'1 the Ci(I~ nt ry' S f~ rli~!I1 cial syst:elll1. ~t is req iii i re~ ito ens ure Iha!t it f~,r rill ulaltes s!!Iclh a poUcy mix tlh:a.~ it is a.~le t))I CJ)lntailM ~ I'Ifllatlii(In, Ill1lail1lta in price s1:abill i'~y JJ](i I~el p bo:ostecomHIl ~c g:rlowth.

To Iilliak9J it !Joss.i b~e, the centra~ ba!'lk s 1110 1I1d lise its mOllet1 ry tools ,enecf~'I,Iely. It is e'Xpeeted thaj l111e oe nlha! DaJil< would Msi!i!ta i!'l slab Ie tOlreig Ii! eX()h all ge ra~,e aliid the exc Ilia IIlgie r·s;te ~ 0 I icy wou~d be COllll.Sistelnt to :SI!I!J" !:If) nit m;:~(lirt g mwthl,

COMM"];AlCIAlIWK'S BlIEASU RYIDEAIJIING ROOM

T~eas 1I1'"j[)l~a~in g m,mfl ©i clJmllf]eroia~ ban ks, ~ lay~ vih1~ t~ I,m, as it has t,t! m1iHl age bal1lk's. assets ami Habl~ ities aillg tD pln::nt~~U'he iif]s,titUlHI)'1iI rlf"O rill i IIItere.:st n,te arid I !!ilul~d-

ily rlsk, IJQllIid~tymanage~ melilt is the key to eln S-li! re thOlitlu nds are av.a~~ab I'~ liJl meet the ba f]k's oblig aUo ns and to liIl.a.i,liIta~ nl m~lII~ atllry reserves 8 n~ I ~CllIid~ raUos ,.

lillie i'l)b iillo~i.Idles m1l!xim~$~ ina iJian~'sea rill ~nglS: over and SElf\!, lei rlig ban k's re ~al~ I] nships with emd€nt IPlficiiflg (If aU 1~ p rodlucts, be it fQl1eiglll .6xchiilngt: I ~6 POSi,t, 8:dv,anlG~S or pe rta~!i! i ng to fixed hlCO!if]le ililstru rliIf::l1!ts. By virtlle ,jJf ilS trad~n{ll a.cW/~tlie3 jr'~ tM eustOIiTl e rl!o\!n;: I 'Uu',e ur,s-as.1J ry hlin cUI) n : s exp~ctecl to~eld tl;Dthl\l "i IIIs~i~lli:ion 's I1iQtttl;lmlin,e 11I1i11 to e!IU~ lire thatil.ll~ ti~anlciSiI w~s,k' is, ap~n]ip ria.tely 1iI11~,I1IMI(l;(!.

Dial tyC(Ull menta ry and m1.l!rkilt reaort '~h(lluld ~,~ I1I1lacle ava~~able to the eustnrne I's,wh [;~ h wo l:I~d 'llllihe r stre 1'I~[h,erl '~he re~atio I'Is~1i~ between ~Ile ba [II; and it$ C!!!Stoim er. Ire;as!llry 'r!iln c:t~o ns sh10u f.d be Ibroad Iy seg r~.g.at~ e.~ .:3i:S til1e.corpoifMil d~sk pl,ay~ a vitia I role. It must ~1iI su til tM.t lill ~ ,custo miH r,e~ate ~ trilmsaC!~OOIIl S !Ire prQ~errry dephlyed ilr]d maxii .. ITmHIl re:t~HIII is e"XUIl.cted W~lih r;:a~[)IiII:ilt:ed risk ~y the .AlM f[j tid i rig de,sk lIceonll!lg t(l the ALGa {lu~dle'Une, which Im:nks ,a:n~r till ~ I:11liIU k's ~11~' aJ1Ce sh,eet

ROLE OF SB!P TREASUIRY State Ban k ~f Ps~i$ta!'l as ttle Cfflililfml btwko~til1l.lc,[)tJ fI~ ny W(I rks illS ~rni I'Idellendie rut

enes la tbat 'l~cC'llliU<rali Mnl< is the reg-Ii! ~ato~ arnd SII pervi· ser ;ll!l1d Ih B IiIGe, has 1'1::1 [ffl® Ulre the s m o,(J~11 fu !i'c,thJln hi! 9 of thelin~nG~lI~ masket, S8 P has to maike !ill re thalt U UISe:$ il$ entire !lvda~~~ teuls li~J;I (I pe III Ma rket OIl,ef.3Jt i (I ns (OMCls), tiorei,gli! ¢,,;ch,anne ae~i~~tv a nu:i Ir'IlS~ r'i/~ rI!Q nJ~ r~· me ntenee~ively.

SSP's tfols,asuwy dlep.amll1!iillilt IS p laYil nI~ a, key ra lefor the diiV~ IOIIi menll of fi naac rill~ nm rkets· III at IllaJS p rod lIC:~rJ po slrtrue rasults t'l) !I grei;l.t exrelill: !3Ind has Iile~ped~n tlile p~ri[ld of tI~Str:e5'S. lts in i1~a· tlviJ wril:h .ca.r~liId!li(iI2;alh:frll 01 qOlliernmel'l't seeurldes, re iOpe'l'Iilll g [!f JP'11;S,t i!>sllI!!S lis 11 move in the ~g h"t diilrelCti on. Ele.ctrQIilt£; bond tr,ading_ pial· ~olrm wu in~rodllJcedl to i!l~ rease t I'adi lilgi ;lulIi'il ltlas a~dl l'Iwitll!Jl~ngl mor~ nanspll re 11:cy . 01' ~ nrli[) nmatiolil, VIii! ~ch ~s yet to rnak-c i n(()~u:Is:.

RIGS syswm tHealm!'IH1: (i mss 8&Ui ~m~ n:f S,ystem) was ~alU n'c ned by the SSP, wtl ilC:~ 1l,~camG ~itiIlY I) pillr.atll/6. i rI Ma rel11 20 09, and allows di re'c·t p.ayme nt tl) oamks i r1steml 011 cl1eCllles~or ~ !liter- 0<1 nk tmil$aGtio n;s @l:Id alii SIMa~ tlry transacti 0 nS th<1.t has certa~H1ly bJI(J:1.!ght em· d.e m:y into till ~ pay m~ rut sys;· tern,

Wlhi~e, ~ihe eC(l'IlQmy wa,$ ~'icing ttar"dish Ipis dom N:. ~ mp i rll,or.e igin i !1\1'e~tme!lt~, I~q' !,iid it'l co nstra.ilnts I ~i$ i iii!]

[ln200Q~, th'E! intelF~banlk money mar~ ket 3etivllty co ntiinued to hover arou nd th,e tm,dI~IPoi I1t makiil1llQi Ijt lifl3St attractive for trading purposlBs

elilW:Y lhat- is resp[)n.s,il~le tlJi reg iii I are ~JI the m (m etary and erred it sysle m s of the ,Q[)IJ IiItry tQ~rJSEHll stab~! ity in th ~ ec omm-qy. S 8~ has a, b(llsJd that f'ClI'Il1I11iat~s m (I lfI~tifY p'l)l~QY a!ld crecl~t IP'O I ~cy 'Mtih ttJe~oowd i rl<lltillllll (lr M i IIII:st.)' off fifla,nce.

Like a Il'eaSI!I ry IS mle W~lhim any ~il'lalilciil~ i!1s11M1011l, the ee rlttral ~aln Ik as wen plays vflta~ ro ~ei rI ,e nsl,l ri tlg stalbUily iln~ihe dOlmes·tic nnam:ij,sJ III1laflKct, Bill tlii® iiiHljl~r tlm~t~

i n~ll~tu~iIiI <m~ Skilltg ri;nll/ij] , 'S.BP il1tood I!iDe~ti. G~ nHlo,t wUh ~he 0 b~ecWJe of pmv~di Illy [I ~portlJ I!i ily tD an Gil or ~Il (I rt·ti:l'Iin hntew,e<s'l. ratl.ls,IO help !lXHtJII(II the yield cmve ami im pr:Dve Iill (wetarry po~ icy triinsmijssion.

a{;tivl'l.ycL)lnt~ulll~d ~o h ov~r arou nld the mild~poi!'llt !ill~"ki IIg it ~~<1S1: atn-a.G~iV6 fOlf tra~ i flg purpcses. h had laUedtol de I iver the desired res UlI~, !it'S there is no .ge rMJ ine ~i~ ui{lity in tlh e' IiIll(lrkllt, :s Ino"e' th e ~ep msut l1I>lldi dif~ed i nl 'in e absen 00 Qfheslii [l11t)11'ey,

Fill rtn~ rmo ~Il.all the aV[l:~~~ able liquidity geJiierated In r© ul{l1il int:m re-st aeerusls is e;as~~y abs,owbed by ban kste r th,fj ~ llfth as,~ j)lr ~ OVtlflil f1IiIM~ sec urfiUe:s. whiich O'rff,'elr ~ U,Cf'a-' '1~\I'e rstu rn, Marklet estimates a~e[~mt tl~e intelr-D"lnIK tn.ding v(lll!lmef,~II! by arot.!iIl~ 36 to 4n pewee flit. Th is ~s ~ Llit~ a s:e'~HIDu s issue, wlil icn req l!Ii res immelJ ila~l.l~ aU~lIItllj)n.

So f1I1!e More measures takeill by 1M SRIP <1!r~ dlll:ilatillb~lI, lIS they dO not ~uil 0 Uif malrket (;[llliditi'I)"~i~ltu:JiI!lghl ~h'6 Ge'iiltlall banlk may hai'lre a d Irte~ent persillemwe. [H&[mntilll~,atill)l1I (;If las~ nTIll)liIllent umlestm8~t with

~orward cO'lrer fOf ifll1ipmt: is tllei ~ e~c-ess Iil1 0 nley.

rWlt a !'l1!arket rr~e nl:l.ly mllVe, as

ifne SB,P' s,hauld C:OIIilSidler l'l'welrin'Q

the flool!' to 5 pe!n::!fmt to matchl with !PLS Rate,. Tihliis would! fon~e barnks t'll buy g ovemm,ent securitie!s from the

jint€lr-MDan k market

h ha:'3 iu;li\l\er5elly~m pac ted the inter· oal!ik f© I.Elig n [l:XGtlal1a~ !if]:a.rket a,lIld m O!i!ey m-aJ~et d lie losli!a FiP' fan In fOlrt: ign exclll3nge tll'ad ~ng v.o~1J me.

lihere' a I]IJ Id be two reaSOilS, ~ecau\Se !SN) 0 i1ia~ter ~ Is~ co ntin !JI,at~o rn of 10 rward co'O'er,.SB,P was a~glr-eS$ijvely ~iilg aged in@ BII~fS~!11 {IS'S) swap an~ rlorwa~d oUitr~glu tr:ade s. SIcS: swa p m ea~ s inj8c!io,n Il~ Rru ~ee lilj LIIid ~1ty in theillirew-bafiK m..ark,et andl it s<im ~ It;~,li!eou:s Iyfdte~ s·~h e (:l8I11tra~ bank resElrv~ P~$ itHon, fhl~ j),rtteri'aCUH i 6 th@!l S B·P B/Ss;w~ IPfOlVi d.es cl1,eaprlOr-· wa rei ~OV(lIr~Q fo r~~ rl! 'CL.llrreli!~ r::y I( F/G)o [0.0 ~rmi,i!lir~, wll icl1 c:o~ Id be alill'lually 5 ID er'Clei1it ().(ilsUier it cwoss b.o raer he.tdQl!JI is I[)Mag necl d l!Ie ttl c() U!ntlFY risk allldc U1stomelr r~s<k~

Asad Riizvi

oil ~pv6m· nment s(lIcuntie:s·· 1'l)we1l", wh~ch mll~8'S iii· oeldremEl~ attr,a,{ltive 10 rthe il'al]KSlOI irnves~ ~n hrill'

rf;s!k papers alild thus i"r].trod I(IC· till n o~ corr1~,or i I1i a ili IgAer i ~we s:l rate s,Gell1awio is a lJ~es-sing ~o'r ths btiif1~(,

Go~rrudO r h~ aiso one o~lliie nlillldllfl ill~f,ll!c:ttir!llolr thie- fai~· ure Itlf E ~eet ro n te IEI'O J1d Tra.dilng (IEBNJ[l), as baill!:s Il!ave a fll~lor ,avan lablew make

l~enl)ll, iii: is :5u.gg ss.ted . tlh,a~ SBP shoil:l~~c'l)n$id'er IQweni'ng thJ!;lflQO r to '5 . percent to ma,tch wit!h PLS Rate, TIi! is W(I'1i! ~dlt() ~c:e ba!1Ii>s:I(l1 buy Qievewmne!'llt s,ec;urities h I'Ii! !I~e In'ter-b,anll market and EBNIDt~ad i FIg wm Il,ick UIP, Or SlEIlPSotwlII ~dI r~:se tilTe P LS IUololr to 11:1 p.ercent an~ mai FItain ~dI~ lIst~ rlg '~he atillal1c:e/~e posit sp t~adl of 4 perc'll rut illl line wiltli1l'i isto'l!lnt r<l.1e rmOIii8- th,1t[ w~~11 ccrtlllirn Iy tl!mlP,t the d~podolr, wilich will Imt ()11II~~f Sl;l~ 11 halt i !lllliill rus,e, I)f W rrelilcy in (lin;l)IlaHQ nI, Ol!lt !{I,[m.~ Id! allsu ~n()o t1rag'~ the degD(JlsitlJlfS t(ll [lilt l:h!,'~r !ill cmey i!'l bank's tti.at ofM I !.IoHlilwe retlu nl, reSJu ~ti!'lll i!'l a rise in

Th ~s was- an l!JHlece:sssIY CQ r~idm as a mO!ll08tary tOll)l1 tihe natlo'i1alsa.vingIS r~~il(L

rlJ"iI[)ve, 1111 hiclh !j,aV'8 1iI1!) rE!S!) ire cou Id 01111\1' ~GslJccilS$fu I in a Tfle V'lrilB'r 'S nil} CEO lIf

,:iilfld ~r1S1ieliHI cnl(lked UII,e ~i1/ter- zero or I,ow intelrest rnte e~wi~

olln ~ market. [) ~S!) iil:e h ~g h i fltere's:1 rate en \J~ mwrrne fI'~ (lIn dI w~th a 3 lle rCienlt spread., thll [inll.lr·l~alll~ lirlO ili~y lTI!l!rio:Bt

I'[Inlil1l~nt But ~1iI P.a.k~stalll, wh:ere:ttJe diisCJ[lUllt rate has bl!~1il 11lov~fI1ngl in (!~)illlb,re {jig its M tAe Hastlouf yea rs. V~ ~l1ld

Currencw Markel Associa'tes ~ .1l fil1.Ulcial sewlcos co:mpa· n_y.. He (Hm be reilcheG Ilt Bsadrl:zwi@gmaU . .GQm.

1!:i "

[NTERVI EW BR BAN K~N G REVIEW 2010

- - - -- - - - - - - - -- -

I)ECEIMIBEIIR 3~, 201(0

Finan,ciall incllusion holds the key

An inmNiew'witltJ SUlMam Aijil,AJlltiml1l eltJailrml211, IHBt Ali Kihl!lar\& S~Jal Famrad

[Fo,t Allllana~ finmi1J(~j,al ~m;llls~i:on ~s th:e Ipana~eafbr €'l:lO n omm c ,Q FOWm Ii n IP'aklSi,an ". Stir'assi ~~lon~b'~ S\!lO,m ~,ee:t, ,Aillana po itnts out In dwf~ nan cia II i nclu$ion lis impewmive fur ~ it£re-.a!S',mn~,;t the $aVifllQ S w,ate. II n th is, lihtelfviiew, he ,al sota~:I{s aboJlJUh e

BR Res.eSlr~l; What !IS HSL1s s1m_ililt~e IIllFBSeirrtidlillllsof ec.oruamiG iii m.t:ertlfililty'.l'

SuRill Plm Allan: We are©ptfr mji>1!1~ ron th8 lo:ngJ-term (DlldI~()'kt glivenl P,~Jkisliillrs reSQluroes arn~ the' m(i'Jlil fur t@IIl;' pijJ~g t~e e-Ixm()mic:: po1en:bal. There m'ay ~e sho,rt.!~e rm issues; hlowever. tliJe~l!Itulre of bllink~n~ rn Pakistan !lp,p:ears P()s~t~\le.

HiS L w~111 r;r:mtiln u:e~o I'llOIl.ffl fm'Ml!td· on im g!powth 'lro!!ioo'O,· ry atn~ is f1IGW wen poised to plU rSl!!e 1iml.n,cQaJ incl~~ion in an aspects, Oil! llie a:"Sset sl~~ as ~veillas the Ili3bUi~y side. :and also. ~I'! 8J!Ilcillary blu:sili!e~'Ses, sLIoih 115 illsl!lnlUI(;i8 and asset Dnagemel1t To InO{llH1SS aJS a 1iIMl1~jn we mustWh iln~ i nl te~mS! of ~iHlanloia~ ilnchlsiOH;rnd !HI Bt is d!eV,e'loll:l~.g! a pariilcunar focus 0111 fi!iia!!lcilll ~Ji!dU1S~Qtn.

Prll)ntabm~ly is 1m pofitsJltl'Or us. blutfi.mI rtc~al ill(l~usii(m ~$ llar~Jllol.i tl!l'; as tl1l~ ~argfl'St bain~ wij[ll 1lItl exten'$~ve t)mncl~ l1etwo'rK~Aat has a pre-sellicein ~he I'ltrl1otfi,sl ~i:ons !)f Pakis,tafi, HBL lis. obllg,alt~IO dMtwlF fin.alf1{;i~1 f1fncll!lt.t:s an~ M~U= til[ln5 fm tilT,s b.fl!n,sfitt of UIE! efl1iilm slPe(ltrum of so{]ie;ty. il'his is ililteg ran tn the futu,e -g1llo11Ml of HIIB:L

r~5!!l1l: unl 11 igh,8lr rewu rns, ~iiJt II filililk itt is (iIU r mm:al l[ltlli.g!~lt[(;m to \!mrk fortihl'l b~i~rm:eillt o~ Hre 1l~()I[)II.s· ,asSiUillh, 'I'm arB 'lu~lly ~"O'immitled III 1itl i'S, We wOllllld lii~e HIBL tlJ be' ]uldge~ riot on tI1Ie iotilsis 011 .o!llr eara-

'f.a:Hi\la.cIilM areas iwuto 1I1ie flllml~rall1l;uiD~'

SA; HBL's Inm~[jrk cO\I'!Bl<Ige, wit1h .(lver 1 "Hm ~ir,am)hes reacne'S elrell tihe tnlr<lst rura~ popullat"itDIl in Ihe 'OiOliln:tW HlYwev~r. the seecess Q!~ this iWl{jIS ar1!~ relilJ rns ium on what OiUtI'ooch is~1in ~eolP'le also. we d~liN~r to, tnlll !SOG~lij aft~ sholJl~~ wise the ban!i:iirljJ. system

We are look:ingl at expand~ng our tnsursnee lnthe elm'erg~ng markets. So !lith Asia is of partie II lar Umt,er'es.t ,to us; we Sire als'o lookJn!g i IiiIto {~erntraIAs ia.

(:ons1tanUy reviewing: our '~II. S- M· -IE ' r t '"

SAo. A.lKIFED LiS a ~Ilrnd, which ~ .... il; !s a !)ormp!oa.l\y

bralilcl1l foo1pwi ruI: 1lInd lM'e COA- tQ,pic. il'ihe p h,rns~ "SIM!:.' ,

~()iOW3 o~ !')!U r fl)lle. Goili1g f~ r~ n:eecls \(1, be re\'iiewed - tl1l~s: is,a, W'llim" WEI in~Mm set. I!lP new ve:ry wld~ tfiFm, To 6llplairl. brnnc~es where lIIe~ssary" lin add itU(l nI, Alt:eflil1lit~ IDIl.I ivelY Gl1raf'l1l r:: Is, ~ FlOC), am 1J.il'~liIg acUve~ plU rs!U:ed as ill sWlteg:v ill ~rdelr t[) ell h'<lfl!oe I[lUlr oO"v~r~ ag:e,

.BRit Sllu~a,~henpeopl!l may lIIot bl we'm~&:rsid wilh~8iCb~ lilo:i'.Qgy,. wlum !el,!\ll! Qf ed'!!tca1i~li1r . ,and tminingl Wiill bo looe~a~ to ,achijeve~liIis?

SA: The "'hain ilngl myUfj 'las

PEl()!Il[le.

iIaiRFI.: il'sUil~ls~!I phllosoph,y o1'·Ule Alga. IKhan FUlild for iEa@f1i@mlC D~vej(lpml'ln~ {AKfUl) or tile !JjGiJemmell:t s~arehtlldef.i·?

ilnv~ts in~i'IiI~rg~ng i'IiIOlirkets atild Its role is to prol1l'1u)ite !leo· nr(llillic tlervetoplII'I:e,l1t F~nanciaJl

ill1c!usioll'l is vel]1' !iflUC!l lpart OIl [ltlr st!l<lteg~., Ha\f~rngSllilf ~nis" ~ \!/gu~cl <lrcS~ $ay 'li'htd th~$ oOjB{]· tivi is aUM tOrt !~f tlleQQ'v~:rIil" i'Il~mt's thrtnrklllllg as; weill; tl1e s!eiP ha_$ lO'lllg beeill I.! rgiflg for more and lmOtr~ Ileop~e to be ilndil!llll,,[J ill lLhe i)aJIliking lIIet· wot~. W.at.M1 Cilrd: Is Olile suc~ :s!eP ~1'l[llla~. d IrreC;tiolil,

~In my OI~'ill[(I'fI, HEll's fOtlllS IBiHR: What l1Ileafil!l~ei, ave yo~

011 firnalf1cia~ iin:cl'u:sioli! m!;l'Y nrell m[:(Jngl to il!Lcil!n~e jmlilpJ"emmm

• th~sis: .(;lriHtal fOlr its S!JJ(;.cess.

lit is al50 impQlrtarrt to reac:h out~[l lp1Jople i nl the l]rb'~iIl areas, panrcu~arly those intne IQW"-~nClo.lIIle tua~!liet~L We ,!re

beeliieliminatecl b.V tl11~ Olut· reacn ach~e:ved Ily the ~e1ocolt"li1 !irrl"ns, Whern tel~oolfl'l csme, e.vllI1tOn~ W®iIldlilltlld as Willow thiW wo,ulljl O'P8!Fm ~r®SS ~~. ~pllctrl!lm of tha 1l'I:DIP,ulatuOflr. Now no bcndy ~luHsti()ins th is. P'eQIP,le are w;;illllJ ce'lllllhlones, to tOIP IU P Uihe.ir aCPl)u!ilts, .sen:d SIMS·s. ob.taFn ooucatiMan:c1 rDledica~ asg~s1anc~ etc, Some .are flOW aliso IU.Sii~g mobile pn{lli€sfm rum:1 trnnsf~f pur. pesss.

~l is 1ilnue that ~rtli(lur;t ~ffer' iil'!Ji5, aliuJ s(l~uW:ms wi~1 h'1!:I.IIH tQ be 11Ili~J;le sQl1llrple I ~N,lt ii' 't[lU flllalr<e th;e iIl'rod~ct u~~r'flriend~y, peopte wUi 'u~e it Case in PO,illt Watal1 ,cmc.i .. peoll,le iilre lIlsil1:JI the cardis, Malking tll:e pro{jI!llC:~: isim pI'!l an:d Ili"S.elr4rfilirnd Iy ,Ci3!iil h:siIp blnlng 1i!~®lutflifl<lim;i.ar1 inch.!" slon,

TeoillilollJ'9'Y. iim om view, wHIII plla.y a key mle ·,this w~111 elilablle bS!1ks '00 d:eUver il,rodlllctsanid so~utr~ps \lIide~y arid eUeotwe· Iy. Making Ibr,Mcllles an:~ CIUS· tome~s' ~xpe~ience elfi.c~em alild user ff~~d:~y is also ~iliPOf' tillilit' ~ we haV!3:stMte~ a pmctlSS w!hl'i re we. ha'l'fl Ilmgagsr:l female stilT as~a1ler!l illso[)m(J nt nar branches;

Hlis ITfH~!lSIU re has resded to <l.gre.aMit fl:o-wGf female custUrners-tO' Hm brarno!hes, !IS th~ !elt oomtol1talble in uansacWtg wrtlilfflma~(l staff Wih,[) ad W81~· trailned ,~)]:~ kn~wtedgeab~e-.

IIRIR: lert'.s m1k ilbo!M ~he SiMf sector, Banks a~e CUrirlllilti~ c,Or:lcm1nl1inmllollll big. Cilill'pO~ rattuns., aJi1dlU!~t has s~Ji!lewha~ !CITIWd.ed out mil.!! SiMS sactor. IHow d~~ your propose lor.! adl:l~ess mls Issue?'

le\ie~ ~!l:de:rrQl at iUlot~e-r;s.omer wmStart a~' a IOiW·ef Of MgrM.r le'l,ll~~ etc.

~~. Y(ioU do a s.urv~y of [}afi:ks On tMiw limits of "8" snd "M" ([11:11 you willi most lliki!~' get I',en~ (iiHefMt ilIflS'Io!ters. IFor ('>[l1iIl1ll "8," be9~lls at Frs5 mitIkm Ollila ends at As30 mUlij~f1, !IDU omers it be.!Jins at Rs'1 mi~ I!on and -ellids M: Rs1 I) mmio'rl. II leel that tl1l~s Wide de~ini~~ot1 (;r,ellt6s Stmii8 t{mru$~Oln and pi:rfila~s GrelJil@s gmiPS, wi1icih es~nHa!1y d!J 1iI(l~ !Jet JUii1l.IiICled. We nsedte, th.Bmfme. (I,g.uelOIP ani inl~lu~r:f'liJide dEl~inill:ioill of eadl g~gmellt, SOl tih~j~he bankirl~ il'ldustryis81ble tD ~roF \rf,de ,cove'rage 'l1O thiEf ,ellrtire SrJi8c:limm,

BRR: In your q~!IiI!OIl, Inm wo~~d YOLI ,~e1Ine~~1I "'S" :s.ell~ mSIiI.t.?'

15k iel;lliinli~ally, tM liS" ~h:llu~d $irt Where~hll micru tafler$ ~ff. The baUlking! iln!i:lI!I~ try as ,a Who~e: ·SJrt net ill tb~s s>egmenj~ in a me.aUlinlllful ws;y ~ HIBL is worl1i:iin:.g 'l:{fwaJvds poor \rid Ilngr c~e<IM to tlll~s,se~me:nl~ iil a systf}nmll~c wal/.

Most m tltB~anJe !lank·s In F'.aJkistaJii·r iiil my ()!p,irllo'rl, am ~lIhal maybe 1termed as ~SME" but <Ire essemiOlllly PQsitkmed ill t!lle "M' 'seg me!'lt; start~n9 ItiOmthe mid-1M t'Q the hUglh&M, U1ey're rmt onl:lte ~ower s,ide of 111:e l1lil1{jie eilil1er, Fo,r USlO, be nbl~ to C®Vil:r tIllE enfirrti :spet> twm, W~ hlav~ t~ MMI CO\ilBlrtM 1~'i'lJtr "'id~ of th,8 mn:g~.

Wil1i~e tMr€ are nmitaMniS, or perha~s- .coJnrstr.s}llts,. Uri the "s:" aXta. e.g" oiler ~S: ess~~alily W~[t1out MY Ulirlglib~e socu ri!r!/ olr ClDlllarteral ~I'l the "S" $ide and

~f a ~wller retQ~ei!Y prl,l"ee"ss, IBRR: Ganl{lJl.lIl elalbQrnre 0:111 IDe Sillilatillfl [It o~l!iliaralln Ute S part 1M SME'I

SA:: lin oUlr ecenom Ie spec" trurn, a ~ersonr rnaynot ha\N;! Ilus~ness re~a!te<l assets Dlut they ms~ have ~erS"o!Il!~~ S$s>ets sU!)itJ as I'esidflliltia[ p!1[)~erty or lana, 111 other ccmmrtes. such IOlrm o~ persenel Clo~llaterai f.s UISed ., ~nfOmlabulity is key - if pr9>ce'ssesaml systems ere streI191Ii!ene~~O"e!1ab~e I;jUiOi~ ail ~ timely ~nfQ rcelmi;llilts, t:i~Wllks m~y IlIl cOlil1irorl~tlre in leJlldijllg,

Afi(l1ihe1r asp-ect wilie!] may comnbUM andrllicmtlfte~n 1lIle (j1,eve.lollfl1efflt of tlie ~S" imiCI '~le lo,wer'6nd "M"s~gi!l1Jeints is "tihe 3vairall,illitty af ven,tu Fe G.apit-at Ulilforitl!lnalerry, WI;! dOHl'~ have i nrstitJUti![lrns i iii tlhe: (iI)lUIillry whioh !l,ner ~ is form of 5ur~' port.

laRR; wt!at a_Ill yo'!!!f views O!l1 lI1Ie sNneugies bat'weefllNJU ;emI HBL~'

SA: There isexc:elr.i31111 sYliler· my', Toclao/, Ihoo,u!QIl JCiollliilt)IOr.i.· tiOIil, VJB aJn~ Qffif8rillg:mml'ic~, whic hwe .tOIJ Id rtt ~iiI tn~ Iliist. e.g. li[f~ 11m! h,e!l![1h II1SUIilIit'lil: to [ll!Ir cl!I~[)lIIlers. llil ~l!Itl)mt \lie ht~lJe 1Q be ab:le t[l Ibrilng 'OOnl\lr QII!l9,lity of fite pmr:illll)f$, e,g. edu~a!i'o~a~ i!!slura!ilce. We d1o!il'j have!U1em yet. but we're !(lDI<l1Jiig inll) them ac1i\I'Ety.

IBflR: ¥Cilil haw a ilireseq[lee ~III liIiIilny ![lOl!liltli1res,. WheFe IIJre you pmlllilh:g'to ~d liI.m:i'

SA: W~ h!lv~ !l! s~,mla~l6 p~~S8'n;C>fl iin lila G llif wrnB f~ IWl ~aVe t.lrnfLcht~s ~flthe UAE,

We hope to be able to IbrhimQI other QUJaJity 01 ilife prolducts~ e.'g. ledl!Jca~iona,1 ins,uranm:lJ.We domft Iha.ve'thelm Vletl bllfl[wB,mre Ilooking i~to 'them adiive![y.

thle lowerernd ~'the "M" side.. Ball rain ami Omi311i . s'o G~J II is we win have to find urmov,iiltive <i v~~v ~liI'Ip,ortam ,clllster h]lr us \Wys W ~ddl'eS:S this mrnitmnoln, lW(j WB willi 'CI1:mtiIlIllB to Otheuwise, Ol!'! a lili!ti(l!il1!~ Ilewe~, Bl!:paliirJ iiil this r~g~mtW6 we rnao/ nm b~ iib~tI 10' '~U Illy h!1I.Vll .~. so Iidl ~;m:lse[]Ge iintliie adldress Ulle nleer:ls af!il1is se.g.- UK and th:at pr:esen(:e wm m:ernt Th,e:rt: are alSQ' ~ss!Ue$ of g!rOiW ber.:~Jus'\1l we ,are' em balk" ~GJJlmy ,and ot ~mdlli)18 lun!1in' i ng l)I!Il i!1Qrg_,a nrie {Irorwth. the ciilll:SatH:I aJ~o, i"IlIaJnyt~l'Iles.! ~a..ck Jrclo-~uster ~:s. SOIUthr As~a,

16

m~CrQ·bi!"lI:;i nl\J stam at,. say, a As50no h::V<B I up 00', say. R 612 00(1,,0 []o(l- ~ s3 (I{~ )JOiL TacnnlieaJly" thieSME SIl.'Ilctl1Lli'l1 ,sho'ul[(I ~rlsfulnhat alld OO~·

tinlil!'! nJP~o v~I'J(Jrn ttJ~ DOiPOiffite sedof beg iln:s.

B~nk~ inOOlipret t~e category dil'el"entfry, andl h'ill.ve vary~mg 'Iim:hts fo'r ~he. "8" pan Illild~~1e "M "part ~1i~M SMI~ -spectmm. SOf1lilil win start SMEs ilt Oln~

I!NTERVI E_W BR BAN K~N G REVIEW 2010

- _ -

DECEIMIBEIIR 3~, 201(0

wh~Gh ~nC~iU!ijes IBanJgladl~sn, 80,.'i'~fi;, wh~n eC(linJomic Gond~." KIiI.l!IshmaJm· blllk; del youw~1iI Slilibainka and Malili\!'es. &1I~n:, tIrlns aflll ~e:tW1 and tlreto fs m r~ase: YDUf p~$eililce llil

SJgiaiiil, we are glfI)fIl'lIUllgJ_ g;rOWith. W.J;l might ~~(Dk untl) it ~he mlCliIlf,illMCtli iMustfy?

ln ,@~di~li[ln~oth~~ dll$Ulrrs, IBiRR: M,lI' ~lallS- for aC11li!limr~~ SA~ lMicm 1:i:al1lkung is ,!_Iii inte-

th.eBs !1m S{lime h 19 hog [l)M:I] I~l(s in iPakijstall?' (Jrn! part of fil1l!lirlc[(ll iU!cl!Jls~oln,

marnets mat we'Vie ~def!!irned: SIt Not at th~s pohrt ill time, :MII:ias lJe [-arges,t pN'I!'-ate' bi:Ulk' one be~n:g Cenltra~ Asia, aJld t~e att:hQu~h weare ahrlays. epanto iFlthe oountuy, we GaIilIl'OO teaveott1e:r be~tlig .A:~nca. OUlr pres- e)&lml~nirg OPID ortuln~e-s whe~ n {)iUI~ '~f O'lIr' p~J!r~folto. My perMoe tMre is nO'I ~nr the fmwr Of tney srlse, We ha.'!l'e a fa~rl:y sonal ~ew ~s Ih<M in the lon[

HiBL i:I!!JI:llimu:gh snareil1ol'(liIM,gs Over tliJ,e l1exlt 4-15 ''1. ears, u~a wo-rulio;l ha.-.v" a,

ilil '01lI1JJf IIf1I~m rtglolil~~ tiarnks,. ,",~n!l' !!J !,I

liihes.tl <i!ijllin <ire. Ihigh:-glrm,Pl'1tIl to ~ook It mh:rofinance ln iBl seneus man-' areas a:n{I~\fe ~l1Itendlifo filmtiler

so~~dHfy our i!li)!sitiml in th~ ner .... ,_ as the oountry's largle:st bank,

(lorn irn~ y'eaus, we 'coo net ,stay lout: of i~.

BRR 1[I~)fOO1 .to ~~I yoor En!s1i!i11iftee ~usf:!ilessaswellr?

SA: We are IOr(!k~nl~ ar frn~arJidin:g olllr ~IlSlilran:ce lin the ~.m~nglun'g marlkBits., S'ol!Jth As~a is of partiGtll<l!r huernSl: to I!IS. W~ rre also lo:ok!lli1!)! lntn CElnrtlra~

A5~a as ~he~e iSIiflI@!rkst demsnd, SI!I: We I!lO~ ill: ~~M men

large ~resel!loo ilnd are ,achieving rea:l)o!£lal'.l~egrowth - 8C1 tM~€ is nO ruslilor compu 1510[1 .11 Mi is S-la!ge.

IBiRR: 8111 YllIUI wm ~oo~:ilQ at fIBS?

run, te, i n ~he l1ex1 4-!}Y'eeJn~, we WOIU Id h'ave to look' M tIli~s iln

dE_cjtl:fi_~ it was I10t .:aJ goortlM: Il:lr us, f!Js I Mv,~ S91Ki, W'ij w~U look 1lt

a ssrlous man nsr 1).S lli is i.s v~ry much 111 psrt oi '~ililaitc!al ~ltcl'U~ siOlnl. ! il itnlk. flat ~ttl,e- COl!lln~ lll}"s la.ngiS$t i)~!fl~, w~ .c~mlirt !Stay 'I)m ant blft, agIi3HIii., Wl is is liny pe rcso!fla~ o,p~n~a!U.,

BRR;Wlilatabout',~Uldng '0007

BRR: Ar:rr; Ip['wn; (}~ Vllli!luring! illtO lJ!~illat9! 'e(llility "Inmds?

SA; We've been think~Ili~.

The~e was a time wilier! we were at sn ad.'!lal1l~~ sta:g:e wJ[lllllteil'I1lSiUona11 ~illlallc~all ins!illJrtlo,ns· for l:ilti.IIiIClilil1tg 11.1'1 ~nlrf@strllcitillm fru Ii!tI, i:ll!rtlhiB prn~etl tiM liIot IilIJ!.fe f{]ll'war.d ~8ilJaLOse I)l Um g~(]!b<ll El[i[)11I0m~O challemgleB.

l)~pm1l:Ulf]iliies, Iilllll: we'll ei;t8:IIlMeSA: A;~ some stag:e., Woe wm if tiIii~y add to, om 'fimn~Iil[~e vialll!Je. 11M 10' look~ atlhis ~M;uec~®!l!iiWe I\)~ked at RBS, .. aml·'IIfe came ty·ourr ~~rectklf1 isrnl)anciaJ~ to a co ncluMonll'id it cUd ncr!: ad~ iilcllusioJ1l amI:! ~ is ~s.aI1 ~i'lmgtM vallie 'to' our frnrndJ1~se and so' we pari: of timmc fa I hilCllllS.!Orrl.

dlld mol pUIt'SilIe i~~urlillmr; BRR:Wl'Iat m yourstlggfi$,'-

lBiRR: Hal I'ti$ a :stmka O!fi ~lonsl0r incl\ea!lin~ ttlf:·!Il'r.l\f_ngs MlQW 11'6) percent in the rate III Pakrsmn~'

SA: One w.a,1j is findIlcia~ incllllfi;iof~. Ths Gltn:ew is tlOGHI" mentati{l'n of fue e~[)IiI~my. II yo~ d![)c~nmelilt the e('\~III~my, $avin~s w~111 motSt Itke~y yn~w. Ill1mrvallive ~JO~lur:rts to fit d~1~ ~ereil1t pmlilles. is alsoesS-eIlt[\1I.

IBiRR:: Why im'tYl.lur l~eWa~ 1Ion high 'Dillie IlII1o,mtga'QIS: ,side?

SA: I ~lljFlk tine ~aws ~n Pak1smlil w~n 11ave ~o be tar mo,re e!IMMng to ~rlngl a~)iout am iitdvan:cemel1lt ~f I'I1IlOfttga~e ~ifllal1cill1gi n thecoulltry. The process or reposSegS~~'A rlHlst tie' sw~Jt beea.use ba!!ks wijll '1)III11y lelii<lif they aWeO!l)mliil)riI· alb,lethal the balfl k:s w~11 t)e able til rE!>C1)\I'e,r incase of (II de'flault

J\.n,Mlher aSi~c-I: is that ~Y.()U wM11 also Jiieed SOIU 00.91$ (lflo'n~" .t~rf1il rllJ n:tllng to S1IJ ~Pliti mOil· g!ilge filn:aJnoilllg, ~!! theaJ)selll~ ,of smJ:i1igly eJllfo(Utgal:ll~f,or:etlo· SI!IIf'e !iilhislIIn(! lang-te:rmriU n:dillgl. it ma'Y~15![l be d ifliGUl~t fur t~e 1'I1I~'rtgilgeiln(justry ~D deve~I[)~ in a meailJiin:gful~ mannsr,

IBRFl: IBut: WhrY arenl'tllOI!l aogroes$Jlv,s, II!ilJ C1!rn OO!iIlllno or ttedil ca~dsefthar?

SA: We. tlire ~here, bm .not IJery al](lir@ss.ilJllly. We !lire risk· averse, 1l~ll1lg (;~tf,olll.SllaJn~rs.

~Wi ~lIiintl® tltlsiln~s!;, Iburl: am (iauU(lU$ in our apil'~tiltE f,pr rl,sk.

BRR: \M1at is lro'I!IrVteWIUnr fh-e telld ofN PtLs?'

SJ!r;. My sense jst~atthe

I:Iarnk~n:g sector NPLs n:a.'ffl bet!J)m:!:ld oIU! 1'1,0\1\1" Th:e 1!rentls ~M~· tate that the 'Quantum of NIPLs is nke~ w become Ilower gloi~g, jorwaro. Tharswihat ~he trends are ~n:dioatintl.

ProfHe: Su Itan Ali' A~lana

(;;:unently w-rirkimg as thl~ Cha~ rm:aI~1 ~f" Hr(]~rLb Banik' Ltd, AJlllana has; be:en wj~h the ban~ ~,~nc(lilt W~5 ~wil~ V,a,tizB~' in- F:e,Dlmiiiry 2n04~ Prfijr [0 Wllis IPQ·sHion.:l he w'as~ble ClhJief aD e rat~ng C)HiiilC'8 ~ (Iff Nlil B I~anika,fldi a [)iinidtor' afll[Jroulrlld~r memb!6WO~; ~1t'Jbla~ 8Muflitie$

IPaj~i:stal1l Uti. .

Ar~fUil!a.. Wil1rO' nas'J]\ler 2r5Y@3tS ,of' e*peJrl:~hlce tn ioe ][1 n;ijIilGie an ~ ha1fJikin~' i n~14sEry •. _~!I:sa .. se rr\l'~s as _3 rnre'C~Clw onlhrs, b~a:fd o;flJhlt1 A.g:@ Kihran ftllnWill fiQr ECIOIli G 11l~IGDe\l'elopm e!n[ (AJ{FED) and ~sJ tlil:e Head Q~ 'th'EI IFinam:;ia] 'Slerv~tes" 'GlroU~, Wh~~11 'Q:V'ers~~s AKH: [l's hQldtln:o:s, in tianlks, n ®n-banking Tll1U.lI1l'Gllall

ins:lit!,1ttnns amjf ce- ,c{lmrr.anies, [111 So lI~hAsja.

aiElli'ltlRat Asbl and uriCJt ,- ..

S]nrce 1 9;®i, AI~a:na ~~s .$ie rlj,edlas a Di r~(:J:or Qt thfl IOllJJFiSm P~\!ml~tlull Sie~~]G8Jg IP~~fSitan Umllood. the· -owne:rn ~ifld ~hle'; opre.ratl:D rs jj,f thEJ\ S.~,re;na Ho~ls ltrl l~alki:s1tanr-a~d Il'las e8'fved asJhe rCl1laJ! rman off tl1l,8 Brst Mli~tf'oi lFjn~~u;:e lB'llWllk u mJi I :2006.

He Mro;llds Umlill!tglra:d u~te allid IPG!stg rad1lJa~~ deg rees Uo.m M~GHil Un~ite;si(y' andltWlI~ Ulllliv91rSlrty or ~isC:O'Wlsirn ilnl IEnl.~ine~rim.g 3[ld Ma'na~,~mernL

SILKB,A,NK:'

Ves we' 'can

- - - - --- -- - -

MIG ROFI NANCE BIR BA N K:IIN G REVIEW 2010'

DECEMBEIR3~, 201;0

Good thinqs come in __ II plckaa-

lihll ~i"IlI@J1dal ~llIdllU st[jI' has la I!IIilC hied th ~ ~ r~a fI PoV'ert\l' p [ovid es ban ki IiIg se rvices on d S~'(It ha $ b eetl'ltal~ n ~yth'~S~2)8 Q~ sav~n,~ p1),rltfo ~i()1 experieliiced heliflenlhHJfS AUeVi~W)1il IProgn!!'liJlifle g ~IDwtlh olver the past few wllei ~ e t IleCOlwTt ry' s '~~rst d'ecades_On !(Ilne' hand, i;)om- speciali:sed MG{]) I<UJ1~ Il ~e,l< fj na ne ia ~ j;lriodu ets arfl! r.r11J Iii d,atilJlfi, 11f1!1l!d ffl: Its. dlclHit. to be I:I!~ me.dlo ~ t 111e recen t F[]rth ~r IlmglH'ss. 1/II,i1J;S made

g~ollllll .ctonl[)J1IIic ~iMrdllr; after the for!iflatijo!il lot

but ~III t~H other! S~1in pl(l' Paltistarl Miwdilil,al'lce

tiWlam:ial pfQdl1lcts. (i() 'e'lliib~f) Nletwork aJldl~{lrmulation o~ S{l,(;VCi'"IIColwmh:: df,ev!:~oliP"" Mh:::n]IW'l:iirlCB~ Ordin.ult,B~ iii ment an ~ IroV'fHty redlw;:"tH>mT200'i" h,avfl! been tCWlnd miss;iIlQ" ~f W~t~ near~ one t~irdr !]~ 'tile re ls a 1"11/ 's [!iBGi a I is i::,d th~:l" I)(lP Il.II anen liivi!l g ~e I ow b 113m: h of ~~IiI~IiICi9"t hal Iii as po"vel'ty ~i ne am d more th,a.UI the !potentialtol im~rove the 75 Ileltiflnt flf thie 1I1:I1JIt rWIl-

1iI1:~'Cr(llimllile~ .pr'O~BGtS. Olinl~ ill the space oj'!'ew yean;.

e uts,ide bi! Iii k bra riC nes. lit pro g ram mss am UI nHI tli! e flit present, ttl ere 01 re 2~

w(lr~d are sum!Q~e!'lt pliClats l'I1icrof11liUinCe servlee '[I181t a.cGllss~o Ilnanetal pr'DV~Qlerrs. ~n,c~ll.Id~l'IY1 eiglht ssrvices net OIilly fadlitates l'l1ucr(lfill~IiiC'e banks .. Of the P (D 0 r r;le 0 ~I e i n tne ~e:~tSi!'l.!] 21 1'1'0 n-ban k 1ill~'CrOnl1ai!'lce tliie~r e arni 111(1, b liI~ .m ~801 heill's $Ii'n~ ~Cll P nN~ dews. ~b I!I r tEl estsbl i 5~ s liml~ ~ business- cater to th e rl!l raj !>i!J PIP,~ It

iln d IJ ~t ry's ~ I'IHi{l e ~Inl nese [U rbu Ie-nlf (!G,'l)ln (J iIIl lc ti m es, n ls mtcroUllaliic'e.

E\th~em~,etnllm var~ous

ulaU(]'Ir1 !i!LliIP'rill'l::d (llf Ib'iilSic ba n khl g lao i I itie 5, ~he I'll U(lrOn'lS liI'c;e seeto r IJi!l!S wit· l'Ies.sed treme ~~ II) U S gl rO'w~h

Maflk,et Sh.are (O/a of Act~ve Borrowe:rs)1

.' Fi'I~ M1UD~l!I _ - ua.

• _lllormIlillrol ~ lru. .IIIM

• Kalt!~ fi:Iu~

Nrrical ,.0.2 :2.3 '1£l(J,~
N~a 1.8 1M! 11,..1
I;:CA, 1.1 :3: '109'.6
MElNA !M, 1'UL2 123.6i
F'akisten ..:5,6, ~3 '94.1 pmgraHIure, liIin,e, are 31)8- ciaUs·~rI entm~s:, !3Jllld I:Illglilt Ill. ~~~~~~~~~~~~~~~~~so~ .. · UIW<~'.~.~' ~M!cr~' dol1bn:El~iIICe~' .~!ru~JtII~Jmi1iiit!IlI~"""· . =ID:!:lm~~' ~n~,ge41

A ~nn:lyc I) rld u ct~d b'~ me rill ~mse lilt s ~ (;~.il~ ~ ~VB i O·p" ~CA~ ~s.j:gm E~ :iilld CBn.!nl'i ~,

'-" .a " ... h.~ ~. '". unda ·'II·'[)" to as ... ~ .. ,~., ss m~l1t o~nu~s.a'tiolils 'rlha:t I<. ·1 .! h.! IJhl!l,~hall- \1'''11''- '" me "",-"r"'··

" .. ",IOU '''' aIL"" ...,~ rr ,," w,ils Ila.! eeas a W8!t:ers leli.! f\IL"'I!. ~"'.'" I'" I!!~ ", " ....

l~a\1e til lc ron I] (lI11 c;e prod ucts ,.."" ", - - - - ,> - ,. I/a .... "·r In

th·e ij!'l1 ~,s)ct (lif !Tn ~cronll iI,!iI oe mOlflrlil.itt il1lt hie dev,allJlp ment ." 'uU~. marser, 1\ ",'1 I

"." c·lt' .... nts .. " m."" "'".'.".'" """. "11. illl tl~eir' s,er/ice ponfolhJI. t tha rni ,., 1""'''''' '1'''''''F'''I1'''' ,.,," Itl'II'!liJ'oli.

.!to '~'" ~ .. n" ~ I "' • ., IJ ~'''' st"(liry ~~ t liE! ml CW(J~ HI,~.IilO:e: . """'-' ... - "".. ... "' ..... "Ill F... ',,"""

with the F()I_lJIf'ld!atJiolil "if()lr Thes!! ©rrglal1~satil]llis hiave ilndll!l:stl!)' in Paikilstal1. It ~s Rlllrlll SIiPgblort~nrgr-.amm~

Iiil,OlrE! th.~1i! II yeil.fS! ij'ocHI- lal!llilchied as.~ew ·(f,f mi(;m~i· hoped! that~lhe;avail.ii.bimy (Iii lUI mir:;rC!-s<!.ving, aJ;lC(]iH~~Il'(J rnel1ted an ~ncrei:lise ~Il SaJ\/- !'laJ!'ae pr(lldil.!Cts sgn,alilllhl~ a br.alilo:nie5s ballkililg net~ to the ~!list 1Iivaila)Me dilihl in£! tlI hl.l'(]-thinlof its'cl~el1ts;iour lirIajil;lr area,s, crr'HiIlit, work WQlJIld pave way for tM rerleased by Pa.k~s~3.1i1

over the ,)!(lIst 'One ye:i!.r', wh'~~e' s.a,!;!'ings, inslU r.ulc:e O1.nd expall:sio," o~ banlkhl.gl fiJJ!;liU~ Micrafillilarnc-e N!etwork.

34~erc:el1t (JI~ tMlr cl~elTts M' l' h I On tllie gn:aVlhr~[)~n, of an r6lM)md an im'Hol'!!~mMlt II1_JCrO_linance. __ as (:·ome: I, ong way fhm~ ni1:1!o,[ ®~tlm~IMs.

eoolnomic: sutruatuoll! d.u:rinlSJ in th,B [last few y,aarsi but cl)lmpar,sd miorl)-i[]~mranCH 5!!gim~mt

[Ili,e same ~efim;i. saw thre hig, hest gr~wU! i!ll

es, pnHnQteeducat~Q" (!!'ld im prove II ealtn.,

liiaar~ q !Jar! tu p ~ed to Rs9_7 bmioln at th'e' ell d 0 f se rJJte III be r COIIlrlIJ)'1liredl tctn e llrst q (l,altBcr 'OT CY07.

lMarrnal~ I q!bal

s ize of .eo (I n(lIllIY, its p ellstr!lbr;nnt is stilll very ~iOW.

This can be ga~r:!ed t~IDI'Ii! ! ne ract that IlI1I~C renna nee 1111 stl~ ultiMs 11~¥~ just ar.mmd 2ID dElp[l:s.~~il!OG(Jl!lliIt$ pew thot! sam! aid I!I Us "~I] mpawed to 229 ,~CC!) Il.I nts per t'hou sail d adlu Its Wit~1 en m!lBcrc lal han ks, aCC 0 rd i nlg to the fi aanelal ACDes!> F:.epo rt 201,0 .

Tile lim!~rlc'l!!il~rit behirHI low penletnll~iorl is POM OIU'[reach, lill Pak~stan, 'tMreue 1 .. 92 rI1I ~clfol'hl alii C;~ b ranc ~€S pew th(ll!lsaiid krneempared PI) 20 bran ell e~ pe r tnousa nd km ~11l Bamg lades 1""1 .•

Real~.sing the facttlhM t 111111"~ is 11 la rg ~ p,(I rtlon of pop iii ~aUl[)n tbat is IJIl'·Se rVH!1 - wH h some 'e stnnntes slu'g{lest more '!~an27 mn~t~rl fmtefltia I c I tents - mi eronnlitlirn Ce iln Paki~1ta1fl 111 as tn ill n a kllllg 'way. illlipllyiGI1! 'the need tow more s peulalis e,~ ban ks toern!:er inlo ttl is maw· ket

IRrDrUE Of SEIP &. mllAl3 I!LENGES AHEAJD

Po S HWJB' £Ieve I o.p ments liII rl1l~ lillie ron Ill(jjn Cl': S~GI9'r, to

The higlh Ol!ppetHe f'(lr sglll1e exte.l1t, have been ICHl,lnS $ UI PIl,mted the d Elm" nld attr iib I!Ite~ t.o ,a. .s L.I! PP(llr1ivll lor micn} crlHiirl I}ni£l L.Iltls 1 regda.tOIJ" !!Il!VimnlmH"t as evi(ie lilt fflr;llTilt he fill i:r,:rrof i-

Microfina.l1Ic,e iirildlll:sI'ry re:a{lt'u!ld a

m,ajlor mli[l,est:(me I[ast ytHU when l,amfll:lu MliC:Hdiinamco Bank

TIfI€: Bi:itis~Ein()B of micron- to the size of ac'o m) my, its Ipen eUa - the tP'aJst few year$. TIii~s ijs

liIan ee is n (]l~ very oldl in I ilvi ciM! ~l'olml the 'fi!cct '~hat

P(l,kista rI_ Va rri(ll!,j SS!J I~POilrt I i 0 mJ i s st i II vel ry ow. th,e illl ~ u.:my was &Ilf¥in g 3,.2

p~ogfUllmesmllldl pHOI: IIlFOIJ- FIlollley m~.<fisfer ser-Ii'fce:s. million aG-thlH ~nSI!H,aIlCe

~~ts r;;a.meirn~iI) fgr~y First MiicmUmmDB' Bank, tiBs 'W Ur]'S"6[\liHI, rUlr1i~ pOIUcies!ly $ep;te!li!be~ .2010., betwe!!~the 1 'gmJs all~ KjH.iS~aH B3.rntl: il.i1d Kasl1~ arBas at 11,[)\v C(]lst IJIl,fro~ ]\Js.t O.~ rrfliUiOill at. rI<Hlce busilii.t')®S, ranking, 1 g'ans, BIUt, im e:rsence, F(lu!ld~,tiOln are(l:\msi~·er,ed At pr,esent., the Ni!tiOtl,S~ the :Start (lIt :2007. A~ t~€ wlililchl ,are tile mlost~lov!l.d (f:~I!,as~d recently by tI1r€i I1I1:Jc rnfii nl<lJJlC~ g.aiMd rilaJ~sa- a$ ttlll" rll~j()lrQ(lliltri b.lJt(]lr5 t~ f1 u ml 5. LJlPP'O t~ IPtO.{jfiilI1UII ~ -®<I.11m e tl me, t~e si2·e {)if t~~ IJ [od 1JI'~·t in d'evelop,.i Ill!;! co n· ~tolln v Iil1 ic ~ IIlle I ~a(l~ I1ICi) U Iil it lion i!'l 1:9916. wllle!'l the Ag.a the deve:l,ollmenit of mic:ro~i- hglds. 11. d()liI'I~nal1it ~Qsit~olil iln micr~-irtSlllram:H portfg~it! W~S, 1l.~'lp,irlg mi'Cro~~~.illdll!lrS GUll (]If 54 OOllJntrrr,es, Khalil R 11.1 ra~ Sup p 0 n mmGP.;l p [oll I!I.~'~ ba sket lin! an th ree key IliI ~cwofin an ce (SlUlifl ~ns II reel» r!;!ac he'd R s~4 10 e.xp~liI'I(l 0 lJllnlachW 2 m u- Pak~stan ill ot tih e 5tit! p laoe ill Pr'IJ:gramm.e .separM~,d i.i!> Paki®t_an. s;~grtrllelnts., c'a.ptming :22 Iil;el~ b~IU>Ol1 fwom Rs5 ~Ulioll1l. liui'l bOlfr>(llJ/ers ~fl~m 1U mU& thle mijcrOnm!lfl~e bu,iness

m~cmjiil1laJl1~e- Ilglsr:aHOIil linlt()1 TIi~ gmw~n:(I m~.c~oWlatlCfl cent. 5,1 Ilert·en'~ amd 46 ~el'- Sjmi~aJrly,savin[J f}lrCldulcts li'(I1'l DOHOlJleFS in th~ St!IJlt enV~rOllll!flelllt r3 ill khlg ,

separate !.!!nits. il1lflustry rllil.GIHujl a i1iiIajDI cent marke:ts:hare ill the n;l;ve .a~~;o. g.8iil1rfll:i1 aUr1iiCUOn or 2007. aSGwiMd mainlyNl bMter

lfMsOOle year, thiestate'- mlle:silJinI: last year Whiln' lilliicro-Icred~t miwHHlving Il)ver theCDlJIrse o~ yeam; Mic,wf~illiilrlC~ lI,a,s (;[)IiT'I€ a regll~at~ry fram'eWlJfk, ilil

mVliled Nati[)liIal R[]rall TlIm8er lMiOlrofilnantGe BanK alild miGiF(I ~n$llHilnll]>e segl- actIve saver:s morHhali!" l(lIng "II/ay iilil lli~ last few which Palkistan, a~ong with

Suppllrl Pro9lramlliiie lau 1li1J~e<d 'easypaisll' tihat R~el1t. r,es.pedively. The sec- doub~e~ tOI 2.g milillon sJldyealrs;, but 'C>OfIl~aFed to the Ga.ml:i,o'dia grid] PiITi~~ppine$,

ia.unc[hed leasYlpaisal that proviid'BS bankingl serv-[i.cles outside banlk branches:.

18

DECEMBEI1R3~! :2:010

MI'CROFINANCE ,B,R BANKJNG REVI,EW 2010

-- - - - - - - - - -

wa.s ra.nk'-Bd 1i~st Apart f~om Ms~d N~,O " 'tIlIer ave~.age lIIan,c€ banks tn~ed -to "Char~er expenses with int,erl1lally br1lncnlless balnkiiflg wi~~ started pJUlvidingi miewofi· aforesaid, f.akistu wa;salsn CI[lSt p'e'~ blHf(Jw8r pE!fr GN~ a hig,her ~6ndirJ~1 rate '10 1JIImera:[e~ income, The OS'S ~ope!lI!·~Y brililg scaletethe l1i1irlce servtees us,~ng ranked 2'othin inve;stlifiLent per Qa.r!~ta. was 4.7 p,erc-ent re:main sustainahla ami r~~ioHi ~n Pakistan HIS~ tn 9<t 11rI1H::wf~nlSlm:e, indl.lstry. b raachlsss banking net-

(;lhfl1l'l~ and! 1I:2tl1 lUi ilnS"WLI- in lflakis,'Ifj,1iI ln 2tl08coffl" Ilm'~lratl,le. whictl. ~rl~um! pelrcLltl1lt: In '2Me from 80,8 n is also 0x~:P,(u:t;ijd tQ pro- ViIOF1\;;S" IFtH insbn()e, ~1iI

tiolilal developm,ent. pawedro, iJiv:e-ragje ,2.9Il'ercent Iii.ampers 1M aJ)i~Uy .of sMaH per~ent ttHi yeaii' betore. Kenya, thre E(jl!lizy B1IInki 3

La.t'ely, tne Slta:te Ban:k (If in Asia.. IiIlli'c'fo b~!ilksW SJca~e up. leading! miprlDfi!lliH~Ce biOk

- ,Jfilioo

Palk~Mari has 11ilkli:nl soms AIU©ther maWr ctl'a.Uenge nm'fore. tile ptr()if~ta.~nity ~

con s-~ru cUve steps iil Un e is tn~ i ow sa\!~ 1iI!J rate Ilfnm i:Gm~ilifarn{}ain,s,til~tklln ~

. . ~o

foum ill I' rle~ax<!ti(m in celFl:aifi 01 mon gl PJ.kiS:Hufs iOlwer in Palkus.t-aln remains weak.

COlillfrit[(ItliS iloi:llifld reglulilI- m~dd~e clla~st8.mHie:s. Since 1I1IBo ililliluS"uy'!; ROE: 111 .U

th)intt:lili~ Jm~vhHI.s,llypre\lerlt- il1lt:iivithJ.ilIS with smMl1 Paik.istaln ~s, liIegati\l~ 23 per~ :2:.0

~.. ~.

~ -:;;;;zv--

~ D'

lnvestors relueta mt to setUlp' In i cmHI1 !i:.rlt:~ i rust~Ull i 0 IiIS. Ue !ii,gqes'~ hl"lped i ment: ~S! higlhi t[lpe~a~in!J oust, as lnicml~I1ME:1i: ser';i'i,c~ p~l[)vi~ers (l~fe, $fflall leans

..i A lt f 'I··t' j,,"" order UII ~uI~ld vO,illme:s. At '"'.'n.",r·o'·I·(]'''~1 ',f'.,",~1 ",' e .• "ff;".~"'.-,',n""

·an,1.! u·e'~ O"S [<Ie I ~H:lS:.! w,~ I(:ill u"'~, "'. ,,,.. oJ o;~ II 0,-, ''''"~, "J

1.· I Ii l present, In e snze of m ~Gm ((.1 ... <r! .. ~.' \ ""', ""'''. ·li ...... rO'"I- n ' .. 1 S 1''' ... 1'111. ~ ..

m~1\6S I~ a \tt'll"Y ,a '. CD U'IF II 11m n- U l,}!'Cl/ ! ,.... u ~I'_ u • ., '" ..

sjve h'd!l!s~ry. AC'C:(HditkgW sa\l~liIg a,a~()Uln ~!S. Rs9 bll- tb,~ 'albi~ity olf ~ rnh;n;:ifinaIlGB try. ~1iI a. (lOLmlry ,vhere Y~lIr, ~mda9 times chsaper 'ililterlllatioliial mlcrmtaanee

. ~. j . A . I io n CO ~iP'<! re d ten ~'Ina~ I"" ~ 'It •. ·W'I' en t". "(]- ',U" r' c nsts 0-.1' aru lJU iii mI,' 65 In ElmE!liIt.i (]If the.' ov,er asp,a,1lI IO'~ Hile years, pial', ers to Pak~slan.

tl1J e Ilast 1r(;!II'e ased ys:ta by , .. ", '!o,," "" ." .., "'" IL<! ~. . ~

MiGfOllU:nall'c:~ IlnfornmaH(Ml fllilHr;ro·tri:d~t !:iff ~,s.2g Iln~iO"Ti. o~era:tiOlllS, whucll ~liiclud6's

E::<!ch.ml1,g-:e - @ WUh~~l~~:OFl- G(]ln!>IM~I:[~f'ltly, lllRic.mf~·fil1:i1ln(;~,a~ aiil£l liloIHifllllliGi,a~

eo mi'crQ~ill(u!()e baliik:ll frum income are mere ~nc~in,e'd eent, cl)'lnf}ared to alii aver~6~~ipll~ fli!J to (1~ ~g iii '~II rren elY towulrd S bono w~ liI:[JthaUi age I) f 11 1 ,2 peree flit ~ III Asia .. h).'i.liIsf roo m ~n te rn a Uo ria ~ ,sal,' irng. m ic rol!irl'~11 ee l:I~ti1lk.s .B Ultt~ e g I;) nd Ipian ~$ th at

lenders. have to otter hig~ interest loeal ~h::IFIJ!firlaiilCe IPI~,ay~ws:

[J't k t' ~~' II rat~s on d'8nO~~IS\ than what ha .... ,a ..•. ·or '."m,1 e c. o,,,rI. "'.". n "·,'·1'..1 "r-

'esp'l e mar:6 p Ou:HIJh~a~! '" 111,,_ ~ •• ,l"'1 """ ,.\ll , .. ,,,,, u... -

thmm mJl'~ s,om.m thal~GM@:s: commercial ~Jo(mks oUer, iill ab~e irrwrov.enneliltill tim

til at ~J,~J;le been ~ak~ng1lhe bj,ggest impedimle,nt is Ihl~gh (J'pe,rat~

iFllg ICOSt, as miicrofiinaFu::e, seNica providers offer s malll loaas and dep,osit

faci!liities.

to mloh i te rn lc ~ o-s.avi nl{ljS, m iC1[o·JIII S I!I r'o'iJM:ean(! other b~nk'in1:l1 pmdu,r,:rs v~a lIfliJibill® pholil,as.

in pa.rt:ner:sh~p with S,afari(wm (a tetee .. om finn),

tl'1~S year. lrhe servtce w~111

1111·

---

--- ..

wa.rlll te ij}r~liI!li eDomollil1c IHlo:s~elrity till millions IDr PllofP'le, And to acll ieve tI~ ~t.

Amid hi!(lltll alP'emthlg alild I)_pel'alling C(]isls il[lw a.

Cmm,U1El'. aci\len:t of branen- bral1ch~ess agel1t are 76 leis~ b'aJl1 kii ng is good news- 'times ~eS:5.· th a nln!s micro fi- the {IlOlJ~trll m ent needs to ]o:r the IiIllicr,oN!'lanlce il'ldl!!s· mance !m~ndl lin the Urst aUract IlrWfe e-;.:~:er~ellced

.pelopolotl live in rural ~m~as h~ some de\llllo~1l1lgl coun-' fflc wriler CO'l17 l)~ rlJ~c'fled wit.nl lime, I nlraSU.u.c,t IU€l , trlss, IH.l1Iks IHl\,~ a~rildy at frranal,fqbM@lJr-milil,t;{)m

Inspired by our customers.

WI,ttl a p~'Oe"ee in25 coul'Illi'i!S aroLlfu! the wl}rtd and the ~arle.st banktng lr:le~w(!1'1I: in Pakl$ol'af'l, we colttinul! to evo1\1'ti! wHIh a dynamic conSumer II.imd5Qjle.

the tives of peoJ!l~e. Our ufllceas1l'11g ql.le:s1 to fulfil c:unerner1 iTteecli5 hilS drl~J'i us to e.toel [n everything we do, wkereve!:' !oVI!. do it.

Th se achievements are a, te:stal'il"le n~. 0' om dedica'lii 01'11 te pro:viding; our ~wlthW!l!rfd dass-fimmciru prOOlJWand ~ed ltiiulikiqgsel"Vi~

Faster forecl,os I re syst:em must to foster banking

A!n iinrteNlew Vilmih Atit FI_ Bolm.~i" Piresident &: CEO, UnljtiedlBfJllk Uiim,edi AJlil ~n~zaJ & ~'Qlh'a:il~' Jamalll

ih~s' lillllervie.wmkesithe IreQ!~e r ;th rl] Vg_h a-c.qn~ vena~Q!n with Am IBig!<haru, IP;re$id~fiIt !lind:

C E'[] af lJBL Pakils,tan,

- -.... ~ - .- ,

The ,CEO 'spe'3!ks eb (I ~It th'l~ rilu'c:h~li1,pl1lljeired i sSliUe Q~ fi"lrnulC~lrugof IQl1lg,~te'Fm project~ aind ~Iila;l Df m,g-· 8M E g8m~u.· IH e,. alfso d is~u$ises in deita,ill~he itl1$Rand f~~1 of 'C€lIlISUlml{!1I Mnk~l1ig. in 1P,a:~:S.taJn and "UHF r;ea~ 8'0"'_5 tl1l~re(j~, and s!pealk.:s erf UBL':$' farr~ [rea ~lrilnrgl P!t'is~flrt:e in b ranchlles:sJ1311l king"

B!l ~~DIFIs 1fIa'JM't bee!iil

verJl:u1U~g tslmlfinanc--

ing\ 'whereas ' ~~am

. ~ ~. sliiolNeml; fill SUWI it seemrlocro y,ilU1 thlnk . loog,telTl1 IlIrqOOlSr W!ll!!td

from, lack 0:1 ~_~

Mf I_alit Tlhe sp~ let ib'l Of Is \wg taklllii I!lj) by mm,tIilmilJaI

banks oampJeMtl/. mOO tliM "in

Uiie-las"l: 15 years,,1h Still!()-

Ime (If tmnks has 00rm _red towa[{Jis cthe shj]i1Isi:l~ but irl~ SllI.iCtM of ~~iilI: whtrl ~I!I II~ok at lihe ~ate1000s itml the early 2GOOs, I(mg~lernl pro~s \'reTe befog frn:mGed. easily.

ThB lirl:l~rc !lower p:rnJ.m:s wt.~ finaJnClld Iby oo:mi1ril~itiai IMInks;

we are' ~5--"2U ''iWfS.of

re.· . IFenlil[i:?er and

ofuell me!laJ Jlrojer;it$ Game iniln~ biillkslinam:M~h8'Ill. So full mismatchl om tJim ~Iarnce sIi~~l has IiIwer preClluded eomlll1:erdli~ banks t(l~O ror kin{l·tem~ f,if10RJ::"" in~: ! ~siust tha:tyou need toc~me u~ vlifu viaJble IDng·term pIDQjBGlt.

B!UI:WhaI: in yourrv,le'!V is_" !nul tIoo pmm soomr ,at IHy froml llfgl ProjeCIS?

J!!)B: Ml:JnctaJry Iroliqy is ounrefll~ty ''lB1Y tight - tMugh I (£[}J1'1: dis-agreB 'willi ii.

ElIJt 'woon ymJ mre talkin@ OOllut finaincilll,J a ~lUe chjpoo!'lilps~ ~ wrm't fuie ab:lIlto do ~ing le!5S malil ;2·2.5 IPOO)[lnt OlMlr KIIBDR, wtler6<is at16..fH '1 jlellJ8lit Ibrlgr'Ierim viabrli~ is. dililicli1~ to sustain JUI tlle pnP.iale,s:eooor. ()I)Ujlk! tllat 'o'I.titih the I)reva~illg (lolitical ~i~ 3JTIi:I u.n~rtalnty~ an.d the private 8eGffif will mlnlra11y slW <l.'i!t<1y.

IBWI!: lEIaJ1ksOOoo ro ~ '1;111 '1iWereas~ rocwsst~ olil1heS,ME

Aft 'Ilh@ dBYree, ~he-~ is an ~IeflIl81i11uf ~arns-l€ifldiili{J [n this iiri1l!f' ~. However beMreel1 ~99a alll~ 2{1:OJ,.th:ere '!'!.fa'S sldJ.stsJdilaJi 1:j("(l1/J'tfu in tell1i1S .(If iIeW flames altd large ~poou:re: btlin!lMkeI1i in"! WJ1MY,Oll call se~ool tf!l\l' llo~rowers. 1\00 I !ell you ~al a !IIl~jWitY 0"1 these' w.ere Wl"IOTlg Mils bll b~IiIk$, ~1100 S800iiltl til:f was 1110'1 OOIl" ,q;uare~ ca;pltalj:oo(l .lO suStruin .taJ1l e:conom1i:: dl:lWJ1Iium.

Tlherl! is ail elEfrnBnt i'U1 this {)(lunHy whelll piBi};ple h~\I'ei '1fiIB auJIity"to ~ay back t:iut tlUl')l raJi: '!he wlll to reIls.y,. Poopl:e ,SJe very Short ~i!)ht~d - eSIJ~~lty!;Dtl 1!b8 $M!: :si~a. They wG:uldl i'althlH' SilVil a Penny ~ not paying up bank]' ~elpal ,a~dinterw~ .b'Ul woul~ nlll: thlnk mihe IPOIiOOI fully klse by d:~ru)'1ntJUiJeii ~ft lrating,

leM: IBut d'onl bimIcs, hM aliIY

beoatllse he dkJesn 'II ~E to se:rvtoo' ,anythflli~ciuringIWl;:tl: tima. ~f th~rewere $ul'li:ci:enrl: IfiWS lin barnlmIPIC:V, you \VoDuJld:n't see ltiesell1lings hapjileoililgi,

Ilf &irilljOO~!i has d'$u.lHl-t!,. an.d he does oot fIIave atJi!ity 00' repay,· it ~o,es .!lQ~ mea!ll th~ bail~ 'Want tIleml4:J' Ile ilil ]1lOi in J'a.ll We jus( wallrl:HW ~~rinoo hruiJd over ~heassets '1.0 filS SID we €,a !II sell 'nhem~)i oonne!bocty \W10 ~nr nm nus Ib;u~ liIesstletffir.

BRR: Does 'um meanllilat Ui3i has Silled away from '1M SME 5e!Ilment?1

AB:. No; I am a.f1rm fuieli!werMrat if \!II] don't OOctlS on an(]dewl~! Ule SME. ~or, t~ ,e(;j:momy wm !l!ever gfO'l.ll'. Ybu \!Jilll never gr'OOI ilm):uglii the 15-21)" la.gi\! groups,. wllIiclii 3fe·~h~ ILug:mt rnlillilcrtru:!Ur~ ets.

But at~he: sametlme vcru Iii~_\!'e to li:lOk <lit the tlr.!i.fi'k remmj 04 SM~, SM~ poftlfolios (If I1.t.JMty !l!1I1 lila- bMks, IYvea clafWult ·Me of

Ihe bankii ng ~ ndl u stry got bll,ack.maijlled by peo~le' who were ~n fact mostly sallesmelil rather than tmB' consume'r bankers.

1~1;sei m, Ia~'

JI.B; Today til@: dmun~rs GhoO${! tQ frg~Un cou i1s, wfle!re j~ fukes O~ average 15, yoors to get 300c1r"OO and alii ~'xec{litii[)Jl, and f[}f' 15, ~ars they geUree IJ~ or Ib8lfiIl$' fiilon&jl; So g.etti~ int(l' rrtigati()~ is IlclumW the best thjngllbr ~ne· rbolf(JlLwr;

more' ,111W1 '20 ~reent You canl't sunviue as a I1a:nk wi1ih25 pstlJt!illl: ciBtw~ rnre.

Stili,. at iJBI!. we corrtin:ue to, sefViloollle SME as well a'S ~he OOli13Unmer seglir1~lWe ca:n't I;us( Will< [way Imm a ~l1iic!Jllar sector in~le eccmOlJlY; becMse wetee[ that ''114) have iii oorta;irl rreSJl~nsibil-

ity to tIlis ool.mtry;

IB!RIR: HiI'I1e, the' iJaJrII0l, tikm ii.P mJs fssuie with rerevam: ililiUii.llld~ ils7

Aft Yes, these· issues have been take!1l up 81t ~amausrorf.[!TlS and al~ we ,seelkis earty resolnrlf~1iI IJH (:{Imt cases..

IH:What:amhi·~ltIloo Ir-. 'hoo"I 1IIie OOMI!fJiIlei!' ,asse'i: lOOemir~'

A.B:l{lofJI;see Pakislrulii b~rs Vieire rli![lstJiy 'O()~jl()rnle baMw.rs; Qunoomer bankiiiig was ret tMir t()rte. ·lIlitere VilaS, onlY one inrema· tional in!St~n f~ai: had 1aJJrnohed IJ[mSUIill~r bankinlli, and a larys l'I!1liofitJ'~oGlattl.f! w[t~ COil"SU:lmr Ilil!ii~ing iff rulIY ~nl1\- in ~n h~ lJ~m tJrall1lad !leY tli!at. iooMbiiOOIll.

So ili.~f all red Qne ti)i_e~ busi' ness model ~rnfd inm~lefnented1 the Sl!rlllF: mQoo~ Wiil1t:llrt knowl!iig it ~u'lly wE~1I afld hOYi ~ w~l!Ifd pan out WE: juS't stililtal f[)ir(lwm,g (Jf16 !lootl ~linrffoOOl€d.

1Em.R: WIllI was eJ!3C'Ily wrong was· '!fie Im~?

A8.: TIle mooa1 was brule{! mn djrect sales, which made !.le~etQr a bank wltll a limite(l ~ti!ncll mel- 1.!/mk and h.en.c;a lIIas:J(!d a. 13flIIl d'irEllOt sal8-s J!;DrGe, 1JI1i110rtJUIlate-~, Wt d'id that: tOil, becaU~ <"1111 ctll1I"SlJlmr ilanl<. ~$ .sairI that 'no ,rItitlelr 11I1!i!lel wJIII \w~lt,

lin Iljr.OO1~11t. why sh.ou~ I have a diroot sa1es (oree of 6!,OQO PeQ;p'le w~e!1 ~ liiave 1, UJ(] Ibr,aocoos? ~ i~ IQgk:a1 nllW, but Sit thait time it 1l1a!$fl't

I~: So tloo Klre l"IillI!lfel Mlilld m[~ mUdm 1:ie\te:r'2'

A8:The prob~ wilh the dJ~t sale-s m~1 Is thijt sares.melll .aJ'e ,only bolihereCli about Cllfll'llt"l-nf.;!.lions; 11 lot of '~5"esaJes!"li!en 1.!i'ere.n'tr aotu~ly Ibal1lk employees. -so tliIey oonil'(l!i~~licaMll'fls 005 (i~ 6 oonks,amlw:)ulld SEll anY'one III the 6an'ks;' ~rQ~l!I~ dB"Jl~lldiFig UPfiJliI wli'atths vliffiOFMr ~d. 1ihB/Y Md nO I~.

IBRit IHowdid 1Jlls herd m100"set: a:I'fe!:t thElmdUSby's oos:ts?

AD: roo ba:nks startedoOtrlllel-

• tIiIat th~ ~~

sit:uotUff;! . haywire; ,ilIiI

IOtti!l8;r' (I,f 1tiis.50,O:OO salaty per flmn'tih wmlll:! dfimOliltl dml~le mat salary wilh;inllhe .flirsl:llhl~ 1l0nN1S - sayin~ tnru: if YOLI d'on't dOO~[ei~ Unen II wj~go tom l'la.nk.

S!!Jdd:e!1~, YI,mn1J offICers wi~1iI joot: 2..3 }'Bl1fE oj ID:pI!lrlen:oe ,sIa!rtiru demanding 1!b8 . tifll!~f V"IOEI P,resiilf,effi$ alild 3 sa~a!ry .I)f Rs500.;OOO p~r moilllh, :So, Wf: goo: . b:laclrnia:il~ !leY lJIM),plB wtJo were.

in fa~t !mQsttysal'eslTlen ~her gjse yOl!ly OOIi'l1l~ ItIlJisil!l& as

diirufltJ'u~ cO:.IlsUmer bookers. ~ ,SfiAIl: ieoo:Jnwg?

Sooon:dtJI. prOO!i!ct wise, every(100 ggt into th~ g1lJfIlIl m who ~ ~Ohilg to malk® mor~ S:ailes. Tlhey starIecl acounpelfi1cm; If ooe Ibank smtd 5.,OmO ca.rsam,Qf!liI!. '1Ii!~ sales ~BadS III other !:tanks w(lukiss:y IVJi in UM' beat th!M W(l~; s"o q;uaJ.. HlI was i~rno!'ecl ami iI: rotally booaJille a sares drriivenr exeroise.

BR_A; IiO'.W ([0 YOUI S88,1l181OQ11- SitJllmIr SBOiililent Il~ng 'Mrllife Ireld: :5 years Wiol 1!l'h.iIt' mGdelI o,wu!d l{OMK!llw IltJ!i!t?

a.: WOOn 1J/oll started di)'l.'.I'JiIsiE· ing our ,[llJr~lJm~ bl!lSi~,_ I'M ~irJ sn exertrseG~JIe(I Proi!::lTrla, whi(l~ '!\I:a§. ti~l~ fllel1!giooe~nlJ and reotijjurising of nur briln~ rnBWi',nrk.

eu r atquisitIol'I. nillmibers rn (l!!)OSU!"ller are tflWJ!ll. bll!l: wlhat.e\!er ~'I.'e 'aff;!aCgl!lirirngis very go~ qnJ1llity. !tIe-am IM1<:ing 8:t 11. d~OlliLt mte of less th.IJn5 peroeM em our !1lew potitOOl10. ~ w(.iukl wai!e;r ha~ a ~u{itl[)ni in~~l!Iisitio~ ~.tes Ihrurlse@: 1lr1¥d'ttim~ ~t6!5'rJ~ 1Jp.

BRR; _BLtI,atlhe em! at tbe _, is~Lt ith cd P!llk:ywifij IDat rs ilQ~m&lblf!!. ~r you 'fGlrm.r thll dl!led Wrluldelor the blWlChm

• WE fuU[M a sclIF!3~rn sysreml of ,aJilOlr:rsJn;g appliGalioll'lS; \'I~ llsed to (f(I t11m- in the- drIect sales Wlu'deliilml we wm 'O(lntimJe lID tlQ· S(i in 11m' rnlationsh,ip mode1 or brnl1Ch, mooe1.

~III tllie b I1l.IIIch moclel, the rebmanagllf fSi respoflSibre

lor b fIiIg flil qlla!:ity· !lu$tmners, .AD: U may be· !li ~m;rate seJ.j-

Unfortunately when we gave out bll1lki:ng Iliioorloes!I it was Din tl1,e model (llf tilE!: b~g 6 eo mmerciiaJI baJillksJ which doesliI't 'Wolnk forr eve:rybody.

S() ij'lomorrtlw the l~aI1I \);oes bad ~H is ~pollsible,.1!: 1lliI~ 00 liIotlbe UBL's cliem, Imt ill! ~S!: tlw ~ ~onslh~p mafla~er .mcrws~he (jient

BRR: .ar ~ you b(l!Il9V'Sl 1Iiiat.1I:L1iI bramtllillKNillll ~II WOfirl'

:PI: Well, ~he jUlry Is mm. ou~ wOOtber '~hi$ moo\l).1 will Mlnff<. in me' Inn!1l-WHlIi. oo.oaJ!.lSe- you haw IV h~v.e!l cetrnltl.rnFnfiUll1f 01 !l:oq,Llt stlion® ,a montl1 to.,~ lleast ~feflk even o:n~lle lIuSliness, EM aogailil, at UBl. ~1iI if ollr Ol!n~"uliIler asset oognltmt:en{jg up asa. IDss Ieatr.erf~r the l1e)'J! 1i() ~aJ'S. \l,!'e will :still ()()[]UnuedOill9l it W:e are mi;rt g,{l]ng lor 00»< iFNii!llI~rn ilL

BRR: tlI',ClWWliIUld YOU ~

AS; lihe ~lem ~lJ'iIl> itIii;rt iii.'> ~ rliiDVed direu1ily Irnmii" OOrpCl" nne !OI Oi)n~ \lle IfIl~edI the rnfll'lUl1eltla1 aM 8M!:. settors .In ~n,

BIlII n()w~l il!IBL we ,~!iI': gQin,gro locr~ DUJ ·wotldooue- incon1'l' fli'l81t1B!I Iemlllit!ll by SI;ijll8"W~ijl Ilrlll.m~ mIl' perCent i!ll 2:011_

Po. rel~nsliip lIIl3.lilager on the SME'ru_oo MJlldling arollm::l :30 Or 40 relaJtiol'!!ShilYsc~nrrl()t ha.ve h.eaiUly interaction 'LI.Iith so martY t:1tents, So w.eaiill gOlngl bafik dlBe\per -in~o '!b~ relmJii)nslh~.P rmloc:lrt because ol1~y~hat wm WQrM; we \\11'11 ratiJ)ll)sIisellle- Iii~m" tier of ~\irt&lnshi)ls tliW" aj1eJS.OliI sn.(]ultl 00 ~yranaging, ~~!illily iii: ~h:ouli:J bea~.ou nd . ~~25 depend" ingl u POIil the osWe of tile iportifuliQ,-

Ism:t! Ht:iw ,da'y,oo pran to rom good usa of yOur ~ net:~ !MIJ'k?'

All: W8I i3JfE! mfl\lllnl,J tult\!8fds lMh®tWoillCall retailb1lJ'lkln(l, wh Ic~ e~ompaooes r!Ner'jtl~in;g. ~ is me;luanch n.etwork,O!;DIII1Ii1lJ;ln:;i;Llassms, 0011- sumer assal.S, insl.m:lit~, mUlt~1 lunas 1lIiI~SO IoMlih •

{lur big:g,est strength IS ~ur b:rarmlii n.etJ1rork; an.d S£I ~'Yihif1{1! :;nCiulldllluw tl1roLJ"{ln II:. we Ilive iliso atI'dOO· amu.fId l&-lf lislaJillk .. bar1hlng windows l,MMi~ f)"Ur 'Oillil1J.effiiQR;i1 bwan.ch(!!S.

IBM: Isn'il Is!aJililic baJ!i~g a. sepanite ~slm.ess1

mem, byt ~ Co\flles I.Irtthinr 1~ ret.ail segment, ~ Men'! I!lant tosdd lislarill1c banlil~ b~oohes i~ every oily wilen we min 'offl!r Islamk: wilildOOl\S ilil existillg b.ranches... l1h5 was all ~tt m our P,rro:ima eJ;)emse tlues YEars !!lank.

We ~cI ·UIat ~ our IliiIOBt ma~inal br.Ino'his mal(ing FIlI!)OOf, ~ [0\'1 ,oost ~PR3 ~ p~1 inl h~tl ~in!l'~~iTlif1IBrI: !lOOumes, Bill', if ami 'i.'1IDID i~ral.Isfl!i:Serro6-7~alio1f ol'1Joooheslo'llili stilt ~~ ~ SO we nOO!1 til eM'''f;!" thi(I. our ~ oont,~(Qas ~ gai!h@mrs but aIso ~ I'a\mU0 OOrli!reS..

IBRA; Fanlq IllOOrItlmY has

,20

[NTERVI EW ,s R BAN KilN G REVI EW 2010

DECEM IBER 31, .:2010

seen ,81 ItxIom 'm Ialet. Wlrry. dont

~ ·tmblg~,

VfJIWnl'~ . 1rD~ rood·

QJ?

!lIB: MosHlf tilt .agmi ~ndingis in Pu I1p!r, Ib8lfi1Zs (I(ln'l: m.ntiOO, go' 001 Sim;lh btlc.alJ!;lH I[!~ ladk of [JOOL1- liIlanffitionl 5'inOfi! :Sindh has not bS81li ab!1e to oolillillufE!iSe Us land rec(l~s, bankers: caliI'I g,1) a.~l;d bnding tl:l!8J!1if1eFS; even ij~e refatio.ns11ip l'IlIamme[ kn~tJWa cmrunperson (I\!fI'IS cMaJll'llaoo,

The soooo:nd 'isStJle Istl1iOO we lilooci 10 SM up uM~h[lusinJ] fatlli· ms; II you :!II'C a:. snrnallfilJrm'8r. Y,[)U sell ),Iou:r ;cropm lliIB '@rm" wnD' buy ,(;r{lj)' fub.ut!s at 'S!ubslaIvlUll¥ 1Il.lmratE!51!1iJ@1iI m3l'1fl1l: price,

~f~1!J have:wamhDu~inJgl (qipoaciI;y, b!I!'k'ies \\Ilil increase ,agrf Ien'd~nSl bec~.liIse \Me will have a sense of S:lloority Olil the I.llldk. of ~mehousirI~ ueo~plR

Ag OOillurecal1 be !iIett:er PfOmotel:! through priVMIE: StclQr mgioMI !:tanks withl lililiitedf geUIgF rap'hy. UI1ilOrtullHlJt®~ w'!hl1:rJ ~ ~~ mit I:Iankintgl ~iCetilDeS, ~ was ~1iI.e 1Ill(l~e~ of th.~ bi!J .s oommerciial Il~_~ks. wliiioh ~oes!il 't wol+; for ~oo~.

BRR: 'Vllfl'y"'Hlilt 1w!1r.s, ~ banm~ 5emees(Q fie 'W1i1~'

#lIB: '.AIIii1is' don't vfilJnthl, Ilee~ wtlih oorLks;, tOOy are totally IIImlooUIiTl~. Almrn ,00 p.ErGa'.f11 of~he cum:r1~nFQlmuIMi(jr11 is frn~h~

ag ril:u'llillra1 seCtDl -am.l almost all ,od it is ·~liIdooYnl'e!lJtedI.

i~RfI:. U1U. is fill tlmt oornlilm~ tlaIlmkw ~m.rt manetlless.ban~ lillg. 'Mia! ami ~W'·'growth IlJlaJ1$, ·mKllIow:suDC8SSfu1 has: _ me

~?

For ail1Y ,akj agency, ~fecOOl: of delivemino{jlsicI lo{lle needy is; s©lilw~hing almmcl ~5-:m ~en;iflm. U's t!ltllntematiuMI norm vmMul any c:mrl1Ullliolii.

Onlhe: I~their IhaIild,. the C!Dst (If del ~rln!i<l!irl th roughi~'h~ carc:ls\ is ~ss!llan 5 pelteM \~hefeas- In the' GaSe of ~DP, ~ ~S lless: Ulan 1.5 (IeroE!lIIt. The cost mi· ~ta:n card· is amunrl3lp~1IDt

S8(j~mdlly, gms· is a h,~nm~ gro'lljlnr6ChllolO{lrY,wI1ereas ClIther b8J'JKS ~ptBd for tocnnll!!)IJY firom inmmatiillilal 'l!3fi[Jors, whk:h oosts a lot Basfca'lIy, we startOOllml1!o:Jln.g on thjs. produGt ca~lild ~BL Onion about 5, yIiSIS, iil],[); too pmjm;t

We alr,e plamln i ng to ~Ilcrease nu r ~ueis-

once iil11 Afri[l.a" whi,sre in one I=NarUCU-' liar country we should ge.t pBrtmissiiol'il

. .

b . J n,c2·····011. Y lLe _ L

AD: Tooay loVe ha'"lje sr;mMliiflilg like ':;:,OO{Ia(Jems, we Wi'" rSill1lP tt t[)2i]-30' tooll~d a'!l~~ts in the n~ 1.2, 118 nrilOlttlis,

For lIBL lheprtDIect has ~ell q;uite ~u:~srlll~ who, cOl!Jld harve ev.e.rimaginBd 1fiIall[)Ps ~$~vat, wl10 ha~f 110 m:~OOLlre: tOI bil.lliKs., wouk:l stait !!Isf:n\1 (100ft ,card's ru1I~ piJint of salesrermln@ls, Vile eM

aoout M I1iifllioo Gards in ;JJ ~paCfl ,of 45·f~ Clays: \rJk did tlte World ~ood Pmgrarmne ,sllld now ~ ha\l'ij .dilne: tim WlI1i!n. C@Jid!_ ,!!!,kl:ta1 ,0113, m~lLon Ga!rds Iha~ ~eni issuect in~he 1Jli'ataJl'I scheme, Gil whichl liSt h.acsissl!Ied UJ millicm-

IlBRfI:. Whatll$Iti(l seem belllJKI tIOOsuooesso'llDf:alil~n bmlrJ·ng ~ I~~ lin 'tImiillsaf d~r' Imanagement?

AB:. Branl)h~~ss baJilking is • cheapest to:lt!ni oj iJistJribMingafti.

'I\!].so'1. ~ suooessfu~, blif~ ~l1e ~miflg gM us a Ii~st'i.rt

Htlvililg: seen om suc:ress, a oouple CJI private eq;uijty flJJ1ds; wmt· to ~UY. (lurtoohnoklgy lor rngioml imj}hinl~nIaJN[ln,

BRR: W~;n,i1d you sell '1Ii!e 'teCh:rn®'~

.AB: Mso~Jy.

BM: P.mt _ m lequire a smal~ bru1k?

wE m11 oontsee.allY smal ~' ood.irlg ~e,. SlfflI banJom 001'11 11a:y;e any We~h to !nin.g 'to 'UiJe tab~,

IBiRI\'.I; :80 \IA1iIt 1sliiou:ld SiIIiIB 1baJnk!l do tol suI'!Iilw"7'

A.B:: They s11ol!lrd rm:f(te .. if tney onn~f1lj~l.O· ~g :brulftio:nal ~aJllMtig t~ MIl al~ ~ GaligliIl: up, iiil thil GiltcIFl.lp i(l!Ri'll@ to g~t 'to lliB rigihl sire, r nClif3~i1eiir Ibl<llilclil networkaml-so mrth, AIKI mr'tMt the share:h~rderi3: will iIaue m ltieeKil fjuliIl;pin!] IiIlnney, .

~nsteadl~hl.;l $lTlii11 b\l!n~ lI~d to devel~~s~gia.li5alti[Insi like:,trade, ag.ri\ll!l~tl!ne, SMits, ~mt8stlillenil: ttanloQlng! an~ ;ro torth\

19M: 100 YIlt! think ~. MDR is a"good measureartlile capflal afie'~I~?

AS: The:1l has io be, a: ri~nt !1!T[:.; 11)1" MeA and CAll

IBRIt Wlla&'s yGlar Vl.'ew on INPl.:s?

AB:The 1TIi!j"()r ,a~-ealhst: ~ (1m concern:ecl about rs~he value O1{I'doo seoror. Silt!: ~ dol'll't see .rury signifi~nt ~1'Il~mCl: on the NPLs. TM W!il~ IS be.hindilliS:.

IB:'R.I: 1Nl1at\s !{(NIIr iJtte:rest III'ate 0l.ID00tIl'

Me T11lew;.y '~11ir1gs: 8ire gofllg ioonetli raw wi~li~!Iy tfil'lllaf-n hi,gh th f'@~lholiin 2rn1 t

IMR rl!lli.. ~ QilI·a ~ tJoo rnYlllm'li ,CiiI"I lJOO sIwe irs

~

,iii: it W1).S<lurliirs1 OOfSlilore S)/UIdi.r:<rtirunllJ;rulSf.ltOOliI ~ a£.,;y~r.$2I) milljlln sYlnd[Ga~lmn Finaln~ faoillW f,OO" H'adrwnoui: InvesIDlJN!t P,cl'wer Compal'l)i to pM:-~iIlWe a 75 MW povller ~rant ilil Ha~ramout R~ion in YM1.eQl

lihll:l fI wjS()t win $1U p.l)ly p,ower to Yemen 's !'IaUo !'lall El~e,ctJr~ci~)I tHllIIsrnissimn ~md d~~ribU!tlo'flJ C()'ilnIi'a.f1y as weill as t1he s~tJrn$glF$' $Wei p~a~t UiBL a.ctetl ,8$ ~ n\l'e~1me'!'!lt Agem Illfthe nalls3cbol!l ill aplrlilio,n to tle·iln(l t'he oo::~lusive Flin:alfit~a~ f!.fivisOi[ Ma AJtrilK1~:Br toithEl dtellit

li'he tran!sa!eluo 1'1 ~I!rksthe Ii r.s,t ,ever flllllld!e(]l s1l'llldliiC'ated fui:cimly in Yiflmel1l wOO 1Jl:a~lcup.a" tklrn lmm 5, r[)()al illildJ~reigfl

ba nk.s ~nch.!d ilng 1IJ Bt, Tadl111rr10'j] ~lntBma'ni'oliial .~s~amic Banik, COl~pewat~ve &:

I\grlcLlltUJ,a~ Crecilit BM1~, A~ab Ei"lIli1k ~1(1(1 I n~ammi~I(1M B.aint IlJf Yel1l1:elll.

IBiRR:: .Am 1{OO1 loolGliIlIlta t!!Q~ lI'O!l!r IP~rtOO In ftf~ii! ool!Uilbilesi?

JiiB:' ¥eS;WEI want t[) w(]Jik with Dur ml'llQtl bha! isUtie iMickfJe ~t I'l'rellrolllSly, \!re ijOO[J 00 won.,. on~e ~ll_klstaJn~de mode~ Now that Wfl. W 1]: p~tl~ in all of Pa~n~ imiljor irnde paltnl!l'S, we a.re rOOking! atlbe Mfddle East tl'lliiB moool ~aJlJSe th®t offers la~gerookets, We ar-ea.tro planniJlg to. ~ntma.s>! ,00Ur 1!l~G@ ~rJ .Africa, wJmre in QIiI8 ~rIDiculi!r Q[JUIlliy,WEI sholilrd !Jet permiSlOOI1I DyJUIlle 2fI1t

Prof He: Atif R. Bokhari

Mit\, Bi;)'kA3fi was ,applQ:~nte[:j as ~.fe'Slidernt ,arrd!'ClEO [)I LlBlLiin' May 20M, SLLI b~te:t1lue;JI[~O D'riivati~iW'Olni in Oetub-er ~O_O2. l3:@khari ha~2~ Y~l9JrS Of.Wpir:kexg-emi'~ enee, 'ail1id prior 10 UIBL ne w'orilked(:of I.e: II P-aldSmJil llmft€"r.'t B\lI1k:" ofAmewi,~a ~nj] ~laD~b IB.1lJnK rlr~ also Si;!.rves 0111 the Boards ®f Un [ted E:.;e:e ruloorFS aHC I:ru~~~e}h U.frlij~cI_ B~.r~~ ,ASI ~~ficllli UJnJi~eC! Na:Uonall Bank, Fi~st: Women Bank.; Il1Is1tltule ~f Banktlfs Fl,akisEa.n 00 d ~crm1:h i Sd.h'Qol~(Iw IBusiiI1f'e:~s amid loodershij p,

S- AL Habib ~l\. ,

PECIALSPJ'_c .

CERTl FICAl'lE .. ...,

,. Profit. illUtamaitically ,credited to 'y,()ur account II' Mi,nimum ,amount: fe'S. ,2$,000

tI, 90% fina'l"u::ing aJ'Jailabl:e against d'elPocsit: .. Fl1e!e A1"M/D'ebit Card

'.' Profit wm. be' ,'aiid Dn com,le:tioo Df' ~a:ch six~m Oftlth period- e .

liada .s.ahooLat. Ziada Munafa'~

,ai:2~ tI:r"liiIe1'l,es !'sulJ.ib:l'lIlIiull'h,ealn ,os clilWe,1 Pleaoo eall:l11'~ ';7S6-~1 C ,11·~ 1.(1'1i4~O~!4 VisitWWINJiJal1l<all'ilabib.rom (IT any 00 our i:nrancl1i:es·

[SLAMIC BAN KI NG BR BAN K~N G REVIEW 2010

- - - - - - - - - - - - - - -- -

I)ECEMBER 31,2010

1s,lamic banking in search of a direction

~II s~all wa:tcl] wRh keen- Schari,slhc:o:JlWH,s.Iltg ulce- ilu:ll!lshy sllould instead the high of 73 psreant in ness the w~lrk of yom liWl!ls,~nd ililtJodlLJcea vilri- con~'IIHHl togrlow fm ~mQthl- CYOf, it IHIS toUC.lIH:d the Qlrgaflh'ation .""l;l,[lmgaaHbl~ tMJS, investing al'll:l~inaneirng er 6,·,6 ye.a.rs ill i(jH~ .t:in:;I~IilI- I[lW5 (I,f 48 ~~rrtent !IS 1)111 with ~Si,8mi!i ideas ()f~.Qcia~ tlolols for the ~sla!iflic bamks, ~t8nc'es" It seems tl]at Jane '2{~~O.

an~ 'BGooomic~ Ili'f~, We ~ust gradlu~Uy" by vitrnj~ 1M ~shlirrit banks have r~aclhild"!sia.mit o@mks' A~R. g~rn' wo.rlc. .; 1!Il~ prese IiItt() th e \Ii hieh, Pakis.t~rn to d a~ ill ~$ th,~ eun S(lI! ud atlil(l n p h!lISH a .e ra Ily ani O() mila rab~e 1!J~th wo~kI mll!ectullolIrI'~csystem~:iVe hII~ Uedg,edl lslsrnlc b~ '100 ear~y which weflle,cts: Ulilit l)if co nventlo r1i11 I l)~II'IM based '[HI ml~ ~s~.amic eon- Dill [lll s ,ah:ll1g with mnrs tlilarl t~ehlllnHes~Mt [be IS~i!lm~c acroas the '!,!lO:r~~. 'ther~f(lfe, ~ep~ of e;qi!~a~ity I!U IiIlliiWhJ'o'(ld a dozen cOlliv,enti:onal ~'a!lks ba!'lki!il'g system taees in the poor AOfl: ~III Ip,Qkista.Iii's fimflS 0 c I ill ~ i ustice," SI]I that rill n I slam ~c o.pBr.at~ 0 ns Pa.kiSP.i.liI. case is tli re Illec:tioil or tAe addressed Mohammad A~i!)!n the s,ide~illll.s"

Jintn@n at ~I~e inau,g~Ha~'ii(.I11 hoe g rewtn 01 ~slsxn~c 01 tlil ~ sm~~ B,al1 ~ olf Ili.lrllo:s ~In PaktS:Ea.1iI was masPOl kistan ln 1.:948"

sive dl!!lrh~g CY07-C'¥oe

A h iind ranee 10 l:s!lamiic ban ks ~ proifita.biiU-

ty lis the Ilack of SharialiJ olJlmp~iant il1lvIstment .avefilllJes which causes shortterm IljqllJl iltUty Issues.

Yet.d.esQlite Iii! e hId 'th at ils~amli(;. ~:Hlmkinl{l '!NiI.S imevitable in am ~s.li3IliTl~(; replII!llllc, Palkl"starl was a IM~ satrant to tn~ p ractlcal Ilflol(lel ef ~s~(IH'Ilic balllk~nJgI. Hlowever,llh e ~as:t few y,ean: hau.e see n ls laml G baa ki ntg getring due rec(!gJil~riol1, a!lhougl1 th~~1Julrnr€y nas im;t beg II! n an d lh ere isa IO'fJ g WiJiy to go Q,ef(l re I:t beoomes; hlug~ iii! terms; (]If ~ze and ~~~acl on the ov~[~~~ Iimalflci,al ~1iI~US\tn/.

Duringl Zia.'s era, the feyul.ator b,ruliIglrt ·about s:weBi!l ililg cIH!.nae-S lim th~ financial system ~F1 the" quest of ·~s~a.liflisatiil'll of the< ecmmmy', whicth r~sl!ltled 11'1 at courlUywh:le r,ol~ {lut 01 Isianmic tn:ln~ililg. HIQ,wev'er. (l~it'~()s a rg ~ e till a.t the cl1@l'Igle was s.ludde~ amd witholJit adll (J l!I~te llirep'~l.lraU(I []f, IN h iah !e.t1 to '" (Hlh!si(lll al1d!, Ut8':ref(l rll, ~sliilliTlic

(!es~l~te the gllDbal recessj:C11il 1Hl1d ulnfavo.lmlb!e tj n aneial e liI¥i [lJIHMj;lIiIt il"'he Inass i \Ie 34. pe ree fit ,aM 33 pI: reeat g.FOW! h ~ [I ishUIl it bank'S' asset s~ze dl~Hi!ll~ C¥07 ~lflidl CYOS respectively spaa ks voi I!lIlU ss ![If the rei a:t~ve ~m mu Iii it:y tlun: t hie systetlm -enjoys ov~w conlvern, ho n al nan ks. n is ~s beeau se 'th e vell'Y 11 mtlJ re o~ ~!O ~a m i~ banks' dI epo s~ts~1ii ~ adv,a,liicas dlo,as not hamper {l1nJ:wtll .j] ,~u:eat d e~ L

1000i nr¥e ntU (I m a ~ Oil.ln Iki 1iI'~

dlH~Ili~ the same period orilw <lJ! a I1IH.u;hs~Ow6r paee, IU ndewstaFlhb~y UIOJUg h" as thi! fililil.l1J,c;i,iH syste mf.acedl ~hle i mll;"d~ o~ J weO'l kel1 i 111{i! eC:Orlo:my. rile t)~s_,e eUflct itlil'ldl lh~ d,evel, (I pedsta~~at wh i (l h the c(lt"IVennOl'la~ lJal'llking syst:e nn stamds 11161] ex pi a~ lIIed the slower ~n)Mh rate i!ll r~ la't i (JIMI tOI till i: r~ I <litil,!'l: ~y

A ~argle majoli1tyst~111 beUeves Ole l[lun€l1i1lt Isllamh:: balilkJingl not ,to be in [;ompUanoe with ShaJia.~

bal1!kir:l@ !)O!,llid liIot rH<lUy infa1llt stags (ll~h9 ~slamio

kick o:ff i~ its true spirrrt banking ~~dustry.

The less 0 III S lea fn1fro m TII1 e ~ s~alifllc ~,an k:s' asset

thel I!Imst)t::ces.sful aUlHIIl(lt iln 9WE;i!drth. Ih'Owever, c'J;msild~r· the HI80s led ~'O 3 mjm ;jll~y s~owed down dlurhl~ f~i.I.li::stic ap.lpro.ach in r~' tM f~fstsix ITHlillfh~ o~ 1<1 UII'lC iii i"li g Df II s~a.rIIlJi c baln k- CY1 0, wlil ~(llh ma I'IY i IiIO llst:ry ilng intire 1 ~l9(ls. TtI~ SElF' watch,er:s say 'is 1II0~ a goo,~ iS$I!I'e:d I ice'rn.5E!s,fO rmu II~t~d si g iii. EXJ!)e rts alrg ~H! tn at the

,-- ~ lIoIol1ili I~~,tulil ,--~

~ C;on_ ..... ~ny,'jIlIfI -~Ml~~

-

sJ:eadly IH og!lres~ i Ili dep o~ ~t growthl .lU a much b~mr 1l1!(]H UHl.ln o~rnuuli(ln!l~ banks" r1Hinragin,g 10 im;U:-<IS'BIIh e- de pod llliIuktlit share fwm rlearly " peroent ill GY07W! Iilear~v 7 IP,en::B:Jll by jl!lne :2010,. These :m.HiIllbers have madeth e ,experts b·elil'!.H!f.! t~,at Ine ma~ ~et ~s uerry ~l!!ch therre W be taiPP ern; it is ~ (1St'll lllHilter of e<ffel[]t~¥nessalld beilng co III'IIHlt i~'I\i'e.

AiI:Ilv~.lilces- gnJlwtnl, (Iii! th~ oUi!B, ha nd!,. has. beern ~,~ckImm'e, which Is rel~ecUve of tli ~ fac~ tih at lis I,amd (l ~~rn ks la(l,k aJ.l!Jlp,leav·en lies fO'f fi t1<UlC.~n g, ne adv/l;1Il (;.e~NI· depos~t raUIl! resultallitly, shi'oWS !l dis·null p~,c,ture wh,enco mpl;3J teo IIll Ilh a~ of the cOlnli'elltkmal ba~ij(~$. lIii6 Am'l: ha~ \Vlor~s,~n'8d [i r~.d I!I ~HyflrQ m CY07 ,.fr~m

II sl <I Ilii ic b,arnks rety (111 La~, but net th(;! leas'!:,

asset bud UmlitHJ:in,t;I to theJe is! a trust def~c~t a,enem.te. return 'fow depo"(~i- iUiIliQrng1s1 the O{]lI1!·5.Ulmets, tars, The fixed! ra.tiB' bassd both p o~enUa~ and 'I:il:t~ existi rig OMS. ,A large ~a~l)rity stW be,Hevesthe CII!H,ent lstarnlc bamk~n:g nJo'!: to b.e ilil ,o:amfiliarnGIl !lo'n al t\(loh;. Elltre p ~e FIe urs

iN i t h S ~l:t!.ri8h ali! d perc e~¥e~ are also r~~ L1cta n t 't® s hi1W~

I~ as j ust a cl1lan'QIl in

d 0'8'5 exist, I:mt is nut I i Ii u id eifl Q ug h as ~t is n ot:fre'il1!I:ently trad ed i '" ~h,eseG· onda.ry lIf!ar~ets due to ~€ ma.nd~s iii P P Icy ~M;IU ~S.

Ilsiam~1; banks ea!JIHf~Y awai~ the stats Barnkto lii'la~~y ap'~'1'0Ve t~e lslamlc i·bil~$, whkh could hellP' S ~ real dea~ i n a{l~ res;si 1'I.g1 t~ e industry's !l'lr()bleliTls [1ft ~!io.k of l!1vestme!1'~ t!lolls.lnI,a:t s1.lid, erl!JiIJ.l]l1still n~eds ttl' b,e d (D Ilie tiOWiH'dIS the d evelojlltrrlel'Jt oif SharfJalh eornpllant in,)jE!5tm:e,rnt toollsl where a ,g ()I) ~ le,ad ean ble tasen Iwm Ma.lays~i!l! wlhic1li nas. pl'~'niy [If lslarnie ~m!rE!cSt· IHeM iI'lS~~!iI!'IH~MS II'IC~liH.!i[]g swaps" T·hills etc.

ZuitJair .A.bbasi

the rl sk p wf i lato create a level Ipla:yingfidcl (uuJ to r'HWe,ct U~e risk·sha.fi I1!g nature 01 sharlah b.a.1nking deB pMRS..fl1,B il1dluslry !:Iemal1~$ [hill eentral bank 1:0 treat ~slam lc ~'Jal'lks I~om a (mfi':r~r1lt y.;tlrdSlick than ,the one used tor cummsrelal banks,

Ava.Habmty Q~ ~1!I:3!IHty

i]l.!ma!iiCalpit;a.1 is, ,als (I a ~ i'g lssus > tlLl:!i:~~!5S SChlfWi.s, banks ,a.~d ether ~!)dies hl!lve ~o wo rk h,ml to predi~ 1;13 riIll'l;l reseh Ilhn en the su.bJect,. b eea lise tli!"e Q~llPr(l:f· i u n:lt:y on (II He r ~s h<UlgiC ,8f1:(1 th-e human resuumes req u~ re,d to! ta pEMt are f~w and far b etwee iii.

nJ,!)mentcl:atl!!lr~.

That G<li.n 'Mil y Il,e d I) nlfl when a~~ the seho~a:rs sit ttl,~ellh e r ill n(i ~eHne wlh ~t !lxa~t:~y is I g ~<lif1iil ic barn IkJ ng ana tine reg ul!litor sholJld f,aG~ '~tate tli em oy p rl!)V~~ i IiIg !Hlr'W;i,~~~ tools to OPfnu~ 'ifil the CUHe~r~ eIlVirOfilli[WOU:, likiH 11 different belli(]lilrifla~1k. raMttla.r1 Killlor~i[lF '~M Islam ~c Iba.VI ks ~e'Cili UJ~e i~ [mI~~e s ~he ~ sJ am ic tr,an ks IO[Jkflv~ry bit ~~k.~ !::(liln\l,eli!' 1~(I'11 aJ I Iba F1~:S.

~Iii the final ana~:i'sis, th€irei:s ~rI(ji!~tlgfnt p'Dtel'ltial ~n Islamic' ba!'lk·

The Ilessons learnt from the IlInsuccessful attempt in the t9aOs ~ed to a mo:re rell~' iistk: a;plp roach in re-Ialll nch iing of Iisiam ic fJankiing in the 1990s.

'IIIh e re de P CD.siUo rs are 'cre(]l-

iflg; i't is jIUs:t~11U t.~e itom and th~ir primcipal is

D rtiltec:te d. b,~nt ksaln dth e re'g IU lall) r i'l.Mdl 'W aUgn tih~CM,(;~Pt rJl'oue shktly with the ~ 5~am io te.ilc ~ i nrgs.

Th.e. V'lriXfN' 'C,,11 De. Ie:rctlfld

22

~ siam ic ballks ad 0 pt a !lei also ~t1'!l ~ack [r~ ~I'I,o.Ui!gn ~im,~rn~il1!g toob amd I'lpP(I'lr· tuni'Ues aivaillallile 'if! he 'Sh'Hia.h systtllill 1111 Paklls:tal1," Sg ~d a seaso ned ~s l<'l.rn ic o1llliisieir !tSSOIG i ah)d with Meezaln Balil k.

Atn,(lther ~~!i!d ra~ce to

~s~a;mic b'8!llilk.s· Il,wm:ability is Ule lac II; o~ :8 Iii aria.h CI(I m, p~~a ntt ~ n:veM 1'Il~1II1 mve nt~ es wh~ch ,O;li!JS!lS sn,!)rt·te,wllIl liqlu M ity issl!!es. nal is w h'y !s~3ii'liiG bal1ks Jusu3illy G~Hty hig her~';8Sh bal~rn c<es thalil eo tlIvellltio nil.1 t.na.n ks alII ci, rn tum, yieh:l ~(lI\Ver retl!lms ~1iI t tie ~w ~ !'JVestmelllts.

Tl1ere liia~e been eUods to (jallsl!) p t\h e d~fhrates Iliii~f· Ike~: f:olr ts ~a rI1 ic ba n ks ,and (It hlHII1!¥filstm ~flit tJo'o~ s, ~ Ult pwg ress has ~·e'ell pa~ nth. fly :s ~o w a I'Id Ilfa.s y ie.I~le d ~~Ule ~nit The Suklllk i1Jilrket

P [![Idiu ets face h-e,avy eritlcis~ due W lheira,pparellt re{;.e.11!li Iii ~a nee 'III~t ~ eomre 1'1-

p runts l.liith~h e fin all oie rs ill lo,w ri:sk ve nt ures, La.ck o,f doc III rIHtillta:I:~o,1'll 'm~k:e8 U d iflie u~tto, 'l/iiiork wUh real Im.!>i·

me S5 veiliu r'e s ..

Ma~aysi,a and other

tecgi~JrHll Gl]l.mtl'h,s hialjl~ re!axed .I"'eg I!Ilatory to~lls al'ld taxation par.ametews. 1011' 5 !la.ria.1! ~an M. islam i c: bankers are o:t the vi'ew Il1at Siil:C~ Ils!~iiI1i,c banking is IiIHW in th (lJ[)untry, i't ~ ema.ri d s rel~:x--ati{l n 1m taxaHlon b~Ga4lJslli in is:I1li.m~(; b arl Il.s[b e de prosit 0 rsar~ p~dnlers and 's~l,are ~ne amtl1lal IJw'D~it ilr:ld loss 1m I~kelraditio'n,al blanks

Moreover, beCllJIS,e of thr~ ~ if{edlilg rilatn8 ~f ~eposit,ors., Ihe ID'I;!H,;enta~e of s:U~ ~liId :CRR aJhou~dl ~~

- - - - - - - - - - - - - - - -

BANK.ING ~,NOU'STRY AT A GLANCE BIR BANK:IING REVIEW 20101

DECEMBER 31,2010

:DI'p'08~t MeiblliiSaJtlo fII

IDIi.

..
A5Ii~ I~(MIII 800 1~3, ~ ,27S 11,087 1,7S7 UC~
I/Iij Mi;I'~, 11.991 ,2~":213, 2:.636 3.4173 6<;2410 3,.739!
iiI!:!im n_"!N«I;i C!'I! ~. lel'lllifna tOi p! .. 211:2 2101 1191 1:U 240 '·NA
-
,-, gt~,
,~~~u~ lit.
i_, -,..,.
Friilf:l.Cillngl EqunY' 292 ,4012, 54<4 56J 1(510 585,
-. -t" Oe<~ :V632 ~~tll, 3,e54 4.2,116 4,1,86 4,.8,18,
l!N.Gii1 - -- - Joo.ID Bc~m fll 351 ,438, 0'1,52 4§9 ,SSg ,oNA "_~e:! ~~~~

II

,I, I _ """"'~ .1~

,

flllirrest l'nooli!ilE! 1'IrI,tOl!eit i:x,elllsQ N:et, rnl:ems~ Ilnll!Ome' 1"!iiO¥i!!!h!!!1s

ClUil!~,r' In!liOifllG ICilp!}!'1atll11,gl liIlICiG:!1Il l'r,ofiU: after 1'9,

C:YOiS C¥a6 C'lf'@7' CV'J8i CYIJ9t 9MCY1'IlI
f'ftld, 2'l2J::!i 35L1 (1,71.11 56S,~ ;312"'
11,4.15 ~~O 1'71.5 2-~.1' ~~,16 200Jj
15:5,g ,~9,6 UIO.2 232'.3 261.:8 17Ui,
2.9 3.1 5:U, 102.2 94,.1) 3816
U.1 115.5 84.8 as. 1 94.1 51.0111
'12.~ n~u :275JO ::n1.;5 3!i§.,9 1184.5
1i5..4 21.2, 2lU; .411.1 57.1 38,'9 --------

Proflt and Loss

MVBIliIUI!il, IRs~,b~1 &I:oc"" iDBc.iO'1J .lIlliIn,o![It91 Dtu;:.(19 N'hl'I'-11IQI Ju;m·1I0,
.byEl.liild use
IC'Omlfl'ilodlt¥ 148 215 399 411 364 .\11841
C~Iini!iuJme;r 3,7~ 332: :nm 269 2162 246,

.~'CIi!!U!
.. T!1!lI''--~ Asrie'l:!ltu1r'Q 151 1155, ~51 156 160 11M,
• -.......-
• __ 'fIil!!i:. S'MEs ~31 3;75, 335 3481 am 3~8
IC~liJ'fI~t!it,O 1',520' 2.(116; 1,953 210135 2,000 :2,006, ftgl'lltltwiSQ' N,PI!.;g;

•

I

Aa" I JUIiI,·1,ml (%'JI iI"'~;P I'll 'Top '&to1'ti! iO;[il11llOiOO 'TOf 11m2.' All :Zi,IBI_nlUi' Fa.
lirI,fe;C1ioRI ~aU:o, 1 1..:1: '13.11 Hi.' 14.4 tlU, 8.6
Nel l~fdettiQIi\I Raliio' 2.3 4.9 5.9 16.7 3.7 2.0
:P,rovisiQn OeVllt:age a~.6 65.8 6:7.3: 57,"- 13.!6 1~t1
Ne!NiPts ~o'Capilal ~CI.6 30.7 26.3 191.4. 1"7.7 ~.5 Fmed U:liVeSlmeftl Working Cep-lt!~1 Tll!de IFi(i'l.:llto~

12J' 13JII 13, '14 14.~, 1.qL0-
ttl ~Ui' 13, 12 ~3 12.,8
7.:2 11[1J6 12 '10 ns 1'117
'. All oo~be • . 211

-

BANK1NG ~NOU5TRY AT A GLANCE .BR BANKING REVIEW 2010

'fNI!i!d1s In ADR 'C''rIfI{DIBi O'Y09 9_'C;Y101 0"(08 CY,IlI9 SMOY1101
'm
NBP 31.1 as.s 3,t7 1S,<'!, 19 1t4
!!P HBI!. 3'5.6 41,'7 33.6 10,3 '9:91 7,9
~
_,IQ !!mBl ,:21.9 32.7 ,25\,,1 10'.7 11.7 7,.3
,~,i,IiIi;B ,MOB 21.5 35"e, .21.0 5J! 5.'6, !!'I.,IS
- II1L All ,~!U 'UtT t6'.6i ,,'U' 6, 3,,7
B,Aft 10.5 10,,'9 9;9 4.8 52 :3,.4
(I'll SlOB '1'13.4 16.] '1:2.7 'G.S 1.'91 ~,,4
¢!i'¥' t'!!m ~ l

NO:nJ~JlItDlms:t ~f[I~Rdo,

O¥09 5.50 5',,100 5,30 410 1r() 13,,50 ?'"SO 5,,1'0

eyos 2.90 ~,,40 ,S.10 2.20 :2.70 ,3,20 6,60

Nap' IiltBl WIll M,ce AIU. BAfL sce

3.lt -1.30 4.,11 3.Al0 5.11 '&.70 3..<60

5,,70 '4.U ,4,62

:Ui3 113.35

".30 '4.M

110, 3.30, 3., 1(1 2..6Il' 2.7,(1

3~3D

lM7' 3"fT 4,~;3 2,.77 2,,19 3,~O

~,

1i1

,~

OY09 20,1 18,6; 19,.,5 27,S, 311i 5.2 t.s

0'1(08

2 1.5 1.:5, ~.6; 1.2 0.4. o.~

crog, 'gMCY1IiO'
2.1 1.5
lI!G U
1.5 U~
3.3- 3.0
'11.6- 1.8
'll2 0.6
10.2 10.1 SMC,'flf1i '~~.I '1'9'.1 't8.4 ,2itA, 2,fi,.1"

0..4 6;~

ftA'~urnl ,on E1:S'pcIsi,t,

NEiP HElL UBI. IMOEl:

Allil. ,BA.!Fl.

SOli

20'.5:

H'.SI :211.91 3,1.:5 21.2: 9.2

1.!6

-~

--,

--

Proms

- - -- --- --

II,

IC:o~eirag)E!!for ,O'~:c, AsS:€!,1;s

cval 31.7' 23·.,8 20.1' 31,04 28.9 5.6

~:.g

9 1::,¥11111 '26..t, 3;iU~ 391,2 :39~6 :28~9 111..3 '11.2

CY08 IC¥09' !IMCY11!@,
15,5 1:e~ 11.4,
10.0 1~13 11.3-
B.a 9'J !U
1SA 15..5 12.5
,4.2 1.1 5.8
1.3, 10;9 US
0.7 '01.7 1.£1 INIEI!!" IHiEIl UIBI!., MOB, AIIL, :BAlfl SICB

21.£11 2.1J3: 2,1.81 !iM.9 22.8 SJ§,

2.9

" . •• '10

tWiil

B I~ '~l ~ "

.'~m ..

rNTERVI EW BH BAN KI NG REVI EW 201.0

DEOE.MI8ER st. 2010

Faysal eyeing further expansion

An iinwNttaw With NiaW,e1 A. l~hUl; President: &. GEU! Fl(ySaI jBaril{ UllIi,red Haider INawab

INa~erd A Khan has. his h.aJids fll]lll~ arHffr~m the loniIOJff~llliwu~~. life ~'rs~t tQ I~avea b uSYSichedJ!Jile in the com]ng y'ears.. lailldl'il'g t)]: Btl Rl!8'El8Irth, IK~an $·h,are,S: h [Sp r~ns to cant~nu€ 'slmoppilEl:g lr6r m.e(HI~ m a.nd smaH b~.nlksj whii Ie' iiI1lVl~sin,g, in te_c,hlni~~ogy to. SllOO13im line: h~ $, lexi~tun~!:l busJness and ~Q ,expand fiji:$; lrla~~et llr~s_elhiC:e. i1'.he f~IIIOIJ.llIilnlg 'aFe "e,di:t~d trans cr~pts ..

DR RlfseIU'CI1I:liiu,' only Itlalilk 0:1'1 sa'e'~Dr I~e past }!Blr Is IiI.OW wlthlyaul; ,~oes filTs 1irIm:l1 y,eul ,a~"e dlDne .shopP!ng~

NJ~e'.d ihaJill: i' 'II"e nor

s;tnpped )tet; we ilIre r[wkirlg!o r mnre bal1lks to blifY orte mergE:

With, My vlsfolnJ is. clear, ~ wam 1.10 sic:ale DIP' ami I ilInl hlU r1~rvti:l ci~)i bll~iflle~$" 1 em 'omn vir Itted ~(I ~il:k['St~n:. ,aM I beile'"'1e thllr 1m) ~ I II ~on pea p~e are l1I,or g(l~n:g into tnesea

We cao have Ib~d pDI~cf,am, a P ClOir' ec'CI~lomy, h"oflribf,e (:I'(lVer~aneebl!t a~1 Q1 it has WI ey.e'~tlu a~~y ,ell,l\ll~\J'e irl~O a stfionger strUietlU re', I have \tery stfiong pWinci.j)a.ls \lIbol belf;e·ve im Pakistam. Alild !lit faysa~ Balll~, WE! heluevethiat there ~s tl'8'rnill!lTId OilS 1l1~pl(lrtlillTI ity IlD doblUsilness illllhii5 Ilnlal'l;et

BRR: But merging wilih :ill lili'Iid-flI~S'd GOIli:l(l be· a palnfull IJJopos!lUon?

NIt: No, It all -d'Il:PBflIGS 011 h,[)w the B,qliJ.atloFl W'[)I1Ks. Mer.gets are Mstld 011 bOIOK va!u~ r[).r r:USCO'1!I nll~tiI "(;i1.S~ ~I'iJlj'jis. FOfrrtarket lJa~IiJll:"S, tner~ is 11101 iO:B1l clHna.tik inl the nmalFIlWt SI[) you gOI tOlifl!1lIrtis !:IusOOUIf1re:J 'cMh fI®ws, bOli~.d 011 yo wr estjmil"te o~ IP'oteI1Ua~ El'amilll.Qs" I've dl(mll it twice bekire olndl II kflow h,ow i! ca:n be rI1IOlIlmgM p rop~rly,

BRR': W:liJ91i1 daYlllll IlIhlll to gel beck In M&A iCbron?

~K: I w~U ~ook for mJOr'il partrue rs One!! I Ihavll s~bmzoo. ~ am SCQ'pilTIg right n'iJIIIi "1i!liId m,y MOPS are 1JIojlllgtnNlIiIg h 1l,~I" tI~fu1igl!1ltl SO Ilet them settt6 dl~w~ Olil!fitl \j,J"~'11 t)€i up ;lind runnling .agm.in v;eifY 8'0011. I am 1!!!l1 Il1rerested ~n C!lirlryljngl a very Slnall.e;l1~ftri; It dcesa't make seoS!e·'!lO me. &[1 it has to be i!l tile !')1l idtter.

IBiRR: .Aire y01il1 II~tltllillQi to IbE:!oO!me a top, 5 bankin~e llilear flu1li1f8?

INK: I don 'I kllQW i~toll'fiVe wou 1(1 be r)ilY ts.rgel.. I 'II pee~ tlJ eat UIIl a ~Olt (If m~d si;re~ lIa.n:k$ ~e~() ne I Ol!n~~t WI thlat levfJlL

SMm p I.ayllilg MY baJa.rlcer sMet, ~ Calil o,tl!;S!lfi p aim of tharn.

But nw strategy ~s tOI toEl Il ro fila [)Ie. ~In '~he 13$1 tWOI

mrrRBS~

INK: II thlink ~W ~ iSSllCMd tlhe porUa lUe really we~il. I MUll rBmem~fil~ wh~n II '~lii!n~ Imto 11&glollatiTo tlIsan:clrny peop le stitrl.ed 1)) preseat, I saw til ~o~ of Jaws drop, AIll<l ~askeocl t~elirl '~O refulte any 111 ulm liners. ~f they d iSaigree. II Md (I, very gOQd lJuHJlerst~ndjng olf the po!rt~olio; I had flu iUthilit bank.

~ kn,ew tJhey wan~edl t(ll -exiit t~e market all d we rs deba!ti n:g luno, would be willl~llgl 3J!1di allile t~ Ibuy ~t They Iknew I h9.d tlhe ca~acilty to clese the dea~ 8!nd I t~il!i k ~hf!t is whal; made' iit ha,~" per!.

IBFlJR: Wh.at 'WIJre~h9 things YQiIl! Willi lo(l'fling for ilill FlB.S?'

INK: R etaul was dH'fIlTIi~el:y' a. fu!;a~ Il'DiliTl:. If ~ W<lst.Q setUiP cards ,ami ~calE! i~ iii!)., it wl]Iu:ld tlav13 tailmlJ me hvo YH<lfS" [!J,[jW 1,Ii8 g'et ,a p'[lriUQliio of 150,000 carols. Sothlat's ,alii lnstsnt ~~u.g.

Thi!1iI I gel ADDs (al~erm3;te d!el~\I!:lry channsls] which are ~i!I;r I:Il 0 re B:,Sla tll~sl1 ed tlHtlil

We arewlorldng on a Customer Re~ations,nip Management' system n~at wUI 3Iutumiat:e: alii of 011.1 r froll1t amid eu slome-rloUich 1l0iints ..... we aria a~so devell~ a p~ ng a p,i:atfolrm fOlf die riivatives.

ye"r-s, we have been w(uiKing t(IWiuds stalbiHzllng! Oil.! r oore blu:sirles.s ,a!llt! r·ed I!!Coe dleipend~ e!lloo em equ ity c;a.pnti!!1 markets~s· ,~, sou ref! IDf fNIlming,

We are trying to create an outreach pro-

mi:ne, fABL haJJ a 25-;tlOr seat call c:enltue; IR'lBS has l'I1IlICn Ia:rgelr i:nfr\lSWLlC~ilm:. lMrd Iy 1 th lin k: boe'St practice.s 13.an ~e g!~i n:oo aneil system calPiII.city vim begreat~y eln 11S rJood-

W:e Wi~1 alstl be!le~ntfrom te.cho 10 gy P~a!t!'o rms that they are rl.mn~flgi.~ ol!lgh som:e "OIl lIih~ch are th;e same at ~ABL I .illlnla~s'J- tryiin:g tIl D(Jln~;\Dlida~ the nl!lmber Df S;YS~Hrrrs RSS 1h)as !isilTIg. i1"Iley werre uisinig way ~()Ol rIiijJlIl.y,. J[]~ makinlg things ~ n:meoe'l)s.aruly ,c,!)m pl~]{,

Lasl~, we ar~ 3~S(D k!o,liJjlngl at tn:d I!Ic~~rng itlii~ Iii iig hisiki I ~~d ntlJtrlaifl c~p~tal tllat RIBS has to ,off~r. MOGt of tih<o~ {nat leifl:

RIBS cam~ l0 F.1l1.~, So' bhtl. ~lightl)f Ih ummn: capital pre-~all~ isn't il. IiImtl~~1irl fo!' m~. I tlalJ.~ lost p eo,pl~. JjIJt 11'0ml'l that am re~ FB,ttaltiH:l, As far .as it! tIil Co n;c!Bwn;ild,tho,g,e iP'BIJ,ple p,Jjtl

IQr ~'ltelilr jo us,

DR: Belngl afomlgnr Ib.alllk 1iIilllli1(1j 1IIIlII!lItirn8J1)[om:is InilGI iIIC~~mli1lts with ReS,wa:llIldl they !Ike mlwork with ~a:11 iIIsm!i?

Ni(; ll'le~o relg n eliltl:tiies that MlntedtoeXiI: dldl~lut ~b,out two years .agol whe n fllB S anno,un-cedl'hm.t '1 Wanted 00 s~~~ its, olfllem1llolnls here,

The'n;! are c~sto'rJilef8, who, ~iI!veosf3yedl arid ~ave 'C~~seill to wOfk with ms. We haN'e a ~reat re!lati'~msh~p w~t:h them. I a,on'tsee aJ!ly emitUes e..xitiJ1ig the b Uls.i ness !'t:glht !lIO\!,t

BR: llhe:r'9 Waf,S some D,ff bala"l}~ s~e9t deriva~i~9 Hems, in IRBS\ ho.wilim you ~liflgl ~Mlil1? -

Nit Alii delrlva"l:llIe trarnsa;cHDml are hedged back to ib'8Ck am~ th;e nSK is ~~m~~eWly mil:· Igaite~, So 1M questioln you mj~ght wai!tto '15k is, are you gOIUflig tiD dll'J ~t ,~.gl~.i n:? Alild the anls-wer' Is, absollllteJy!

W-e a~e b ulMiru:J cap'a.city at the lifIome<flL The systems afE! 1111 place illlld that to me is the p~lodu,O",t of my future, Ilythe wa)t

BRR:: W,~at ll'~ojeGts. and !!lew bnlS:lflesS'8s are YQYl 'w-orldngl on?

Nlil:: ~lIIttlJe 1J<'!!1-t two vgarsj I h::lve ~~ell1 a 11611\i'Jj i f1il/,es'li[)f Irn tecHI10logy, n~s. ~QII1 k, W':h~f1i ~ tOok. O\l~r ~fI 2003". MtI .~Ilsl: mlov8~lto a Il~W ~lati!orlf'n, ~~. ~!i!t! aJ 'G'OMsyS11em .fluttn~r~ \\l'ere millny chQlkes illl r~., So we

pb[!jSolj o,fMt.liinlg Iri:g!~lt umw; nlopeflilUy Iil~xt YMr ISO rtiI~ti me, W8 'wi Ilf ·go, live wUt~ it

Wil:h iii cliBnll 1J1Ise of mer 2'90,000 and Wi[ll RBS ~cldlng wlll~larloiher olVer H}{I,mOO we are loMllngl .at 11 Ile~~UIY oetr~lJJch andaltemate {!~strl~'L1- lion chaliln,e~$.

ihea:rsas that w.~ llJEll'e iDak· Ing .ilJt,a8. fl!f as FAlBl ~s COrl" cemedi! was that we wav1.tOO to CO me iatn the .ClIros b'l!Jsiln:e;$.S, I:ml:n(;~I~e;ss han klll1[1 and dll~p" en in~ al~emare cll~t'f~b lIUon chain f18tls, So withi ths <lG(jU lsilion of ABS, we've !lot ca:rj"js lllildl ill fal r~ lal"{lie COIlS!.a mer porUoli~, As ,8 rasu It. we've glot a cOI'll1lP~~"MSlliMl of pOO£lucts from h iglh end ~n\llestmem i:lanlk i Iilg tOI re'iai I hl.C Uisse-d pro£ll!lCitS ,

Wil:n, a. [;on~o'lldatt!1r! viQw •• ~ snn ulliJ 11f1lf\i~22'O IH'aJflrChes, wnereas o'UUa.F,get is 25!(~. Ami we sheu [dl have a faiwly ~a:rg6 'st~e (If I slam ~c B:alllkil1igas, wed L The vnsiml ls '1:0 h(lYe aiJ'OIJ~ .m ~slamic brandes. opeml'ilng i n:dependetnllly,

113Ft Wi111t 'i!ltl'YlJIlIp-!an~o' em whh ~he hnl'estllmel1rl batntiiing DusiflesS?'

INK: We ha!ItI'e ~;eached a,

l,ltag'e sUlitlthat~ih·ere is re tlr,a,lJIsaciio III i III IJalt:ist:afl to whkh FASl dees nOI~ JJlfrt i nl!lit" eeto.

Wa h~!JIe Fe5c.aled ol!lrsd.flS i'liI the last twr::n yerars_ [Jepi()Y~1iI11i resmlmres alild cra.atin!Ji valUE! is' what I l'h~lii1k ol hnlTIo\'at~(JIiI. We we!re

The inlegr,atimil of: my asset managemlsnt with weatth management iis de'finitely on my radar 'Ioli tile next year.

st:arte<ito fixt:nla.t and Inco r~orated Il erlphel'all .s.ystems w~~h it,

Nlow, we are w,orkiillg o:n S Clus.iomer Fle~atiDIi.stliiP' Miall!a:g:e ~elilt SY5tem that willi aUI1iO!TIQte sJ I 'iJ1 OIJl r frOllt e!ld (ll!swil'llerrou(:h pO~fltS. (9n top o'~lIihn, VIe (lIre "'OW devel~ OiP~n:g a p~<Ifl'o Flirl ~'(J'I' ~eniva· ·li),1E;S. ~ n: add iltio n: tl) all (iI~' tll!il we alre tryi n:g ru[) cream alll [I uilt· re;a.clh ~(1[)graliflilill:e J[Jf brnl'lch·, less balJknlllg ,. We are in the

a~~~ 10 billY AB5 W~nlr[lut raHslng ~Qluilty fmm Out S j:lO<ln sO rIl.

Rfghil: now, ~ dial1.'t ha1J@i 11116 t~me [0 I niteOll'ate my ass,!:;! rI1Ialliagellll:efllt Will.~1 we3!llh nllfiilagemEfnt I h'm.ve .~ fa~rly ~arge OP-llonUJnlty wI1:en: I c(llubllne fUllS's: puererred ~il!lUkiilga!lld ~y SoUtaire_ For IlJ(I"W. ~ d om 't tt~,ve thleJ time to d,o that blut i~'s d:efiln ite~y 0 rI my radar f,or the ne:;(!t year.

graml of !n,anchless banking"

tfTI~ 1i~1l end J[Jt tfTItI"IiIllMil!lim. s;ifle Ilan[q;' Alild ttlt8t ,is a glr::n1il~ that ~ talil ,ach ieve, be<lai!lse I am lIIot vlHyfiilr IWIll1 it I'm st~ndi ni~ allaM'ut Rs2iO D~llluo'nl illl .1SSlBts, so, tfia:t f)uts 1if16 f.alrly cl()!;~.

Oonsir:lerili{jl tlila~ Wifl'~ mow ()[)~ ASS, om 8r:ale Gn<l!nges, rrom Millflg if] the: 112tifl Ot 13~~ posfrl~OrI'l. we· are lil'Oifli mClvl n:~ Imo, the t'O,p ten, A.M witllill that range. we are a wa-r~r u\\I'ay fWffi"l to 10. beeause the d IfJ!t3re~ce Is not Wi ucl!l. Ilf ~

BRR: Artl l{Oil!l !oa~lIgl for 8Iil: ~!s!am'IG Iba~k'i

13M: ~C<'llil, ~Ul: lillY sil:U!a.tial1 is that I 'wn! l1a\l~ 40 Ilsl!ll1mlc linlnches .aft~1' UUI mergelr <lind ~ am n'O'~ tlosililQ.-m.WlY b,arlches. ~ \!ii II e~ihell' rellilcal'e branches O~COln'li'ert them into ~s~amic ones. As IOIlg! as I .can fif!d Ule market a~pet~te, i win conven bnmches.

BRR: HGW werre: you aiJire, to rnegoliatf)\ such ;81 gDOO ~:lfi(lfl!

DECEMBER 31 ,2{HO

13,A!~~IING " ECON:O:MY BRR;: Wlnat's yOIJl r \lirllw '@111 small rnl!.l'1!b~

NK: t~ yO!] alFe not aliil(lll'~ th~ Wp ten, then you are nroargi ral~e<l. I" d 0111' ~ think th:e lfldustry is {l,oil1lg to 1M th'e 3n~a.l11 b:lililks sLlNi\!ie, ::),0 lrls gl()~ng 10 go, ililtj]DonsQ~idaH~liLlt [has ~eBiI1 Pilr'iI Il)f 'the str,~te<gv for the b~lilking se.ctD r[o,rt'11:e ~aist: ten y€~rs.

BRR: Wllilat II Si!il1aU ~ilIl!ks tm't ~iilld p<'!!i'tlilQIl$1

N.i<: Then they rliiw:;t bepome rll>gltoMII baiilk'S ltTl(] spe.liialiize,. l\h1fl.pooIiiIElffl !s~at ilI11:iIilY of 1M s~olilsors'8.gliJS ar,~ WOI lar,g!B rol atDellt t1i1iJ:t their ~~Ill\s wm o'petale ina regioln~1 spec- 1ir1l1111. Millny Qlrliem IiIOWilln: liJBk~rI'g~o fiI1:(:Tl,j;B wrrth OUUlrs. but can i~ filid I)artlilers, There' is a rea~i~orn thai: soal:e is Vflirv illl.1Port3nt IlUil: not very much ~s be~n:g wm::.llessettl on gl1mmd ,.

At ·tn~si!lfiI1;e ijme, yOlu ha\l~ :t~ ~weak the mi)loop(]!ty Il~' ine IB.rger ba!l~s "" 'ihalt itse~f is the l1Iex1 cho:lUel'lge f()lr~le celiltril~ !Janik. H i S~Dl"y~e~~s Ii 6., 'Ullal super ~anks <lire mrt hl!<llth:.y.

BRR;Wl1at is the problol'rl

wiWI hiving SUll£ill' blllil~s?

INK: Cl1li11lpl$lOIf1 is liIot~m· cie:nt beeeuse banksa:r~ d ivid~~ iiM!) tI~(;!ks. 1116 ~Hg~ !mnks elbOW lout the med~lum s.i~~ OI1~..~ltl'iciBtncy hasw come hom a []im~lJ9rtk~aII dlfttrubl!l· rion !lIf tms:i.ness s,t);d 1:llitT ~ 1~1 ink is where ili(!~~,l!Illlt()r is hlavuni~ a chaillenge to p~u:g tila'~ gaJjl'.

W,8''lJB rNillde 1!!ne parad~gm 8b~Jt from pru lillie sector IX) ~r~vate, but wM.t ~"'lV6 \!Ie dOln~. We stilll haveiilHlse ~arge banks anti they dl[storl: th6 ~Qjl!lfitiolli IQf the ~;;ml!Jin.!J5ector. Eve~vbody talks .11:)[:,"1 h:iglh spr&a~s, bur ilt is O,[lJ~y ill t'(lse ibiglti'll'e bank$.

IBRilfl: What"s your view OITI aOlr~!!!~!ml! IlJ.m~n;1!.I or' MnK~ IllIIg illllie, rural economy?

IN~ IFm rnato open Ilj) a brali'lctl ~n rUml areas me<1~s tliiai( nrny GiJSU; • (lif GOlf] f11B<G1!ivit.V, ,of techlii(lf,(lg~ and ()f mill! n;~ ,opemtiolUis ~ wii~ lilt! P,.MUlO l1Ii!f:" f1!aHy hf:g~, At what level Oil I'IJlPOS~ carl I b rea&: tI'i.!\en. 00 ilt w~111 be a dra!J. lh:erelore, we h'avl'l klri nd ~1Iays tocu.eal6 filllllilcial illdu:s~orl !Nih i:cih <lIFe cost efficieru ilndlIlI1M'S W~lelre ~ feel the runn sem of r<efl;! rillS

INK: n was the ta~i end 011 luhen ~ was ~hairhulJ it. '('(Iii! ~mmr, lhelre are two' ~h nngs lIihere tne celiitra~ bank do,esn't CIH1S~lt the maflKet O!i!e is !lWrlemry PQ~icy arldthe other is cal)it.al ade~uaty. Tnese are (j~a!tated clclvm.

At the ti ~a, \'~a' r:eaf)Jt~d ag<liiUls~ iii:. But til.: 0I0Vi.lmol"~ th~lil~lin<g was wry slflil.pl~. Banks had: e).De','iS m(jlllid~lY so t~~yaoll!ld S~ll,e UIP' tll'eir ~osi' tians W' teceme mort ~e$.ment tlJ U~S;[lrtsiUlil;lks,. It was iii· smart .Sl:raMgy rut tliill tilme ami

!I~ere ilf1l many othelr lD'rolb~ms that 11!l~ti to DB audmssell! 3$ ~tr(!II. S BP nsad to aUQw 1~w.8r ~Il'ita~ rel~llI~remel1il'SfOf rated ~l1ititiiS,!;, Whern W~ impmvild c l!W ca.p ita~8;tI~q l!.!aey Ily e;l1icour.~.g irlg ratjl!l'!J~;[h:e central bank sllud~bat uln~es!l the rotilng is pu bli(l, "'Ie w~11I riot get true bemilU, So, cCnlsistelilcy Iii DIli~iq is v~~y i rTfiIilYJ;nritU!l!L

DR: W~at ~Si 'yoUlfseliise of w1he.r'~ NPLs are g:oing 1111 the !!IilOOI1i'lI~g ni'li(l!itll$?'

NJ(; ~1 interest ~ates contfnw;l 00' lise, liour NPL-s <lr~ g.o1ng 00, The alre albsoi:utel,. eorre-

wm be.

BRR:: How do ilitrlk we 100JII1 boost ilrgri finanoing?

NK; Yo,o 5iee we s~U~ hallie 11 et been able roge'l: fid Qt the 'iI!rthi' • the rNi iddle main .•• Y/h(ll ~liIltilillu'es tl;l be tile ~igg:est gUI(lip!itilr Ql~u liIds ta ~armlers. He. r,s, ~JS(l trhiH b~gglfmt h oar\'ililr. Sadly, \l.l'~ ha"'~ i1Qt beeHlaDle hfl!l.lly I3sla~ns. h the ()I;n ra- 1ifI(l~itles e.xr>harl!JH 'alild ~<J!'J~n't beea ,ablle- to itlrl:egr~.te il:hl agwt\l'ulttHH" As iI result" Y[l1!I dun 'j! have w:are!ll[)usililg, aMici ln Mill w.1lrel']:(Jl!Isirng doc~~

Iil!led. An,~· it ~s !licase 01 dfl'f'aull: not fuJy desiril ~:ml Il~ oircum· stuIJ~. The rntu~:r t!h~ng is: that the elnenlvcrisi~ stokell~11e NPls. Aln{! In~ltheil' I'll :rhiDM thing$~eID$t~ I>e !1e'a1fii~g reseIl!!liicm, so NPlLuJrt g:oing 'to rl:Se~

IB!1::. Wllilat Is YOUlf '\fiiw of iUilli JUlulf;e IfIlfle;mliOfi of mn~er18s't rates,?

INK: I tlii In It: tlhey ar~g© i nlg to 'go IU~, ~f iinflafio" persists, wh~cl!l seems I ik.ely, n wiil~ 1'IEli!1iatillfely affe'Ct yo m a~o nlt:D.my. More.over. wirtholilt e!ilergy, glrowtlil il1!thll !'ltO rUlmv Is n:8'<llrl. im,pm.siibl:e,

Wi~hl a consolidated v~ewlwe s,ltIoulld t1Jav'e 220 ibfanch,es~ whereas OUI!" target ls :250.

P rofH e: N a:ved A. Kha r1

Naved A. khan' has QVIiJ'f twenty-fo ur ye~rs ot, worik -6.xpe1rienoe, ~ar~cura.~y in COlrjOb fate arId Illnrv,esfmafirt ~[nk~nlij. F9Jrm~r CEa,AB~N AMI~P Bank, 3ind tI[,1i IMiBA ho~dler from tbe Butl&r Uniille:r,~:t!I. USA, k:halnl had als€! bS,Blrll aSjsociateo wiih""s'err~Qif manage ment DJ)sititJ,ns ~t ~be IBanlk of Aimerica! IP,a!krstalnj .. El,mj h,~dI b een ~Il ~ PH~sident ,I)'f IPajki~talnilBaln!k&Assodatii!il'tiI.

I'" _ .....". c;

He 11:0.1105' ~y <PI1~ts at 'the I ns[j[tut~ Gf Ban ~e·rsJ iP'alki:~tan, .ECH Task f@rQ~,' State i~JiIJ~k of Pa~ s,tan, arn~ the Ouers·eas. Irwesttor's Gham~,€;r.s oof l\HJmffle;r,C'e,t~md I ndJW$~ry {O H::.GJ }.,

~ thl~ntklt has wome'tl fill~rly welt

II think Iii hills cll.anged tor t.~e ri:g)ht reasons an:i1 tl1;e Rs10 blllillo'rI c:a~ ItS fiine. v« ry low' c[piM~ reQluirelil1:eFlits bling in very ,smilil~ players tll1atctreate ineUiciency ini:l~e system.

IBPi:: Doytllil think CAR iis I' iDelir measure of capital ,!!;de~ IQu!!dzy'mMCrn

NIl<: There's no, questio1n aboul it CAR is bdtoew. [lut

msnts .:arm: nnt []!:g Dtilll:ll!l in:>1irulifI@ll1its, Hllif1 018, Y'IJU liI~ed ~[I \liB'l"l:lcfi~ly IIf1wgr~at~; f!Jmres earn [)1my a ~ey role 11ere- .. ¥VIU also, 118>ed '10 eliilll ~11ii1t~!ille m~~LIllemm!1" who d oesl'l't l!I!lilltli) I;'If(Ilrl!: Wrt'11 a ba I1ik - by setting up, w.~rell OIlS6'S,

BRR; YtI!l!Weili!e! chail1r'nan of ~he itla;liI~rilii ,B!SSCII::iB!lilJiI'I wlilellll MeR was raised. Vim1 nllte,diol yOlll play?

As Cit1tlilli1K buUds up to I~:s 50111 year ~1i"I Pakl,stan, WE' are JJ~eaiSOO m 1lltrodu~e you te, oW' world ,wOntlne Bilnkin.g. &ljoy ill:n ex.c:1'usirw range of onlln e paymen~ 'racilitles;., that~oo 'from the tomfort (If '{Our IHOME and WOR,KIPLACE ~ absol'utelv 'rmel

Simplv log on '1.0 M'fWicitil)anll,com.pk ~o get starl'OO!

• Mak~ p.ilJylli!:e<llls ~Q dlubs. 5(~lOOls. url~\.I'ef'511ties, ~Sf!s. ch.lldtms and

!'I"!aliy 'more service Iji)fO\!i~!fers .

~ ~k ~tOl.!l1i! balaJl(it}S. !i!M tfi!nsaclion delaUS ~ InUia:te wire tran5rlE'tS anllil cr,01er chec~ books

• Tramf@i 'hm.dsiJiStaM:1V to Cii:ibank cuS'OOmers across 23 ,counbiK

so no IilIIrIfP !iI'aml1!I9 irI queues or WilIT&ItiIIn Ilr1!ffk.14OQ on Ito www.c~b1n'llC:Om\1Ifil todaltl C1L1I our :2.4/1 ~etf]r.iltM CillhiIr'Ik 'GIl'hne help desk at 111 m 222 ror al'IJ rLl.rI~ll qLEf'ies.

5Wl!fil!!lr~~.!1o~~~'~ 11,itJ.q 1%1-2([11

DECEMBEIR31, 2010

State of antii"lmoney laundering laws in Pakistan

N1i(mZl Khan

1"'1)$1 g~ 11 cou nter-terre I'~ die p::ulllfle nts.

i~1il1 ,effmt!>. end an ~~cJe,aS'~ Theilr main I r1~tiaUves ilJ~1 g:lob~1 d(l'Sin;! hi elirni- hav~ ill1!c~lJde£l the .::rI~Orte. mate 'fin,ancfng IOPlllltrtuli'li- mHn~' ~fl <I, detaiti;ldl KIiIow 'tias~iors,puJllJs(ilj'in'~ acts of YOllr Customer {KYC} pellterrorism. nas m a(le it e ru- cy by Ute S BlP Mil ~ If! strac-

Tlie Aot pu Us- '~ogether m eee ssa ryehlllllliHlts with iln the Pakistaif'li I~MII struetu re, WiiU:l were p,nwi(]!u.s Iy work~n,g. to a great ~xhmt ill i.s'o~ali{l'nJ,[r(I IilreVei'lt mOlrH~li' 1~I!HiJd~flimg ~nl t:~~

Altnou,gh many banks in Pakilstan have

begun to impllB,ment AUL softwaJ'B whh:::fh is ~ntt,g r,ated with thai r 00 re baln ki ng sy.s ~ 'terns, 'Ul6ire is a lIleed f'ortlil~s, to be: more

pO'Plas,jive.

monty ~a~,mde~~rulll should be tf~edl eftl1!er inlii1e'c:urrent enurts '!:hat try slmllar l[)ifelll)8ts or in P.I~lil8trall :COIU rts as a stanu-arene charae, under iruermatiolil~~ re,qp:ll rem eats, m fin ey ~.il.u 111' d~ri1ng is pr\lsecl!ltabh~1 <IS arl i I'ldiiv~d I!!,a~ Clf~ m e 'W ith (l.lIt ~~mt cOlnvietililQ an ef!ende:r ~[jr tlil~e prB~itMIl olf~nLC!l. The P'IFoposed ~,ai;!r d[)jl5 not eOliflply wi~lh tlld$ lob~i1Ja· tko'I1"

a [) J'lS th ~s aet as:'8. d eterre nt hJI iP'olteillt:ia~ ac~ivUles, Ibm g <lit hie r~n g (ltf data a rid 111'110 fl· ltor i 119 baenmes all t h li!"liD re em etent, Heg Ii! 1!i1iHoln IlJOIlIiI!l 1~i8 Act will nee{l tOI tailt8 n~ is aspect inNI CIOf]~ siderat i 0 Iii.

AIlJIi:lthe r aspect th.atw j~ ~ req u i re me IfItilDrI w h ii,e to rmulatillig f~gu,~at~olfl entorciDigi' this A(;t'is the ~f!na~il rraasactlen or hawala, which forms a. s:i,zable pan of P aJldsta n 'SilC Oli'loill ~ c systElm_. ,lHithoulglnl the prlWl:awy reasen Nu hawata Iran net i 10 ns ~s cost' e:Ue e-

'ci a I 'fa r eo uatrl es acres s theg~o~e througha. unl'trai ~zed dm:tatlase ,~o ~ee:pl tnu:!\. IO~ <llilys, uspic i'O!1l!l. tran sters of mtOf~ey.

lillie pmmlll~gmhl'l 10'1' an ant i -lill (1111 ey I au 11 de rilifg I a.w has been an a!~,eli!da item ,~t miDst gllv81FF1miHr~ leve~ m.eetill'!}S and Pil~!st<l!rJ h~s be',elJ'l IlIrnder tre'merndnS! PfBSStUifl fot tllifl aP,iprm,.-all olthl~ law 1~lo.fM western gO'll'ernll'l1lel1ts, 'il1lterrJiatil(lnra~ flinOlIlil~i(l1 ~nstitllt~OIlS ilnd olh erl nternatlo Ilia ~ ~o III m s such as llHl F~fHlilciM Adij ©lTI iraslt:. Fen rml (F.AliF) an d the As laPaelflc 13. rOllll~ (APG)"

,lelifl~f]'hlWs, reqlJ ars

ail cl 0 pei'.;,Hi.o~ llJ shl~~tJo~ders wm be mllliyant! wm f]fled [(II htl~,il.lt ~vitlil app rO plriatB'~Y. These include a: lack" 01'1' U.a~11 i rlQ rivl~'il~sS and ,emcielflcy, ill1t~e n!lw~vh:ml1ll1lated IifIQtives·,a~ sn i liHtl u d Il tlfer

reg !illa.!:~oll'l and awarenes.s

laJc.k 'Qlf <II "a." er twa i I <lind tax

~. ~ Ilbotu the subjer;:l: ~tse If,

bot~ at a uI\!.gu tater ,af]d

MOIil~Y (iIHiV!l!(j1 trnm Dpe'ra'till rla:~ levels.

Gwimin,alaGtivities may b~ Trs,i!l~ rlg~uHI awanlliles:s i rltnodi I.Iced i !ilt(l the 1i~ en- sus i nns w m bee (I me a

ciall ,syMe111l. ~1iI Illiliny rnust. Creatillg aeantral-

mlo iii Jl;Y laul1d,elfhig

ro~e and nroa_" have ~nn",Jilca- i~edl diataD;J!5e fowf~~lJ!;ri nu

s .. sahemes, the biggest ~fsk

51J $[1 i'i;:i I)I~ S tr ansactiens

\!Ji~ I e ntall 0 pe[,ati.~ln a~, teQ~ni{]a.~ ,mdl L>~mlli~et!lnl~SS Clh(lII~'IiI~l~S.. wh ~I;lh wu~11 ~~dI~ 'rl)) tI~ manage.t! car(l1'1J ~Iy tilnd fJriofict~vBly.

PH)II~lilng tJ:lf (J lid c Us·

ttlm~rs n ot ca~ltl!J re:tI Llm(lelr Ihe nne reg~ me wh ~ch was 0 rlly imjJlec rile nted ~f1 2(101, wm espec.ially be an arc! !.I OIJ 8 tUk. Th GQst to bantl!is 10 r settln,!;! up robust AMt stlrl!!ch~ res ~ nJ ~~ rle with reg UllatiiolnJwm nJe,e'd to 1J;1ti:l o ~ IlJ.si{ie'r,edi.

TM nature and ro~lB ,))Uhe Fin <i nJ{lid!~ M',[) n ltorl nJ9! U iii Us (FMU) created under the Act are pe rh.ap s widle I' t ha n neeessa ry, HI,ey ,a.f~ i III I3SSElriOa authurized tn receive re~o"~$ (1I'l suspielcus trans:acti(ms nOtI1ll .tI:i.lflks ln Pl!~is·tl!Jlilas wen

nons on hw tu:ulks ShQl.!i~ idenmy Iillig~1 rislk CWI;tn i'I1I NS, Ue :SB P nasats 0 daViE! I n peda S'I:(1l etu WIl I[)~ mOfl~tori!1!g afld repMi~g, wher!Jby b,anks Me requlr~d to have ln place systams to hir;!hllght !>!Is.p,joklu$ traasaencns, manu.,ed by ilnd~· vldualls tri.'i,il'leci ~n AML, tCi tnr:l :;.jB.p wlHeli in turn

eountrv. Tile cre,m:Uon olf the NatiolDial1 E)(I?.tII Uver C'l;IrnlmiUe8' has be·Em a big ste~ illl tile right dilrectitDnJi eflCtOlIJragil'lgUHl meetilng of r~pf~se:nt<l:tille,s from Umr Ministry of Finanl;:e,~he Mii" istry of Fo reig nAif a i~s, t~ e S BP, a 1'1(:1 NAB, ,alii k,ev sta,k~ll elders iln p fota-cUln g P,a!kist~1l ,agJI.inst mOlley I a I.! rld e n n{1 an d te H'D' tst filiarnGil'lg ilif,t~ilm!'!S, T~~ #101 has a.llsofo r thll fi ('sl lj!ifl,e, createdl the 'fr,ame~ work for a r;:etliUalizecl ~a:tilibaM for s!!lspdchJIUS, 1!l~lrS(I!!n sandi tr,,~s,a()til~:ln!s a~ a r,ead1y PIO i liI't o! refe ru,e e flD r na,agingl lut:lllre a,cW/it~e~.

ILEGAL ANOtMAU ES,

(1.5 s'umnm(lli! reeorda if they se:etH. a~olng wit~ c.g.rryhHJ o ut P re~ 1m ~'l3iry . i IilvesbgaUO'n!l, This is I:i.GOl1lmct o~

The IJn iitea N<IIljtl)liIS Securfty (;(1111 nell IFlesolll.n~~lrI16l7, re~ers sach ",as es to NAS

to r neces sa ry acHo Ill. pass!B.d I!Illder IChal!)tlsl' V II of

Ute UN Gha~t,er birlids aim Iillem- GOtne:spolndem~ bamlks

halJ~ 1io~~t1 put l!IfH:ier

gI rea.t~ r s on~t~ ny a IiId b a,,, ks iii P1!kistali! have been pu,e" c liu d edflrc'iITI e I~t!eri rugl Hit (I tra f]'S,a! cUcm S w itl1s hell

Forty .FI.ecomm~lit:latitOflS 011 oilflks .mdihlJise 1l~!Jh~i,ghtMoney La.l!Illdl!3ring alnd. th~ e'd ulilaer the "wa.t(l~ - "st~ all FAlIF N~ ne Spleicl.a~ tC (I mfil 0 iii I Y u s.etlf.olr m OI~Vi)y 011 luuud~fing arHI t~rror~st fimmcing l~pHratucms_

! fIIvestiig ativ,e IlID'wers '131'10 Ull,d rem,a~n soll,ely withl NAB.

l.J~rcioll nrtries, find has tlBen 'Stro'ng~ lurgin.g all Memlb'er States, tOI ~m pleme!l1~ tine eotnplfHh;ensirve" i nil:!lWflatiuliIOII stlndardls em. bodiied ~n tihe FAJF

t il(l!l1 sro r barn ks a.nd fi liI;amt:iiill iillsUtllt~[)nS llil IPakisU.iII h1[)mc:ompliano! arld monitorh~g Ipers~eeti'l,i'es_ 11II\t,e!l~~.g~t~ve POIW'-erS dO!!l~d IriHlHl.in sOI~!elv with NAB"

is lilalH.'Hing cm.s~., Currell1't law Iii! P.8l~~stali ~ r,ac~ IlId ilS th.e expr;Htillg! ofc<lsh ~ rer8iIelr ~h Sot $10', (1(1(1 an ~ ~t~eilil~til'lg to ,c~r'CiUlnWeliit S.l]C~l Fti'IIP{Jrtil11JI reQjl!lir~~ ments ~y mii ki rig smaller ltran sar;:'thm s. is all offe n·s e.

n Ol~ gill th ~ Act ~s 8 sfe'IP in fhe rigl1t d~rection, t~e reg IJilatic!III tieing developed for enf(lrc~lIIg thiis ~olW Meds to Itle carlil~IlIII\"~Otl· Si£l,8r!li:l 8Jlila ~(]rmu laHid ki!'~'Ii,ili'lg local alHi ~li'Iterlila·, tiOfil3!~ IiIIU(I.f]CElS ~nJ IiIlIUfild, ilhre Asianl []!l'llel![)pm8tlllt Ban~ (AIl BJ IS. lI)~m:mUy w{llrk~ Iligl () Iluse ~~ w ~I h t ~ er SBP '1(1 c'feale a snuGture alld devise reg U.I.Llt i 0 Ilfol r effec~~ve AJn elllfon:eII'Ienl

nelr~ i!r,a !HJ''!.iJiiVflr., stiJrtle allomali~s Hmt IiIHed tgb'e' cOlin s iden:ldl bef'i) re regall a ~ tiolrlis. tCfe·uetl~~r t~e

R(lc!] I1ii Iili ~f1.d~tijons Terrorist F~118r1ci ng' • II In the iI.flsem:-e Olf leg ~s I a-

~ rI fi II ~(l,I:lill! I m.a.tl':et ItrTOY' i ~ g rJii 0 re ,all d m owe tOl!!l<ll r(!g· paperless mcme'Yt CI~ujrutries ha.ve Mcolnru: 11 ig l'I~y delli3lldelll 0111 sy:stems and agio ~.a~ i nJo rm'atil[) nJ t!!(thMlolo~y structure ha~ evolved. M©!1ey !,aulnderililg and ier:rmnst ifi:n'illiJIlnn'g a (;~ Mti'BS Ih ave IlI1t'B!l rolled w i[~l '~Iti lill SYStlH1J11. lh,e p r,8- v,e'iTIt~o iii Otf 'rh ese tralii S<lOUo,~s fmm~.1it8ri~g lfIorma~ '~~f1 a !'Ie ~i111 ac~ivU i es I'e q iii ires the ilillp,lem,entatiol'l of t: 0 III IIItiillrt(ji,ch 1i@loDY,

Acomp,rdlensive A.ML law irmHt~ting an AML~'orp'()r,at,eg()vermamce stnJc- enflOt~ilmlHlt M lhlis Act.

tLlr!1! wfithirn P.ardsIOln, bril'l.g- 'Tile f~.H F (II rty

illgl together aill relevant Becom !lmenaatiQrl5 ~m

law PJr{llpo!ilelills and MOll1ey l~!!IIfI~er~ng do not tll1'fome:n; IHlSfinally Iblle" r,eQuire s~tling UIP specia[

Crrea~ingl a eentran~ed dataJJis!8 f:or 'fllg-

t~QIl arOl!lnd this area ill Palds:18.n, the !if!8,~rn I.aw e< f1lfort e f'lillmt b o,d ~B!1 ililvollvedl have ~Elen l~e State B'a.m k. i()f P akis t an (S IBP), the S,e (;IJ rilles ali ~ E)lclililJ~ge C01ITlli!'li!ls~oln of

Palki.starn {SEGP}, HIll:

Nat i (jl mal AI;:'~ (ll.IliIt;l~i I nty

Bureau (NAB), tille AnU Nl<lircoHcs Forc~ (I'\MF}, Uli~ Feders,1 IllvesUgiaUve Ageillcy \ F~A), at1i~ the 6 []stoms AiUithi(]ll"nties" Their fmf.O'I'C,e I1HWt i!i!ifi(!tives ~;l!Ve nl!ce,sslt!JJtet:l HIG cODperatiOin of Hn<lil(ri3!~ ililsmuti~1l8 and rIlICS[ banks ~a'l!e .dlready dElvelo~le(j c.oliflp~ian-e' depa~'tlII'le liltS. wu! h . Sp'IjC,mC #\.nti· MlInJtay L<ll!IliId~ring {.A.Mlj. eotJntac~t Il,o,lnts wit~irl their C'OIit'l pi i~nce aln(! risk

~niH<ltives sl!lchi as tlhe Act a.m Vii!]' I'ifI Ue iii fI'~ f:!d6t1

in ~n eillvi rOlilment Oi'r

inc1!'ea~~!1Ig p~lent~al orr

high f~$k termrj$t activijtil:S, the tlrU"l lol which is [)eifl{l borne by Pa~ijM'HII. We ean ollIlyawai'l I:orrliiula\'i(l1lI 0'1' the reg lI~abDrl a[o I!IIIHI tli II A(lt an d IlH'ellana lor tn~ ctla~IMgl~.s ~!lI,cedi 111'1: l~e time 01 1m plemel'ltllltioln,

g ~ng SUSp ie io USI transacti 0 ns, wi III 9fi1ta.iil o,perationall.1 tech~iicall and ,comphatel1es:s challenges .,

arltij-fFHHiI!;lY 1;!I!.ullder~ng CO'lUIrt:;; r:I(H dlQ ~t~ ew 1)(1 1.1 rl~ triese nlfG ~C~11 g s~m i~'lU' ~a ws entJ))!jra,g~ th~s,. n~f~ dOllS mot apPe<lr till ~H any liI'eed fo r Pal:<tist:an to set !,I p a p am lie ~ ]11 d ~cia Isvs~e{nfO'r pms,I!ICl!ltin{ll AiML oHeille~s.

p,o!ll'l~lgatedleai~her t111~S Y~ilri ilil the form {if ~he AmtHIllo,ney laUll'lduil1~ Act [)j~,O~{1. il"he m~in GbjliGHves of th~s Act are to IlFlJOOOEl ~ropef l~gisi,at~caHl to eI1SI!lr'~ ~)lo~'er inll'es.~igr,aUn·~.o:.riminal~lililg and pmsiEicluitillig 101 nrwn~y lallin' dui~g olUeJlioes.

The' wrif~r .wOrks as .(i1 S'fj.nlrJr Milf1a(J~r In ffl~ AdVfsillY OOfWlmerrt ot Ernst & Yo.~m17.· Shfi ca'fl lIe·,~r::,hed <l't IR'(maJ;haIJ#!)f)k;.t!;V Qom

DECEMBER 31,201 o

- - - - - - - - -- -

,B,R BANKJNG REVIEW 2010

------------------------------------

I.., ··e. " e .. ·-U I ll_I·Y'. ~.···e .. · .

-=.... -"_' 1 _ _] . _. -

,SAIJIIIENI1' FEATU R,ES

• ,Stock Market'&, f~nolnc:i,all Glosscrry

• Muhilii'!!l,guitill Blus,ine5~ VooablJl~QW)'

• ~li1itema~iQJ1Ic r 'Orge n izations wn ~ckisf,iJn

• 'Chambers 0': Commerce &. ~1I1,dtl'hy

• AssochJlltOfllS, Q,f T rode & ilndustry

• ~l11irernatiQnClI' Chambers of CommerrOBI

• Pa!kista,rn':s, lrade Offices A!bll"oad

• fin('lfil;~h:d Seetor

• List ,at NBfCs", MlJllli'CI~ FillllrnJjs,

PeniSion lFundls 8.: Modambas

• 'Gom E~o:l'il:ommcs ~lnd~a(JhlB

• tGro,ss Na~iona,1 Prodvd of PokiSihOin

.1 &perndirure on Gro'ss, Nati'oflolllProdiud

• An~Clh PK:ld'I.:II:fi'on&¥h~ld of Mc~cur 'errolll

• P,rod!JdiQI!lI gf: Selected Man!.\liIQofur;ed

Goods (mel Min,elrals

• f,of,eig niDi Foot I~~vestment o:r liScooomUc Groups

• Ill1lwsl1rl,elillt OIi'J dScvi n gs, alt' IGlJll'lren~' 'ri~ei

• IGEiOIS fixed Capitall FOlim.atioilil

• Mo:nemcN A -n~'C~S

- - - . ,/ rEI~' ""'~I--

• ICulilrenq ~n 'C:irt)U]C'I~iol1l

.' ~ (I dl ~,",pom Iby Commodily Gfoops/P1ni'loipc:d CommOOi~' .1 Expo.rtsClftd ~mpo:rts ~y Se!lected, Covl11Jf,Jri es/Tel'irlitori'es,

Nllo_ Ava i' I al III III lei

'Co-rerun, Iplbnnedl and des,ignedfor busy exooli.dwes, in thl~€~ beau~itru~ (JolcuJlrs.

Usefu~. iinf~rmiC:tiiC)lnyou (lDI!!dd IPDSs~b~y r,equlir,e 101il1 r!our desk An e!eg,(lilil't New Year Grh10 h:iends,., Bus;~n:ess, Assodates '& Co~lleagues,.

IPri:ce Rs. 4'7,5l- per IDh.:!lrJ (1,r'u:hJsiw ,oF .:sO~eiiJiClX;~ Md[ti:e:mlal'ClilfJ rle,s: O:Ull1ihJ~ic:n dispo~,-h ~,rouSllh, Co'u,lI'wer Servi,cEl' IRs.. !85l~ lper diary. 'QUrs:taIiiOIilI IPa,mellilf.: By C'G RilC rnd 'Drat' ami, In ifavou,r of Ajpex IPrintery ~PlrtYClJtei) IUd!.

East to be growth centre for HSBC

An il'l~erv~ew 'wirth Uo,ydl Maddlll::~. Cihiil'f> EXBcu~btl! OffliDer i HtfnJC~ P,lkistln tEtR RieSe'arc,h

Uoyd M8lJdCluck has> l~eGeRt~ ta~el'il !:hi!!, hH!m

_" _" ., r'i ,

oJ IHSB(l's, ®ilil'!'l<rations Illil

P.akllS[a n. Hlil beJli,ewsd~!fI'll·and for ~redit Is ·e.~peCll:edW r~Yi\fe in the Ii]pp~mil~,g y;ear 311lid that. ~!hle;;global f,ocus of HS~C is:Cm em$ffitl rig lf1il'aiets. IM~!I.1do:Ck 'sIAt1ij ~e_d with' ISR RS!lH!c.m:h ~8vello:prwllfJlriffi OJrlr~le IleliW m~h bf HSBG's l,laJlin1lic bar[lkinl,~ IDP~,n:i1Dloll's lin lP:akiiSfim.

BR Researc-lil!: BmkS I~ray a role hili ht II'OJilg·t~rrn I8rn:momlr: dm!o~IiIl&m Of &@Uliltrles.WthY thenl ire commercIal ba:lilks fioouisinOI OJilsholt term am::! ~e:I~ a1Ive~ risk 'mree ~1IIVes:tmemts. rather thaI! 100Fig~tenrl1 imltra,shChlJiEl' projects?

Uoy,~ Mil!.~d~~t My (litlseruaijonl iis th~lit :thi~n'eftects a rliicll [)f infrasblumure i1il:lllI'JG~ 'DgnPO!F1tuIi ities \I~ JSUS ~.I1y Pllrt~GU I.ar mlluctant~ on I~B. pal1 tj)f~M banks. G,eneral~y, banks WOtU I~ support ~oll~Herm infrastruc~u re y~a sy~dlf,{lat:ei[J1 Hn:at!lce o'r PWOij~ct 'f~n'aJilce.

rarity vallll6 If)f iMti~ ssusnces sh OIU lid pmvvd~ lor !J M>lI investor aJp:peti~e,

ters ml! ~mgel: 'tll1a! nIlrge !"llsJke'is suen as Sauldi .Alabta cmlyfacij~imtetl the ilfltro~ u:cticm 'DI debt cap itall marikets ~n1 F~ae:nt ye\ilfs:Ahead I[If thiis,. lit "1I6ull~ cel11liin~ ba 1J:5e1~ I fQW a Pak~S'ral'l :s,[}vllri:!i,glf1 iSSll€i to til1<.e place If) pji~~e a bench· mark agaimlt whic:l1 COln~l)rates alld the~r a(['yiioom co11l1(1 ~~ce risk,

tBiRR:Wrllen dQ you soo a Irr&v~1 ~fI prhralet e&etDr cfSdit dam(ID{I'2

lMt Thlf~ ~,a ~lJestiolll will ic~ fll[)'t olfll~y appUes W, PakiS"IiaJIa blut to 'line. wttller region. From 3i[~ ,20{l!l co rp«r.u·e;s iilll~1 ban ks ~~"\i'e ,a~lvelyr:le·rriske{l (te .. de" leverag:ed} balgn)oo sheets, a,n:d (lOlrIJ'Dralte.s hailS .gllller,~.lly n,aedooto r'e~)I' IiTlJlne "{]In IlI;JUity r;ath:8tF than bankfinarnGH.,

My ob.se:MitiIQiI1 is lruat Wie tJalnlting seeM in PaJkistan has tared 'COfll~ro,lli\leIV ~etter tb~1I many Oliher cOlmtrie'S, du:e 'to pl"1!!denti!!1 giovem"!!c~ IOy'l1he Stii!Jte B~Il~ il_liid, in p.~lrti~~ ISir, th~ I1Db'u.st c:.a~ital "deC! ual:;.y r\3lilru ilFlllillent$. row. e~mlple. we nave seeJ1 no Ml'lkfaillu~~s ill P'alkistan, UJ1I~ke o:tMr coulltri@-s ImHte emerg~ligl1l!liId de\lfjLop8~ world ..

We arel actively Itn the' expansion mode~ ,and looking to iRc:n~ase our asset boo!k. illl Pakistan.

Biven 'lie re~luilrel1l1JeifltlXfor sllbstaM'~al iJ1lve&[merJIts- ~I], I'm exa.I"I1IJle, po,wer ,8Jndi wa.tef, II wol~rdl ex~ect to s~ g:eneri(l bank fiJn:dililgl [}8.i:ng li'l)!llj:lleIiIlfHnteri I:Iy e:)4p.Drt crefl~t ba~ked fi 1'l1.lrncc 1.Ilidl IIHIIl,MW~ ~mnd issuancfls, eillhillr(;OIil'rl~'ntiolila~ olr Sidmlk. Wf} shouh:l exiP,g·ct till se~ {lwe I,op melrlt\5 in tlliesE: areas, ~r1 th:e Iilellir term.

DRR:: OoIlil(pa.lfTIies are W'g;~1y d:epe:iiI~!lm Oil blilnk II(ln~ilig to raise fl!!mdls. beul!II~el of ih9 IiIn~e·rr.,~eve~plil1lem ~ri capitall l'iIlIa.oo:ts; w~at ml~1S ca.1il 0.0'1111- mercia! balil~1!:s play 1111 this; re~rd?

W; My lIlnd!eif"sialld i: 'rs that

Iille St~.te Ba!"lk af1d th:e . IS] SIIlcti;)IF d"Q' Wa!lrte ProYIUEl.$sthe ~ev,e.[[)pmllint (IIi " I[}Qrpowa~e Il(i'nrd m(lrne<t,aJlldl flh is Vlill G8rmlnly U<lillsD~m" 1fIIIe l'D~f1!Miit rei laijJllf cOJr.p(uat.e:s. is 'Ililat tI.[}nd issillance wm {I'pan the~r ~otefl'll.i1~i fll~1Ci~ng o,pti(ms tD r:lrl"efS~ filM ~memS!ti~:lInal ilnvestors. The

The tllllflkllf1.~ seGtUr ilITI

Plli~is.i!llJiI is IfQjuld, with ,clIrtainl Danks ma~lnt1~n ilng asset If) dlil\P usit ralioiS of 50 tJBroe:nt and Ii.:e~©w. 1t1 rough fie downtu m ,. b3!Ill<;.s hav(i1 c.I{};1!tly ~al/ou rM Mwrte r~tElnll 6xpn,SUII1lS" wiith th,s plU I:Illie s~wn aG()~Uiliilil!J ~l)W iflOFeil~~dlflu ndin,!)l" Yields on lI'~Bms' areae,ta iln Iy a!n attffiolll!J~ {lsse1t (;1liIs:s O~I1F!lIilUy. Ho.weve[,g[iililg~(lr· wanl, b<lilil!(s wulll need to ilnlJOOilSe Isndiinrj) 'hl true ~rl\.l'ate semon; in l;irderto main1tain Hl"'· elillJ~ trajIlGI(lw~IlS, .

trI: ijs faJ1r to say th!!ilJt tl's'l,t'~n:~ wo r~e;dI 'lhl1DUgll1i su bs:ltmtia~ levers of NIPLs. ban~ wm be mOire jlu[lr:ciolis lil1l l!:nrJ~lig, aM w~lllfa\1Ululr cOmp<l!lfIiM th<li~are we~1 l)a~~ta~iSJedi \!lith sm.md busi!le:s;s nl'or:lefs. Sl!!ch'CO!"l1Il"" !"lreS stlou~d b.e ~III plla~e'dt\l .l\1'.ai~ ba.lllk fi nan:C<e" alttlllollgl~ diiSiCI,ostllr,1} reQ 1!I~lre menw iin te rms of audil:ed fulll~!'I(;ii3!1 srnte· melilh;; alil~ businl~5 ~'DrE!ljasts

wilill be ilUlIil1l:IfICfld. ~oo'tpnrn~ im tems Oil Well{llmp~·

l:tu~ p,rivat® .sectpr hiM been .ie-aJCOIIJiua{I:e, Back~d by~e justiliiat:l.~ calJiiilolus iln terms of HSBC Gn:llJlp 1.l1,'l~an:ce shoot, we b lIs:~ness exp-aJlsioln. b Ultl[IJoe i1IO ue$~ri:cUOAS on tbe expansio'!"I c8,nl~ot fire . put ~n '~l!aTl~u rn Ol~ cr,ed i~ I~n:es- weare liiolld [n:demnilel,y. S(), iin sum- a.b~e to p~ovijae for a.lllY ,gi¥e.n 1'Il'<i:ry,. I w(Duldi be. sarprlssd il borrol!iefr, subieoft to il)ur 1!IS;l!B~ ~ve dlW run ooe SOlill18 rIJi$,Unmlp:- (lrndit Grdt~rijill tieing met. I lion (Df pni"".ale ~eGitolr (lredit w(lulld add IDhaf We @1;~nlGtively d~malild ®VGf ~IH -coming year. ill1 th~, expiiiliilsi;on rl1Iod:~, arud

BRR: endllot~ttBI l{eaJl' IlloKiing to Iincreas~ {lQr asset

2oo9t, '. was, l~mwll1l1ingl . book ~1iI P'akfsWl,

mU!:ln I~etter ComPilirred~O tits' IBRA:: Globally, HSeC peelrnl.11'I regsJds to ~FiIL:s" what A:rrnana'h ~.II. !ea:r:le,r iftrl lS;ramlr: ~as~1;l balnk fooUS9~ Ihliilt:lllg.Pilkl~iiI presal'lt$: II rrlIV8stmelllt, WOimk:inOi ~OOmtraJ 1II1a:m1mt InIDis ,8i1ia"3 C1Qlilal etc - ,a:ndwlftat[lllle: Iits iID~' the 1:~Tarnil) b~!"!k:5 hem

prfO!~tf,es g!Jili1g f()rwafd? Mve d:QnJe\wlll reoon~. WbiY' Uoyd fQ ~ned HSBC ~1I 1 gij1 ! :a1n:d has, \Il/O rke,:dI in

LM: w~ araa fu II 'scwrt~ Ihas IHsec n~t. entered ih~s mar, IE,I!J rope, N[orth A mer~C'al Asia ,a:nd the 1M ii deUa bank ~n p,a~ijstalil SUIl,porrting Ifret!}'

eur trite Cnelill~S reoqluife- LM: CU'II',erlt~ t~e Ishl.mic 1E"ttst~ ltUllma.rJily rnr nOr~{Jr,a·le. ~11k1ing .. s:tr~tteJgy

trad:e hnslnce. Cil!S31 l1arlkil1 secilClr aceeunts r10r and eredlt, Prior to assl!JmiliDl tne ICOIlJJ1Itl1'

1i!1'1lna~emeli!t treasu!ry and .. "n,""Yim.ately 3 percent of Ule r..

w{lrkililg! ·oa.ll'italff·n!am~e. We . W i Mana];! ew mill e i:"n Palki stan, LI oyd W'fUi "[Ute

also ~ave~he ~~duliI!J. bil\l'e'Sl:~ !lHl!fket .. e exp-ect '. ~s s~are to

.. mn~ .b~'liIkl·IiI" "~nab·I·I~I"I·~" "f dOUible witihunlHu;! liIext two Oo~.n~Pf MQillli3:n.··er in Kuwait He hoJdJ;$: IS!

"':liill~ .~ I' ~ ""I-'" LJ ~ ,~"" years. Oil r plans an~ WII;IIII ~ ')J'!,! "

~h~. H5iliG Gm!Jpl;()caU U!P©I1,· a(h.i'~lncMool l:1IllI!!ch Ama.llalil in IBi,u:lhelitfr Qff 5'llgineef~n;~~el~~!e~ in CilVil1 ,n~d

when ~l.it1UJ~red. ~ n COIllS!Uln:ew, P®l!:lmBin 1m Ilolli ilie.C'iJ~SUm6f

our plrjm'MY~'oem~ is. UIPQln om 31i1d comm~re[al sseters, an:d MIlnrtn~ @n~il1le,eiriT1gl:

gl,ob.111 "Prernter" ·and ~~~~~~~~.~~~==================:=

~AdviU1iOO" IUOPOl\iitilo'!lis., wniclh

sUIPllort the needis tot .our m id~ d~e to hig h iliie~rme' Gliien~s lJollll iFl Pak!lstl~ alil~ globa~ly,. Wrtih H.SB'C Ib:ainQ t~1[! Wllrl~ is 1ilh illll lairQ:Bst plFiv.i!Jtl1 Ib.ffillilk,tj\i~ iit-e also a~ ~1lI ~his· S€Ctti'f. .

BRR:: Ytli~r DUlllk's focus [B.1D1iI1 trmile lilumce ~us:llless ~ e~~e;clailr Gil.sh ffilaJag~rrnent prod~ U,tI$ - Ibut 1iliIare is~slgrmrcam comp9flj~i!l1il from. Standardl Chartered atildl IBan:I~.· WIi1a:t IsH6B.C (!oilil~ tOI dllslilil,llIli1islil

Ilsstlf1 .

LM: iflllim: are only a very few lr!.l~glolJllll>ai!lks:; ~l1d wilth ~IU r pF@semll@ in 76 C©ILiMlI'ies, w~ l1iarve ani excellent p~aUlonnro· SUIPllortal!1 en:~ool en:tlser'l,t'fol)e ikw OIiIF Pak!istllil balSed omp(l;rM~s; ~1f1 whichilv~r lII1ar~Bt& 1!J1ey tmde, C'j)it"llll-etit~(m is a taot 01 mf.e ~!"l ev-ery sedor, bllt we nave ga~noo summss by b Uiil~ i nlg 10 nl§"l€i fliTl !llr~tB{lic relafiom11 ipS' with OIU r clieints, banked Iby th:e hii_ghest le).1'e~ ~l custpmer '$~!V~G~ product Siul~te amIGeO"{I~!lphicfill~ reach.

ElfrlR: Gompa!m!l'dWt ,other llanks,HSBC'\s po.n1!follo s~~ Is liIIur!h smamer, l!estrnldUliIllIlrellC!~ illg! loa niche l~iente1:e, Inm has "that ohanged inl ~g ~O(lrrt past?

LM: ~1iI rnC(!IfII~@mS, we h1WI]; eXllaJn~ed [mm two t.mmc~les to twelm:, We conslde,flht!!l [i)

be ,!l, saJisfsdO!)f ps.ni4'Sllds1M1

SI1l~'~8C~' to Hli:jlllliaitmv approvals, we wmi rliil)lin(llil lh~ Amalll(llil $erotte' Vtlry ShOIrtJ:y,

B R.R: HiSIBC had aOOlfessiveiy launched a consumer por1l'(IU@, Inl tFiaJkisltflJt" ~itS beeli! (j~wnsil"M slglniillcan~v silUlt~ lliLe mn~emilltiol"lalfinaflciaJll erasih.. 'Whit is th,e ba:nJk:'s view or' the CI.HilSUIrIIEMi milrke't 11iI11i,~ C01ilIilJliI!1j'(

LM: ifhaJt is a 'f,~ijr com merit, billt (l('jlll!l:llly arrpn~able totne sect.o:r asa whClla,.IGulrrelillily we< aHi! actijv81y mar~eting our ~Pmm ler" and ~A{iv~iilc.~" Il roposit~on5., .and ou r [J"{]Ii!' su:ml3r' ~us~n.~ss is exp"lIId~n!l.

Biillllks IJJ[]liIot re~ :S(I~ely on 11<1.· tlility (Le" dle~os~t) ~1iI!)ome', I th~liIkthi3 speaks ~I~ IDl1Ir un1telfl· lions g.ID~l"lg forw.alfldi.

IBRR~ 'What is ti1.e Sh!teg~ 01 HSI!U:: Hol\di!il:[lS iP,l~p where does lit pl311 tod riViIll i~ \JrowIiIfJl~OOmu?

LM; ~ SIB'C: mailntaJns a stworn g gWW'l:h [Iocn on emerg i IIIg IiI1 arkets {wit~ ~n wh~ch we~Ii'IC~IiI~re tl~e ME filA en c:! slIt:i-colli'ltil1lenl: r~g~o tis) wnlillstrrolfllurluiilng: to ~n\!lest hi d:B\je~opjjd I1fiJfk~fS. lhl~ p~f]" dl~du mOil g r,ob1.l1 gmwtill has SWUll:lg frern W€Stt[) IE.lIst and th is drives (]Iur G ruu P sira;te~JY"

pf(lfiie: lloyd Maddiock

~,,.r~r ~r'IC:

tI 'S D:itr,~ r~-fiIll1C

l/'fOO' ~ ~iiIr. ~

!~.~~~~~ lkor~~~, 'fR.U." ~ ! ~

~ Flit'rodu:fi ng Samba S'eh~ ~ turFlent .AcClu nt

'Small s~,tJJ.a_t ~.~b"IJ w~ftl1!tlf.@

tOplin.1l _'Dol StIld CUrJll!1\ kmllll, ¥Jlffl "-:Lt!i,b!l~ 011 yt;!III' m'i~lml:lm 1PI!f. mgnttl1) Wilm:r. Ij'IIU CliI:'~ c._~ to l'II~lrn!iIIn RJ.. gMMIO 1If30UOC .. ••

¥WI YflU!' ~ Samb~ EIw~.~111II all n n S~MBA rlZ6Z2J (1" IQllt on I:a 1r¥iI'iIII'.~un,pk to fum lodrno~e.

samba ® 4o,Luw

ao

"II._~ __ .".... 'III~'II ...

DECEMBEIR31, 2010

BR BAN K]IN G REVI E:W 2010

- -

SMALL. & M:EDIUM ENTERPRISE IBIR :BAN KIN G REVIIEW 20110

ISMEs in Pakistan: Irs a catch-22

In HIS long llst (If die nolo) m les, anomelies ,~J'ld mn ~ srnat ehes lhatexist ~ n sllll1!ost alii the s1,)her'es (l'f soctal amie(lonOffill~C :affairs of tn e cou ~try, lhe S M E mlsm alc~~s s ure l.y amo,I'I'g'st the toptelll,l'.

The8ma II and' MedilrVlll Enterprise sector COn"SNtllUl:S aea rly 910' 'perce n:t of all the en[erp~ise$ in iPakimn; rt emp loys Sl(l pe ree Ilt !(if t<lle 'n Q iii-a ~ r i eultu ~ all ~ab,o II r toree: aM tMif :sh<'lre Tn tile c:ountry'SaJHi~al GOI?Ls. ssnm a~MW I:I~ ~ro LIM 40 P e rcant, accord i t'I.g to SM.ED.A., Yat, bMt1!ly 1m parc;8 at of foUl <ldVan'[]'BS g'hl~ln OLit by IIl'G'all ~!n.k$ fiiru;1 their ~lIay to HiI,e S M E sector,

Are banks to be. ilia f1iIB d te r Ht? To an axtent ye,s! but they c:alTIlriot be Marnedelmtlirely_

By their Vlery mJatUlm, 5ME bl!csinessestend to be more! susc<epHtlieN,I 8'~onQmic chi\wntums tna n theM large r (lo,lIr!ter:parts~ ttl ey a re also wild ely d~sj)e rse~, ~ n~'o r rIl'.3l: an:dI I,m(iocumented .• md I'ack s.Q·pih fistiC8itlon~f b usu ness,

AccorrHn g to the cefltf,all [).anli( data. loia! [ill) n-psrlarming loans (NJPls} oJ the SMI:: scer!lor stond at Fls41.3,

tlflHowers.. A!lid' ~ let~ :yo u tnat amajQrity .Qftho£1') were l1H(Mlg calls 'by ~ank5, ~e(lau se S8!(lond lie r was. In ct a,d]'8Ql:latelly oapitaHseci tn su sta.1l aU1 ecen (1 IT! lc down" tern,' AUf BoKI)1H~, IPresldel1t United Baflk l"im~ted told ElA Rllsearch.

~B·Okfl(ui argues that li~ P\a.kisla~, people ~ack.l~e wiU hJ revay, even if Ihey have U1 e ab i Ility to pay !:lack the Imills, oWi'ng 'to vmicnl ttiJe 8M!: eectoJ has t:ie.come a d:ang~ re [1$ s.~ g me ntte do~ B out ~oaiils.lo, ~ SME pn mQili os ,Cl'fnl!<a,rly aJlllhe batiks h~\I'1il a dl8ifallll~ nus of rIil.[H13 man 2.5 PQrcf! nt, Yo UI .[;<1 n 'I s U rV~'!!EI as a bank wlth 25 percent delfal!ll~ rntEl," 'says 13.0 khad.

o rdi iii awily,. the deter re nt comes i iii thsform 0f stron ~ 11,811JS that p rotact th,e l'e~deL i"WwellHf, bsn ke rsaT{I 1iI,e Ih.~t that rI;!QO 1:1 rs.e!Yo the raw is no~ .;;lV~ ilab I e,

S.haring Bokhari's, view.

SultatlAllana. Ch;;J!rm~ru Halli:ll' Bank Umite~ said',. wlf preeesses JJld fiy~teims are st re~'gth e ~edl to e!nable q JJijc k a ~.~ Ii m eilyeliifo rceme nts, hank'S m3Y be COrWllortabl'e im lendlm,r. Citingl different c<lses,lJan It',;~rs ass ern t~il~t

S M E:s .are w~d el~y dis pe rs .. ed t ~nfo r~ mal IlJndoGumente:d, and Ila,ck.

S,Q phi sticaUon IOf bu sJnes,:s.

ilillilJnl])On:st~tuil:ilng .9$ pu(;ent 01 ruta I SM E Fi(l aflc'eat the e ndoj Decem tMlr200'1't by the H n~ of J u Imll 2.(110, th.E! SI!!lE sector's :NF'l-s WJ'(1~ at ~,ea~!ly :2 5 pe rce<n'~ 0'1 toEa I' 8M E a,avarlces.,

delay in ll'i3!nking @I1HtS. whklh nftim t<ll<e. 15 ~eam tel glive .a d e,crHH ,i s esse n ~~any t1ene~'i G il:;tl for dlef.;rWllt.e rs ~ s 1m ~y cs ~ g ~l 15 ~ear5 offrreB I,lse df ,ball 1'::5' m{ln'ey,

LAZY [BANKtNG

The jl,l'il'l~ ij!l the QlQl!!!"ItllJmf1' of :SME. b.ad! l(lfU'I sea n ~e Biil'ikiers flii,ay be pas s·~n g al~ri ~Ut8t1 to high!3 r cMt of the DiJ cket to Ihe~u dIeTary. ~'(lnIDwiln g til ~I tr:;toked t:he tn.Jl ·HI the emd ot thle d.ay l!lle ~ i ke In <dliscou rlt Irlu:e, II t t<lle fajl u re to in c~lliItie lhi3 ~ M E s,:ame tli IIil i: !howeve::r, bad :sect·or is ~~so to be blam e~ ~e.nding ~ua~ity is al:so~]) tie ini ,[)iiIIrt to ba.n~ers Ih'em· bra m ed. withlh e [) u rd EMl s~llves~.

lIII1ostl'j tallUrI'1) IN'! tnl!) borrow- l<Ildllstry sQurcessay Ih;Jt

Hr. r(lV!H the CQurse oif y.e~~s

"j3,etwlle.l1 11998· and .20~]c3, l)an li.ie~s I ()st !he ~{IC<l!"$ 0 ~ "H~e re was S,llI bstan~i allg rowtih reil al:i:o n:s hi p- a.rse,dtlaHlk i n~ if! tewm s of new nanll!lS and t ha! we aken,e~t h,e ~ r KlfC;

~aJ'lg.e -eXIPo<SlIre b~ingtaikein WI1"illesome ba.n!;:s ha~

~f! what ~s(i)allle~ sec{lln,d tier r-e-sorted 'W IcrediiHlc·on

[1:1 ~ogenous ~ac!tor8 S'OulW;A!~d .ZlJhoor; SRi ~s~fif.ir;.h. lie n lIJ res.

Ii'I 'ttlLs context, while based lei1~in~ to SM~. ~Hh~ the· :SM~ M.gll'l1ent, a:!ld glKHa:fltl:!.e t{! Ih~ basks. SMEIJA's rnle has UI' !:I'B

ers '11 ad ti!lQ ~ilW nJathjris nlill,i ilf{tet1Jd ~,~V,'B b,etltl il1l1o l'of~ r:l YIUlL SSP'S EFFORTS RE'AP ~,n hanced at M!! end,. at Ihe

liI1afla g,@rs t [) r tM sf l6 Mi n tll@ catc h up g amne.. wi I~ FRUITS? (It her, 3JW<'l rensss m U Sf i),B

if .. Orifullio tihey_ ... W,E1re brandiflg_, ths! [jig_' ·fhe orHlS, t .. 1" t '"

The answerte thiart might CriMi Btl sO '1Ia·. mnOr13 anlJl

S'OJl1iS banlkEirs hi(l,hlligM Wilen ·asked .about SIBP's b.e,,~olssibiy yes, protlab~y more ,:l:Itl3~nBSSes cau

hig,h transaetinn cnst ,p~.ans re~s.nH,ng~he 5ME nnt. That's hB,causll at tn~ I:Imught i,nul U!IlIQ.rmai~ SIlC" iinvolv<Bd ln S.ME s,E,ctor lend- seetor, Kartl'arsays. tlwl SBP ernl (Iii day. a ce:nlral bank lor" e~~eGia~ll' lhe agr~cul" ~ng, Blilt this, in other words wilill create an "f,nCB!T!Hv,e tural S~ClOr wlHir~ lack Q~

caa onlY l!,S€ tl1e m~neta;rv imllrastructr.He ·is. also ami of StatB! Ban k goverTlOT stmctuiril fO'f Ih8 ban ks that 10,018 to b umtll~ I ifEl Ii rlto [If] S'hahid Karda.r,isosHed ~Is:zy

ba n~i n,g~ _ TDd ay b<!nlks a Ie ~ot even I oo~~ !lgalco rIJO~ rate cliEmts; alii lhe:y Me doil"l~. ls nU.i ng: t l'Ie . a p!pie-tite of g O\ie rn ment, ArliCI cnce t:h e eeo I~omy revive s, bank~ w~ II: have to revte rt agailn to t:h e co rp 0 ral.e, $·ect or a.gtllln, " Ka rdar p'o~me{] <0 u t In h fs. ~n~ervIBw with EWi: :Resea:rc h.

I ill p~{jillii1e.ht.

At the same tlma, i~

1) reer to promote lh e e ll~" ture nf'a!litmpnm{lll.Hs.hif) ~n the C::(l~mtry. Hl.eJ g{lver!lrIlIellt must ensure II sa.'f,e ~usilnessllFl1Jirllnm8nl llFlla seGU rity of ~r(D~erty rights.

Anrec.di()Hl!1 ~IJid€:'n:c~! SUII" g,ests thal y~uli1g tlus~-

n,8SSme'tl 'fmm K·iWlchi.

Who h1!iVB \mrlt!].rsdi irnh) d!ai~y O.r poultry f.arming in SUi:Ul rban are,as Hke e co nol1l1.yor allY o.f its p.artic~ G;a,a a P ! 0 r h ,I've S Eli U! P l,iIliEI, Se'G1Dr.lf th,e l~ng.s are' sinaH lactone,s i~ areas· ch~rred or ~am,agie'(j, even Ilike: K0Hln'gi, hra,lj'fl beu oXy,g~lI1 rli1ask~ faiil~o he'lp lOr waYllngl extortiQIl m(mey to 10m]! !lsrfods._ u:nrillly ~an.gls in ti1e area;

The DluckettherefQ're Kallis 111:1<1 uw.e to pay IU ~ th.s on the giovHmmen't, where 'bhatha' oH'en Ie:atl~ to documentation of the eCQno~ kidn.a,pp~l1g fm r'<U1i!NHIl,

SIMIEEnlabliing modeJ

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ACCElSSlO MA.RKETS

TECHNOLOGY and Managem.ent

SoliJailbi ,Jamalli

tanse, t.aek of ad,aquale do c!.!lmenti'l:~kHl Qf Hil'e S,MIE seetor, precl~des baJnkers to pn:lv~l]je loans to U~,e sector.

Ag reed, th,at ~ n less d:evel" ope d CO<iU ntfi es I ~k.e Paki:stam. SME eJinerp~is:es w'ish to r~main in lline lnfurmaJl MG'

Po I icyf.R'eg u I'a tory I

Framework

(E:nabli 119 Envlo rment)

r

...

JI..,

"C . tor. 8.nO' s n may remain urt-

• tllI.nkabtli, ~ec,au!>'8 of tha C()T11I p [eX reg u I aH.llry J) nstaetas t(l formalisatiQR

But til e5eexal~tly .'l n! lill,e areas" where' til e' ~ eve rnm-e!nt 11l'I1IsI ste pup Hs eff~rts, set UtI) liootitutiioM to do,culm:eiU. ev~!Ir.la,te, and aliso d l.ect UiJ,e SME lJusines"sm81i1 ill their

Human R,ss 0'1.1 res DEVELOPMENT

I i'I S'll ch, 11 see narr~Ji.I'Il CH'le" tarystimullis ca~ ,do IUlie; [he r;eal im,peU.!s neediS 10 come from thegove:rnment espeGiaJly :by ~ac'l!!si\ljmJg Ofl if!c~~as,e'(j dQiI)!J mentaHo!!1. f.mte r j u dic~;;1 ry, ~etle r 9 QV· ern;;ll"loe • .andh~gh>E!r ilevel :[l~ aW<lrsns,ss. Willlhe~QV8m[li'iJsnt ba: ahl'B to [j.!) .it; your .g,uess is as llIood <I:S mdfi!l.

"fhe writer !C'ilfll!e. rfJ8Cr)OO tit soJlaJ:l),jamaH@of'"maiJ.com

Rh;;~n9 (iflf!llullso in SME 'I'iUl.1ll'lc11'1(g

-------------------------------------

A qtli.cK glance: al wlho Ilends m Ihe 8M E ,sector co 11- rirm.s Kar'~ar's vi e 'III , .IMthiQ ligil1 th~ share 'of big Ii ba ~k~ ~n S ME. I,e J'ldiorl g Ilas raj li~nJ tM~W~tJ1i [) t:t>e mll,e r 2!006 [0 [Jatll, it sti!ll aQco unl5 fa r 39 IJ i3 [cent, a6cording to, SSP I{lst ban kin g qilJa~tllrl!y J'SViHW feleasedi:n JIJIl;e ·2101 0 "This i ffiIl ~ Hes thrat S rliI,all aniTII aidsii'er ti;:i!ilk,S have f.8i1ed tQ liM their <n il;h e' iln

32: '

1-

would 8:lIIt1ic8 ~ham to target. thie SMlEs"', HUlse fncilud,e ~!eWng ,slJl)portfmm thle liUa rlil~Uo mIl F[11 anlCIi! CQrpomt~o'n ·an(J Uie A8iaffil Cll3ve!lop,ment Sa r1lk .a,s well as ilil~mdllc~ng BME speclfi,c Exp,or1 Recfi!'lanlc(l Schemes OJ nd :p r(w i (Ii,n g Ii r'SI IIOSS

HOW :IMPORTANT ARE THE SM Es

'9'% of 'imn's

'9C!1i~, 'em'I'I~CI,m ent ,of IP'lI'iv,alte ,enterp:ri,seis, inill1dlU·sbiiia~ :sec,tor IG% of Il'iIIon ... ag<fi:G~fi~Ulfallalboli' fbroe

401% afGiD:P

:25r% o:f 'export 'E!,smiirngs,

.3!:51%, of ma nil farCilu ri;Ii'!!1 ya'~llIe

[NTERVI EW ,BR :BA N KilN G REVI EW 2010'

Small banks must bet on riskier assets

IBRli'!: What Is, yo,ur IGCl'Iloeliltr,ati,aln ,Q'III tlilill 10 rill bliliSi ~ ness?'

!MINI: We l1a ve a very low pre.s,e!1le~ in t h,e: 11(91 r~ sector, We dlo lend to big)ger eempillf1lle!> rharare aMoc~aMd with! agdcu~tl\ln!i SIJGh <IS Ie rt~Hzers, b lit not d hce'otly to'small farmers.

IBIRH: "ow IllS thecolril ~ g,1l me r s.eglilfilfll'l~ prog !'less ~ ~n,g'?

IMIN: Our s,tr~te!1Y

rematns UIilCIHlilil{l,edl. 0 ur ovef3rch~n{l bustaess t!p~'Qrhw ity is Q!rt)wi rig IlIHlrket sn!ll'ei.l'Jonllisen products ,atldcl].~to FIler segments,

There h,as been Iii'Hlmentum iii! gepo;!lii[ rncbtnsation. Ihls is lE.stijmOlily tDf th~ sj[M,~tli of tne Sl;lillldard Ghartemdl tlralild lilild mlW eXIHllIlcjlld gllognll.pl'!~c:allfo !lip rmt,

lBiRIH:. What is: !fOU r shlll'e II1I·th,t'! luem i~,ban!1l!es Inl!l!rketi'

!MIN: -OUir~h.arll is moderat'e,,~b~ siliTl piE! nS@!SIIH bei lIl'g Iln'Q e r lP~eSiHI ce (If the local banks slH:ead wd aUOS:8, the CO IJHI tOt., more lmportantly iiflthB rural areas.

IBIR.R: nUl r(l $SiIJ'IiI\l:S !l@' be h II IIIle Il!tlill atla Iii riI CHI'rpOa r'aJt!& falr'ililli mI(I. illil Pa:klstaJtI? D'o y011ll thin k ~hlat Ilioni aliil(jJh]fill~g~ Ibranllts wm gill hill?

IMIN: Yes,the p"i)hmHa~ v,ewy m L1ch looks there. BlIt: i think ill wiill tale Hme lor thefoHlig nl ·bal'l'M~(l,eliller' this ama,. beCil.IUSH (]I~ thlE! F1et wo rk aWl dl~~le lim ~tlld pmSllli!OIl iii! the [!!I riil~ areas,

snme (J,~ the pe.ople ~ have this stage. We w~alllt to be ta~ked tn. I eee en:ough sn- \V1iI,ere CUS.Ml'IlIers wam us ver ~~n~ngs in the ~ndl!lstrv. am~ W'h'\9~e we see ol!l~'Clrw-

Mter tile ecolilomy t'OQ~ a IiIntie:s,

u-tum, ililte~es'~ rates BRiR: SC:B·';s@plelrratio,~alll moved u~'\ltafds. aU tne effe'~iem~y i[rll:ll~cartors mal'o r bamli(s abso rbed1 tile !lppea r ~(I' ba olill~lhe tJil1llllUl'r wme-oUs rapidly ~1'I~he ~as~: side!, VOlJf'lli'e!w oli1lthis?' 3-4 yea: rs, S (I, the rate (If M~: We haV1e Iiflfad,esigllliICHl{me in NI?Ls mig f]t: liI~ficariit fl1ve:S.tme~n: m teens~ow dOWIil fnl'llI1l f1'OW tlni. Iil!Dllogy pl,MfQlrms, ifl'~m-

tven '(111'1 tliie cerporare structure iFlllpmvel1l~ent amd sidl,eUl(l the SME side, capacit:y.enhanc:emelil~ there have be'elll chai~engles. w~*tI ~e:sl!llts tn hi~her beeause o'~~h,e stare of the ~eprecilatio'f1 cilliuges, ecolllomy. Hiaving said that ~ lihot"ltl expensea will deri~ don 'l!h ~n Ik u~ eyare {lo'i fl'g III ~te ~y co rIl,e down witt! the to be siQIJ1~flcillnt~y ~t,ghe:f' p.a,ssa'Q,e ~f time.

thalli what ViI,e IlaJ\"e seen rill DR,R: BilJllIlkili1rDISpfl!l~ds are

the r,ecent years, ~Ie'ii'llrally InliU in IPakistan.

S,ut at the sa m e~~me ,t hey WhiY is thla~1

W'Dr] 'I b~ deeHIlh'ljJl signifi· MN~ It j.s Oi:aV~QU·S tll1at t~e l),aotly be cause tll1en:l i s the cesr of t Ull d swill ~ be h iglll f~od sitl!!atio", ,smd tlhe lor smaller ~anlk:s, Ml:d the re:sullamt' sl(lwer e:co~()mic spread wm be I'ow~r~o'r 9nJ1wt:h., II !b,flieve INPls wi~11 tileiii'!, He bi'iJi,l"er ban'ks bemere bu ~ ~ d (m' tsee a ~a:\.I'1;! fUJ' mat i vat i 0 0 to keep s~QllUiliea~t rise. the lelld~f11gl rete low. Wei!~~

IBRIR; Whsln ,d,a, Y~!!Isee preUy m ~hIh lend at s itnHa r thaU!!llmal~o!!llli1:d h~ppel!ilin(l? pr~e.es. l3ut the snin:!~11 balilks

Jlhe! pDstMm'erger c:~anenges were:

exaoerbated lby the fact that the 'eC(nlo:my took a nosediive; v,al!uatii(H1S were high, but markets came ,down.

An. iinle,Niig,w wMih lMohsjn Nlath.il Chi1;f B<ecutive~ SllUdam C:hamtenn:i Bank Scih,aij b ~aml~1i

IlnUlirs ~nt~rv~~W'. fQCllS"el~ en th'El' overall I. ~aA1k~ni e;llfmam ii'~ '-the CiD IiIlnrtJry, . ~~thlJinri' cspe;al'ts to BR !Re~e~rch a~CHJIt 1h,~ (:111 aU8ng,es lyin1;l1 ah 81a~ tparti n uillarly ih)lr ,sm,alll bfilil.~, Tfl:e' ",~ sp'n~adl elil\ffl rO.nment and l11i~h'~Qst oJ f~,n'd~, he ~e'liie.v-e,$:, wnllll{[%e~' j,malll IbB!l1iks 0111 Itu;lktoes" wh ilcih tni@hitfa:vtJ'llIlF ~Imi.sp ~:UJthr,e- t:"~ n:seHt1l}ltiCllnrS. NaJlthan~ is (jPt~~ mis:firo ti~'ilult IN PLs and the (!IU t~(!(!k @f tllte i nO!lstry ilnr ge n~nlll,

B R Re!se:arc h; Wha~ Is ¥QllIr' Ol!JiU,DOlk olill~l'Ie btalillk· I~g I i!d~stry?'

Mohsin Nathani;

Uf!d'()ubted~ylill,e'fe are challe!1jJres . i rl till e il'!I:llIstry b Uit thiOSe: axe mo re ~in~ed w~th the ,stat:e 01 thee'coll omy: the ind Ulstlry' om its OWni is Ylen' well r,e~ ulated.

lilmwe are si~vef lill~"gs aeress diHerernt' sactnrs IllHsplite- th E! p re vai I i li!g chalh:mgres, If y(l'~ look at the latter hOI If I[)f200~, t:1I1~ mitloo,k waS" far IinQn~ dlllillefllgilngthalil it i$hu~lIY. Th~[CI af~ 11Ir'ge 1l~;iCkets. in tbe iifldlustry wh~Gh <Ire slii.owirng g!) (I d sig nS QI recovery as WE!~1.

En Stl ri n@ p r~f!ta.b H it'lj,

fi Il!d i n'g g ood as'se~ gilF(]lwth alld g rQ \II ilil!J NJ Pts- are SiO me iTt the ~lllllle ogle s fn rtim bali! k~ UIIJ ~ 1iI:d I!I st!rY, .lbut o lilt he wh 0 left hiE! i nd'fUl$t~y j S st~ll~ d(D ilil 9 quite WEU

OrfE liIHH'E th~liIg ilil the GO ntext Oil in ~ i iii d I,Istry is that Wil ha\llls~e[]il.lilcil w~ will Illrob~t:lly (l(MTtlmJ!;l tOI se<e tliia~ S!)IiIl(l [l~ thllsmall· I:lr tlan'lt:.s wm be ~()okiJlg lifIom tow" r ~ s .~ ()Cflls·oll id a - liol'l .. That applies mOlE \to> the 10mll.1 D@nks than th~ fomigflJ 'i)nes"

BRIA: H.Ow S~~lla'!l$111[1:11

1il'8Jve tMI l'Ilerae'r'S' alillol GonsoUidlarUo:os.· b!~ill1l?

MN: Me rgllH'S nd ~[) nSI[) I i-

any d if~e relil,ces i n ] US'I six liiwilth S, Tll!1l1 d O'I)S n'ol tJa~pell~lilywhenl 11'1 the wlJlfl<l. ~ h~ve seen I'll 3 lilY ~lillem(jJUcmllil mergers; a merger n,e~d s ~ ot or !\1H~ wOlrk ',mJ time as t~l e Hlife ~ 0'1 of en a~ ~e nJgles.

ln our case, the rp'!l'!,it~ liI~erge~ chal~e!'lges were exacerbated bytih e faet that the eoonomy took a nesed~'IIe; valuat~ons were hi91~, but markets esme dOWIl, Whell you g'Ol 'lor a merger of banks you dOll't take a 1l'/I(l"yealF or th~~'Hi"'yei;]J limeliu, you kllok at nllucll lOll 9 er pe ri ods.

~3iUI.l,ns.are l1eve~ t hat easy 'ow su cces~l'~url .~ Ii ywlh e re ill the \!I'ondi. Mevertl1e~ess, tnejolllrl1eY has started. There will be cha~ielilges but tlnlrst~Hl wrl'J.~I~e il'fdusny win n~o'veaIHlat{l,

IBRIR: How was 'lh'a~ eXipeIrihm(lewitlh thie Uin iOirrJ 18i!lrlk?

MNi: unlon B,a.nk predates me SE!J_Jf1mCanuy; I 'Was not arOIUfH:1 nere then, ~yt ~ tilli iii Ii:: it was a, 1[We'Uy good move as it gaVel us tile re(lll i we{l :$ca~!l to 0 pe rate eU~ cient I y amI de river (HI illllll'fo~e<CI ,customer Ipn)'po" SmQIiI, 8'0, it was a very i!!lIl,o'rta.[IIl stlS.t~gic !m:lve', UWl~i[ln Bank gave us a iot ~tg ave 6t;!ln d!li ra ell a rte re ~ of sy nit: rgies ili nidi P'fO ci IIC:ts -

lit iSI obv,io'Us fihat the cost of fu nds wilU

maystru gg ~et'o le rid aJ th at rate, S,() th ey na, ve to go f'O:F ttle higlh yield~nJg riskuer (isseis,

lIh en rea d d ~ffe Hmo e betwee.n the b igl and .:s rillilil ~ b:a"ks is iii sc,~le h~[IIcUol'), NOibo d y ~s kic ki rig . ,~nylblo'd y out

OUiF regiu~~(Iwy elilviw(lll~ Iifl~mt today is ,avery SUIP~ po~tiveo!ile., $0 ~liIybody wllOl 'oVa lilts c,allg (I and increase [he Size.' nisi s, \\I'h~,t market com p ~tm(ln ~s,

IMiN: It agahl de~e'nd,s ~n the statec it Ilee COin 0 my, t ne i(j lsp esa bi'e ~n CQlI'!Tea!H1 t he ~ !ilie!rest rates. Baoik i III 2007 ~eo II ~e u sed to get ca.f I r)a~ sal 7 -8 ~'e r~ellt: today the irlteres:t rate is 2.0 "2!l) pe rc:e lilt n' $ liro ro,cket sci" ~nce' 'thai tiiilwS ,arelll'~t~h, so we ltialJe t~ be fea~sHc.

IElIR R; Any plafms tID be I!I!IIO,re agg~es~slve: llil tli1ce SMiE !l'Borlill~3:lillt willlini tlll,e re,taml sector?'

IMiN: We h,~\I'e beer] j'DICII.!S,· i ng on l~ e 8M Es:ecto r ,9.!HI w'iU CIlI!llti 0 ue IQ do s.o',

IR:R: D.o Y'DU p'liI!liI to \119,11- tu re i!l1lto m-rtHUlikingl?'

IMIN: Them h lIIotnilil~ S~Hdlk at this p(D~liIt in tim~. Tlhough, R iis "'1)1 $(lliTlelhjng that W~ Irll,lle {lut, b I!It the!'l;l is In ol!h ~ n9 ,at prei$1l ill'.

lEIlA R:~ 0'0' your pl.aill'l tiO iIllXlP1Uiiloi YOlJlr Ili,raillliolil IU~~WOIFk.?

IMIN: II th~liIk we h!lvH a giQ(Dd br,~IiIGn f(D(ltlHint al

be highf(u sm1allier banks andtbe sipread willi be llower I~]r them" Tlhe bigger barnlls have no motivation to kee~p ttH~ Ilending rare low.

PmfHe: Mohsin Nathtmi

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INartnaIillii, the GMef Executilve ,o'W S'~andard C.hi@Jwt.€;I'e~ ilalif,k ,(8(;8), Pakfls:ta1J1; is ,~ S€i:l!3~nB'~ GiQrpolmfue.~·1NJ1n ke r 'IN illlhi J@ve r20 yea~, Of IUBi}.l1 an cir ~nte rnanoWial1 b;i!.l1llk~ng exp'B'rfsJ1Ge,; He w~s thlf! ,.Go III riMy Head and! ManaQ~ ng Di [eetof cd le.are~ay.s Bank P.akrstalN PW[Gf to jGi~hli $C:8. Am MIBA ·~·ro m II·rJ:st[tlufe of lEI IlISli ne:~s Adm1 nl£tFflilti6l11, I~afaj;::h~, Nlatihanii IS expA~riiewH;;e spre.ad~ iGfEl&S: co[polrNi~e Ib'anlkin~,; fi;:<~d ilJlcom~ mark{l!a~nd Is:~ram~ (: Bankilng.

a grea~ pos.itiolililni~ ~1iI the I Cic·a~ hHi us:try.

!BRIR: H:ow dlld S~:andard GIiI!illIlrtelrrlld cope lIpwl~lfI~he Oil! iturai giff.eNIIiiIGe be:lweem! th II two lli3iilflkS a~t8r tlille ,11[:11111 i~Ttlol1i'?

IMNI: lPeo'~le M'lIe mm:alist'ic ex~eCltaUons wrth me:rgers; they eXpee~ eve~yth i ng to ib'e olnu:~ ck W~Eh 0 ut

most ~f wh ~ch !.lIe W~lTIted, ~ am' Inotsayi!l!g wed~~ lRI;Jt have a '~ajr sl~3re i(l~ chal~nges, ~ut Ih~sl ~hJ~ lerl!:les. WHFIB ~\xIH!Cte!d like ill any me rgie r.

ORR: DO!liD~ ~ihi n k NIPLs have !l'9akifldanlili :a.re IiII00W comi~ll,g ,~,aYllTn1

MN: I'am a flit ml;Drll ~pt:im~:sti4) a ~ ~ Ultl he NPls thall

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VALUATION ,B,R BANK~II;NG REVIEW 2010

1[1 ECEM SER 31,2010

The evolution lof: banking valuation in Pakistan KhalidllQbalSiddiQui

~n~e early pa!rt of 100 decade, 11m Wils ~~~ ~nle~~ in ban~jl'l!1 slQdks ,il'l tllle Karnohi $tl:H)k E:diianll« int_1iS rnmslly rocUSI}.:j cmn~ n1()Je 11~Wjg11~, ~ps 'S~m as PlICIL, liU,E!;{')O, PSO, ~ <mtI the ij~, D_is wtllllM p~Jij. ~.~mli!1flafir,ijrne aJl~ Sin!, til::! ITslj~1 of Nf(~O'nal !Bank or IP~Sllil'lt al the ~~ excha!1lge 'lh!m!g11 ~t 1(1 pelmilt' 1lru1J~a off'BFiIil!J'

~I was ~J1eral~ ao~ted I~ banI!:!;; (lll!lkil1ll1lie valwet:l usii'lglIree ~h!lO'WS iQ( ipliioo,/eruniilIls(piI:) m~les 'tgi~relli the le~d mature Ollis b@:H:e sItIll(j,t _vdlatii!Y if] ea!'l1!lt)1lsd'uetCl ~rd4Q-esWtl1!a1.e iIDltilin~l:il8S,

Tl1e~.re,~e ~ Wlf1 W I;\IIWlI' baFlltlitllJ s'loo'ks was gBoorall)l' <!reume[jDo be IJUiimllG'l1 00' I~ ban~' oooFi: ~ue' pe~ share WIld ~lng a llarliG!!JJar rmllti\p[eto&at bOlJ( valoo ~ s11~ro.

Th8' rmjor fUGI:ffi rnmwnrul Of] 1lll1YliljJ at a[u$lilild prtosl bioCifl 't.!II1!{e (PiB) multlj)te based 00 lJ)ear <Irn.li!rSis ami mmpillrtng mspBotMI ROEs (reMf'! en eQult'}) ~ ge~ a juWi!iOO PAS rmJllipl!1. ForBXampJs, if one WM Villul~ MeS, one wot!.ld lJ!1e'two me1lhOO5 to ,a~ at a. 'QIJIl" senses fal~ ~wi.

A~W, one W0u]Cl lOOk ~'!ha :SBillor:md sea \!ootSIJrl of1rnullipIBS aiie~ restor Ule bati:srl1 the soo!m1rni!1lr)!J at tate. ami ~1fi3lJl! anhat m~~le il:oo 1~m,pP.~ lif t{l XYZ bank.'s, !look. 1!<l11!J:e to aniise' at a fa'ir 'lilloo.

Secondly, 'OIile1NO~1d ~Wkel~ EPl]lea!ed fboE lor 1M cumemrt yoor ami divid't il b'ylhl: required 00'e of mlll1'n (as per oOapi1Bl asse1! ~ri(liDgI mOOe'ljllCl rumye ill: a 1'OO1t(p1e. full'

~tliIpIi!, ifMClfs ROE is'2!j, p!l.lUI')nI jjntl·~ ~QuimJ ~ of return is 20 lPemIJen~ ~e PIB mruJtW'e wOlllld ba G3.1'cQlamd ,as 1 ;25x, 1lllrl thoo mull!Ipli:e:d wtlh Lhe bailiffS book vaLue'to 3HillIbB slcd'sfuln!\l1l!Je.

AllDJNGi DMlrl'ENli)IJ TO rn~ MIX

BanJ);il)l]l sector piOOlabiIIty be.ga!!! 00 shoo1; LJpf·oIJoVdn{l~he~lOooelilin.Q of tliIlNietary fUJlicf by ltJe6tiilfe!lank of Paitislarl (SBPj. ~ 2OOS· :2l){l5, ~ne: In in1lerest Mt;$ reel U) a ·Ilaned of suffiatIlEtd rmmsy ~rJ~ grow:tJn w:el~ <lJJ!We15 !lament .per anl'l~ml liBsullir)jJfr:llll1l.gl'O'll.!1l1 in private se(;OOreredit~ Not Mly was tihe ~FKllustrlaJ wctor bo!'ll'mllir'lg 10 lin are ,~pruilIiIIllS, bul'lfiHl·kinr,mta· lion frir .3ggrese[J;~ (;OJlS!lri11€lIlw· lin~ was aJ&ll3i!j in ttis lime penod,

fiI5 ~rlt{tres~ !la\eS camedUWIl, bants rllJlllnly i~~elr temI" lin~ v.olurTiIIls, but atv· began 1o'1aM ~rj~el of ~~es in vau'eS !)~' lin~'f!stmerns (ttl0fi®,. If-bils, stoclts, etc,) to rooordl uniW.Ils~(j M~ lfe~isedOlfiIta1 gainBS".

Being FWrIi'lily. ,~n(j ItJIty !PffiIilabril, D'he barddrlg !iI',lcro!" also, ~g(m 1.0 be Iloom! at. as a div1d8rn:l·paytn~ IIn.veS1!ITlOOt alt~rTJaltvey '~edaIl..Y as Gijlij:aI ade!Jnrar;y moo, lot the ·frsted baJib;; ~nt(l fmpr'llilti ailtl rt'llli b'lft$, I(~BIL and HElL} begaJ'ltCi ,qe~ IDsfecl @s pari: af tihs priwatisaOOFljpmgrnmme,

BIiII};;s Wollre Il~ also ljIal'uecl LJsirlJ'J '100· !iI1liC11~1ll(j IJMil:I@nd ~um Medel ([)nJM). Hmm!l;le~; ~e ~ne Jir1llj~r Ui~elsm cf ~lis~~ 1.iI:Jn ~h!Xlol©glj ernanatetl rrom ths lillie Wlitgllrt ~ ,~FlIld. to dill!]}. deoos !.lntl il$ hea,'I,II d~peooence,~ a rel:iliv!1ly artit!r:aty tennin~1 !l.lI11!J.a TGm1iniIJ value 1m !1iJtI:i1i(1SIhii: wJ'ue

LeO!E:"D

18I...Ir;I_IIk~~~ !EA~ l~t!EA!'!fIII~~~1

N1M:N!II' ll'U~ lM'allJll'I WP'~ lGa!'llbols I"'~J!iGn.!

!I'!: ~"'~. R~il!e$ RiCA: ffit.B~(Ji'IAIi~1!i

IflWA:: RiJk.W~I~~ R.oo: l!'t'Eltllmm !il~~

Of 100 preoonl value of.;tI1 tulUfil Ijp,c. gem mO'I'l'! SIL1pl1iistiaIle!l due to tills

IOOnds in lle_I~, cal~ tw ~!1Ilux of 'Fo lrl\lWtOfS, 1Ile.n ~

i1r:ffiYilJ(! '1ilHl1ast Ilfolimrmfoo ilJP.\id'ood h_a.s lihe wi mlllhl'lddlC@/',.

or~ the fOrel)'jS't ili~.n at ~. wmlna~ Rroml N'is basiG urWi!rn;a! mdIods

gro\\Ith ldb3. 101' lPtE rm.iIUpkls anclslmtpl'e DD'M\

f(lf!81IU}J IJMSTQRS' the !l1Iart{e~ has gmauatad to mQ1'e

ImRmI' &: NlJRMAl.JISE[I FW~ l)!J.mlliax and dEltilled! v,alllil'mn

Th~'''''8r''''''= \.,.,."h...'I'""",,,,1.oon mod'$, The Ueamy or'~e ntllrIO<I:,~ "WULl' "'" U '" ,v III'" •• u Ib" mao ~fsOO .. · ROE: ,cm.l~ulMionl I.rsrllni

rcr;elfln P9r1ir~j'O ~nvesoo~ ~a!l ti! ..

:t """'"' nu.Pont methotli IS thM il isGtllB5

IiikII an i~t ill M:istan's sIet:t

'i"~""S~1 ""'II" an 'I""h~' .""" """'no- .eachsui}eompo!1Jel'll a_ftMj alJol,lJS ttie

""","", n!.l~ ,,,.- .I!\I"l"'V! •• ~ ,.._ .. ,- ",,"".,H>1 -" '" '''''''''','.c Ollft.1 "_""', '1"0.,.'" .... '.111·, .. ·

!lily, lMnlctl ilad gJO\lIfI 91pe:~irl '" I"'J'" I"" .,"'"'" •• '" ~ 11"'" mIl< '''U~

100 ~ y8~r; <Ii~18cexGnanoo haw OODllrrre!J, am! I3V!3[] Sl31".i'6S to

me~andOO!iltFdlhro InnaL'lC:fl ~js, t1lq)l~1t11~ mnllfbw.\lQn Or Wi1o:us

Pakistan ofiferE!!!:l 'arl alIIrac~M! ~mlJill'> IIooy I'lIDIi& tm'll!lrt:lS profit;aJJ'il~.

pncetl altffn~ ~ af'l in~lIlrull'l'l II: s alSI) in1!L~ oompl1'JheJlWB

~umlJFl, ~~he w?!jkl i~~, the ff!q)!Ji'aj Ipi~ fJOi1il1iilli prOO! '& loss acrour1l'i

II~ !lr.!S o~ quoted!hai ~. d'aw- . . .' ~ . .

sst 0lI'JI! ~ oom8!(}1<OOIlIJB1l;IJ~lJ!iI ,& ~ shOOlE ILl 1 tim 1:r.ri.E,

to aneoooomi.o gOOld' .sto:ryinl There may ua fi!Jrthe:r etJ.!'G'JlutilO!1l

lmIilS 1G:f~ql!llY inv\%~mflll: i6 ........---,,_;_-------------------------

1hm(J!Jh '1I1!e,l:IanlLllng sector, sinoe it mirnm '!m[\Ji'eooS p,revider!t fIiIlhe eoooom,~

.P.ls.~orEtJn ~rs ~ am:!

Q~n ttakitlg~I}SI!Ire in, PakistaniS bimlliirl!J '500t{)~8$JleGially .Itw! Ia~ I~ Ml1kssuchas MC6aM NSF: it !Rame at)parnnl thai tllere was a tliSi.'Xlr1l1eDt bd,~ IIiIe v,aluaJIoni I1Ilffih.odGfogles used Ily' local ana" I1jsns a!ltl tfnose P~ ~mo P!]~ IW rllPEli[lJlmmd m~8rs atld ~ts,

lit soomed as If JO:re~11I Inl.1estor& 'iI-at noo~ li~li\Iir D'TI banl!il'lQ ~or. mhhighe~l:3ir~ues, ,as mi1lf\ared ICllhe~ocal ~ comrrtunfllt.

Sbloo ::1~7 to date, th8 val· oo1Jon method favol!!.rOO for ban~lngl stockE in PakiMilll iiIas bliien mor80I[lI Dne Wm'l ,~ aoo .t'!aI pracUae, The melJloo b~ lfecrealt$ cslouraliolliofa Ju:sti~e(l PIlB mul1iple,

while ilIso' ot:l:rr~ribWiljion

JI'Om thB . mrnle~

([}DM~,

Ta!drig~hB dMIf!llMls, fur tiha 'mrn' cas: Mrlwn a!md dlscounIJ~II~ wing IhH m'QJl.lrndi ram o.f relum gIves qne pOfN(lnt ®~ :ab~kingl stock's value, I~er. ~he major polilion o~1Ile sliJd;'$ Jilr value is ~em.ed ~rough alhree-s1~p, praass:

~) ~eterml~alf1)1'! of rNJormailred

!ROE. IMI based I1Il e.wmfIl!JS f,~, This is determioo;i tIy Il~rrg ~Qllllnl~he, ROE hto its !>ub-compooorr15vialbe [)uPorit moo,'

III) ItJsingb OOllmtiB (ROE - IJ} 1 !k - [I) 10 calctJlate,,a vaI'ue fb~ IUJillfiBd PIB mulmpltr, whalle g '" '00fml~~~ 'grolMh rate an~ I;;: "" requilili:l w a~ relum OJ] eqilfity,

IUl tihe. cafi;:nJIal:ed jus1!j...

tlum~r by the bim~'s 0000 valu8' to (li300mte a terflll]· tl\lllv;aloo-

Thls terminal Villoo ~s tllim al:klEfd ID tt191lre5enl wlue crt th.e l:Ii'lidOOIl Slreamc.'l'loUlafed ooi!liCf to .lirrliJt M; a ifairvall!Hlf!1rlmt partir:ulaJi bank:o.

inglS1lack, .

CONCI.!lJSOClN II~seemUi!at as tlle ma~~ •

in l11e lileth@rnol.'t}gy u~M t[l vallUe ])~f!llill~g s~~ckS goililg tar'!\'rurd, as oonk:sl lJa1ilinJ)~s.tr{l;elS (let rulOwe s()J)hi$~j~a~i3d with lime I'e.,g. a.dding em ,U~I~/liabil:llles ln ~h,e form or denfya~ives), il1 Ilillll!

wiltl (}Ih;e.:r c:le~eloll~n!J1

eO(l!t'!}mles. .

l-iGWe'.'er, M ~resefU Pa'llistUrfs bankillg seetor rnrtrains heavily looused OIl h1g11e~~plle3!ds dire ~(I an '~~' dIltiWOOf·baSC wtra rs unai1IB1Umwli!ii:!lloo IJ~ thmu!ih too h~ssre ©~ demlllndf.n.g loptIm~JI renuffl.,

TbsFeror8, ~t Sll81l11.Sliarl Sinoe D~ P'Ilnt·~ed l!,fstilliie~ PIB calcu&

laliio:n is Mfnig i'It .. fQr"

ward', it tis Hre

me~tlod t)f chil1ee IlJlr t1~o~1a!lac.

Ivsts Grnm~l1(1 tile Dalnki n:{l~O:c· tor iin P'akis.talll,

~~~4lIl~eN~i& ~~ie:;;:.H8ambe~ <JtlJl1afitl:~ifl~oom.pk

- - - - --- -- - -

~:NTERVI EW BIR BA N K:IIN G REVIEW 2010'

DECEMBEIR3~, 201;0

Small banks need to do a SWOT' a-I a lysis

Anr inteNievu with Arif UsrnaJ~ MaJQitlQI D:lrectt1r ~Cm Q;runbry mficer, Oilibank NlA

A~ il Kh~~r &. Haijder rNlawa.b· c·

hlc,~e olf life mo~f ,t::~n~ .dild [nteiilJ.iew8" USI'W]\IU1Ii assertS WJl]I w.@ 'COTnl~ sum er ~anlkilil,g boom 11'n Paki[Stan' 'was a.' mis~e' ,and h'QoVi! h~:s .~ ~ ~:as. b€~f1 llIuvil1lg Bm:?f!l' t'mm ith,8 rf:O'nstim,er business

.~.. -,., '.. .'

to fOODS mom en ~ts· st~enlgth. Com menHriHJ, bn Paki;s:frari i S:' mac:roeGo~ rmm(c Ipi,otuw'e Ustllarni Hilgliflng!hits the comtW}'s lliscal '{;Jleflicit WOB'S, an cI how mQlh iinte:re:~t r~te 'would keep 'stok~n~1 the. IN~L$:. The 1f'Hmj]~Vilntg. are ~dired irnrrsGnp;ts,

SR RasOOilln: '[iirliba.nk has; tliJat poil!il the credit bureau v~as ha.d su~hl s~rn:n\l Illresaliloo il:l n(U establtshei1- il wa~ I~t;;e Pa!k:4stl!n for tM last :5111 yealS. (ItWilig ~I'I p(]IUlninlg railil witho~t bUll: ~ has been CUtlllilgJ diOM!! willleiNl.

I)-n its; o~emlil:Ons of ~ite\ WIlilY IBRrI • Was U''i3 - h~" - - I'", ~ .. n, ..... ,'~".i 1'J..,.J!0:e! 1.,1,

Is 'that sDil s1mte.~ oodk [1'1 2005 ~~ooitlc

Nil' Usmanl; BUJs!ll1!esse;,s sur- to I~~starli or V!!1lS it a. '9lobaJ vi\i!i whi3if1 th~y prnd.ui(;t SUiSF S"lmte~lf'?

laIilllabre Ir'eU!FIlS rOlr 'th:e3r sharer liolders ilIrnu '[11:000 ~1l!;'r1leSS6i> which (h) nOli, n~e!(J tl:! be feVilllWed and flxM. Our consumer busin:esstl$ snee 2G0i5 have bes!n i[lth,~ latteFrrategury,

Ci!~ dfi'$ijg mlJtedl Par..~sralJ1 a,s a DOIfIS!llm:er ~11I'SiIl8S® (;olffll!fY lin 1 992 ~nd glra:dl!llll~ tlec::ame a st~il.dy COllitribluil)w tl) (I'Lir rev" emilie ~n Pa~sfili! - N"l,ough it lilac! its ups Gnd rn.oiWns during th.ns IPtllri,M. Our cre~ i~ cam tllusiliess w:h iob ~\fas .. CiIilifiirst ilil Palldst;llil ~~~ Q Illite weU alild WilS a ltIarket le\1a!ilf;

flMt 20D:4, rh!ir~ was a otlan9ie, in strnte.~y and n:ew man'agem811~ 'Ilhat IMk ,(1''16" decijde~ to :grnw th,e busipf.l$$ liIlu!chifa,$ter ih'~lnill8 eallaJ;:HY of the marnet ~n my op~n~on i!hat w~ iii m i.st!ke. We silnlp~y p ressed t~1e aJccele,ratm too Iii~rd un: 2Q06, alild ultimate:ly had an -accident We Iliad to wriiteofl, <lnd WO\l[i!tB ~or {Iller Rs6 bmlol['l in tllie o(mSlImer tlusfr mess ~\!'e,r 21]07 •. 2[JQ9. Also; at

memo Fm6-XUFIllpr.e, if ~ give YOIU a Rs5 mill~iol1r~w !1il([r~a,ge ion 20 ~ercelll1 IU", you wntll have to [.lay 'a!t ~em Hs,a5.000 p~" l110liltih [I FI inte rest and prl ncipa I payments 'fo ~ 20 y~l["$. B~sil}flny,~here isa very liml~d lalfi(jlet market ~DF[;O'ilsumer credit here.

iBRA: Whtt iii Oiti'\sstmteu¥ lin P·llIilistan l10irng f'am-am?

AlU: Om needs to 1{lOik at lone's smllgifis and oompe:ti" tlVIl at!vi!l!l1l'1.ig~s am:! Iillak~ business plans iIi~o()rdi!']igly .. 011 r strell1grlhi is ,guf !1l~O ~ily a.lilt! tile proa1ucts, thalwe can bring folr Om clianiOO " thsre res 1'10 olther bsnk in the w(lrtdthat is IP'H!:5eiJI: ilil mme Ih:anl~Orn counlr[~8.

'ill!! r bssic: b'l,Jsi!'less is pi~ovil~" iiH,l1 l;i!iililkililg .seMrJoB.$ to thE! t{l~

tuon/rurtWl)rk. The "Jodiia it [;s milch higheFlThe -5 ~e>rBazar" ml.dier does not need c@ilill is ll~caJus~ ~'jJtI d'(Ii! 't Iii®'ffl IlS; we add !)O' vahm E{I Iii~s the '1m-Ids ill lllilUd ~lIIfms,t~ucblU8~l1ess tlU[ we support: hIm hml 'e,(;i. dams, SChQoliS 'Dr iiildiil'll~Y ~y v~orlt:-ili!J with h~s roa.dls, 1 Ihink, QU~ 'stu;wf,{Ji.be' I(!ca~ tl1l.nker. d.eHoi~ is ~IFIIl~atlly IlV'er 20 J!)E!r·

BRR: lIIWIiat is your sUategy celilt. I till ilnik Uni:s is an8xerci~

reg!lfdilllg ~.? we sho'lJItdl work en ~ 8e~ oLlr-

AU~ Just li:'ke' all tlalilks, we se~ves some me<llum,term ailS!o want 1:0 lincre~se tll:esll\lfe devel'llpmenrtli g'lJals. ~e&I.li1le !Ti i 116n11i1 ul!lm develo prnent

gil]n~) alld lifI~ke alneorclj(;al tnn:i~,~t a~ai I1!st 'rhese. We wilill then s.eeWle mall gap - it ls a scQJJ)' th~iU,glht as il ha~s~g nni· cant S!o(lial imp~ic.at[ol:ls!.

IBM: Whm ~s }HIUW ¥lew 0111 l:I1L9 NPls? DI"l! yDU :se9 them Illnr1li1er acooleTa.tilil~?

J'IIU: il'lie high inteffis,t rate s~nar[:01 is a prolblem forill<Ei !)oIJPQIF.afesec.tor. On;e5~m~l~ view is w oonisMj8r~h~ ~6M·to·

of MSA Un! O!UIr dElp~iI: rrn~", .and 11)'fi!~f IJIJIF eests, Burt tlB:ililg .a~IiIY ban:k, we Iil~ed~o IJil3 C18aJ1Wt;! all [)Utl:ltliiS. Om .strati.lgy is to gO aftr.eor operatililg a.ooouliifs 0,1 (J'Ur

oollISulffUU's r,alli~~ltl~fI thl(lli r $ltVinglS< aeceums b¥ SiU pplelirI~nlillig 0 lIF ,offer~n~ 111'00 tedi1· liiollo@y.

We Iha\i'e two consu me r oIP-emtill'g (1000 Ulnt P1PIl.ducts ~ ()In~ lis~!le~ Cfiti·at-I+l;lm!l and !tte: :01her ~s: c1li!ledl CithflJHIVmk,

tl~r C@ m~larli~,s. 1[lI1~raJ!illi{l1 ~n We de not want th:H ~OIlSIJ rtii!lrs saies rattio ,(jflhe vari:I)UIS $00" P;lklSta~l ~al1~cularly the wri- l:o ever t1a~e to came to the torn. Thies ~ a. ~ ll~r,llIm~teif ilil OilS rnlultina'~Ol1"irut clients wl~o balnk. We eliclOIHag!ll (Jilililinill this ime~es1 rate e'!'lVIironme:[1Jt, if WIl!t wUih IUS it! mUI~tiple oQlm~traJfls3:ctions as tedlnlology ~s y~uw debt/.s8iies ratio iiS i1IiUlrf 1rii~. We dOBVllrythuf1lg~onihe OIU r key str,en:gth,.We willi eV8'll thaFl 50 peliteni~. ~I;IU have a

mill Itirla"IJIMaJs iirre'$.·IP<BCIliv8 Q~ \\fOwl< wit~ jliltell'netpro!Jlde~s pml:i-Iem·~ ilJnir~SS. YClUW E Blir

BRR: Din- Y-Oil h;we ally pla:!f!S the sf1:e teeause ~11I some .other andfaomliate interl'le1I 'O(linIn.ec:- margins avce Mgll enoll!g tl ttl to COlliDe iDac:k. '~~ fLe 'OOlil&llImer comnrres, they ~re liar} CIJS- ti'lilly lir you "(I 0 iii 't hav~, ons, all(l,ws'lJoh leverage. NiPiLs are Iruslfiless illl IDe nelrt~Gllr five temers Oil CitL Other l!ltema" However, © flI~i n:e bank~n:gis nOJt houndtD InlSJe [nUlls eliIV~p(m-

Y~IiSi? till1il31 balilks.lIrEl rd aslocused IM~iI!i1.lIfnJntje,r;[h~' 1tirnalfron~ rmJ~n:t

Agglressiive consumer filllam:ingi wUhouttJer is; !'Ii1o,op[e·.pnone Iblllillking IBRFI: wtm: ISYllur word 0111

C'diHlI1~Y'O'l:If·pockM is Uj~tilil1laM· lliielu,ru rra'G~ sliliWl balilks ilil

c r,ediit bu realUwas nk.E! d riving in IPOLI fin g Iy wllelr"e we, see ·th~$ rn,oirlg, Pa..ldsmnI1

BRR: What is YOl!lrv~w~1!I1 AU: Tiley are iWiliro'UI~I'e IliIcI

PakistaJn's IT!lioo~oeclllnom:io 11a~ to fin:d an ,alltema~rv,e DIilSij"

rMll'I.iIJI~a:? !leSS FliiodeL ~ gluess "tMy $hou~d

AU: One view is that dill a :SWnli anat!jsis an,d devi$S

P,ruK1staln's, ElC011i(,my is simplle astrolegy t~ atldre~~ th~ir to ,alnaJys(! .. (DIU r ·eC(lIifQm~e tate ilte.aI1J!e$5~s... rJ ~Olil {jo~tt bri~g de~e:n:ds '1;11:1 tihe pwi~e o~ fme:rgy, va~ue ~o your ,olustomel"S, very 11 o~1 pruGlls at€ h~gMrtMn $90 50011 ym~ will 110:1 hID'e t:lws" II llarre~ felf !I Ilti Ille, we wm be tomers.. It is as sfmp!e' as that. ~j[ 111i1rd. If oil prices come One way 'Dut co:!!I~~ be for ~(JII,I'!n, we have Ie'ss press,urn t~e sllfIaU l>aJlks;· 00 f®c UIS ([iiI1

P!oor {I,ua \i,1ty [II 1~<lHls we, sO!llroed ,rile costs kimed this sm1l!U J;;lity ingHat~1JB 1i!liId Wll h!ad lQ get O'Uit,

AU!: It was $~ ed~c tel Pakistln and was drillern iby roe g~olnai an(j lo,ca~ milinagie" mem. ~ 111 I1IlY o'~inio!l, ~ailk~n:~ is a. long term ~'Ulsi'n,ess wh ien. fle1e(ls!io be b utili 1::are'~iu ~~J. Also;, YD'U !fl'eed ~es~e ilil Ile .I!.LW; IPllikisl.aJliI i~ 11. b.~J! liable C~!l:SI!,!Fliier blllsin:e~sand Crll)1- C;oIll3ulillere:~mnmenHlllldwe p.all"-ed to the lame l:lIomestro tla!fl~:S, we are very oS r!i:;J!IIL That is. wtW, WH 31fe g r.adRlamy m©v· ilngi(iiut (1'1' th~ C(lI~iS.L1mer se,g·

Paklislan'si budget deficit iSi not 5-6 pe'r~

milil withomJII: w:i pers,

IlrilJ1J~d~ hil@lt",in·,cl,il.SS C(Jill~ SUlffltlf d~p!iJ®iI: stlrvic;;es SUiP'" p~emell~e;di by our 5t!1ie·of·tM

clnt, it is much hh;Jhier, ••. our fslhou~d-bel defi]Gi~ Is pr(Jlbabliy over :20 percent.

mcmt- ~'lfe ]IJISl d~iFI'~ Iliave tl1e compel:itive .adlll.lll1lt.ageto c1e~lver value to i(IIllIF c:1~ems,

IB:RliI; Whydan'tyoliII tIi1rlI~ c~ijes mtler 1tlal1l1 KarachI, lL~nore a;nd Islamabad mare aggrle$sl,vety?'

PJIlJ: Wr5 ~'jJlflrn In F.aJs:aJ1l!~ad, MUllta.[J, SiaJkot 'GUljran:wa.la and Hv~erafla(! IJIUt Oiur tiusi· ness mQde~ W8.-S. I1ll;1t rf:ght ~t was .a.sseti:lfiiVoB'.J1 andgwtlli me

gt(l!lamy ,0111 tl1iis [Jilisiln.es$ anld af'etf'jing '1)0 Jepl~c;lIl:e Giti ';s prl)CoeS$.es butWh fI!; wiUtaKe time. We 3if'6' (logn 11ZlIlUt (If ill~l'€asjlilg CjOlil1 glBtiti(l'nJ alild~re rei:ltlyto resp.o'i!d,

WE: am aliSO fDCtm~dl Oil 11!J1I~ IQc1:l~ cni1iIP'<l1fl ios and! ~n ('llll r.targ:el5~gm~ms;. thellJl has not

llhB fi nal 'ftontielr is mobi!e~lphone

tleelil a. $~IiI!J I~ cowllo:rall! l[I~pl[Jrtun ity "'1h:~r8 we haVll n:ot beelil

[nvQlveQ. Weare aJs[J., aFl: oll1-llilne ~~aUorm. 80 'iliiij. <lJr~ bankeTS~t~" ba!1 ken; i.e. .0 i.lr ill !;l;Im::u mer Ibu'i: Hilt· un CiJlJ· Fi~aocra~ IllsmutioJns busililess

~UlmllW le'rlding " is strO"iiuJ aJnd aqa in ~JUlr 1ldvarl- tille' S M l::.sl~do ra.mi devoll~jJl'p '~."e C" ""e~' 'fi· ... IlI" .. " r' fill.., b~~ (lili Ol:ilf r~eF~S. IBas~e.an\,l, our

lodl1l:Y w1th illruElirliSlt roil:oIl!UiO '%Ii.' '"'"I,,, '''' U'U all"~] SI[)IIUtio'"sf:ow Sl!Ich (]'Olinlp'a·

high, it r!S d~n~ouln~O" ~es~gn network. . po or ertef'!I!'I ~oli'Cy has realily n:ies, Th~s ~s mlt easy "g~\len hit l!!S h'sJd ,,"d has made ~u r

~r'Bd [t pmdutts ti}f e"[,nSIJIitl~irS. II hmv we g~t crittrcuze>d ftlr the ~ red it q Lla~ ity i)lt ,ou r

.. e<n1D1re ,eC(lIl(l'rm\~ vUlllleif!lb~e iln

For ,eXaJllIi~le. a mOil ~Ii~ge at working Oll'lt!{ with the lame ~. SM~s. Sm~n ba.l1KS h~voBm'

1I;0llllrJ1lln;;i:all'ljJtS:S_ willh !<ibm !It lo<oa~ co'm~8lf1ies. I1l)weve!r,~ihe Iilaillyways. If W>ll get th~s ri'9!ht, C§lt;!(lie a niGhe if'll[)rrle'rtili SlI)F·

~\fC 1IIiilii f~x 1Ji lort: rnl O'UI[ pr~lb· . .

14 Ilerooflt wOlull:di pro Ilallol¥!be FIMSIOIiI ~s ~h3Jt WII 'p-alil not rT:I€:Bt vU\I'e • am aaw,l'Ity 0 r a ·sen!~c.e

priGed at :20 Ilercent pe r the needs o~ tie s!!lal~er com· !em.s. UHl.t tMy c:a,1'I do best- otiher-

fHll1lHlt nuu ~!S. d~mC"ll~t tQl . p.llIn i:es. ~l is not Q'l!r sMength ~!11 !n(!f vijevd~e blwd1ge:t diend~t wise ~ am afraf,t1 the.y wm riot serunCil for the sa~lIn~1 SA;!g~ g~v~m tl~ r I~mil:ed loe~JI d~s"llrib'ijJ· of P·~kis.tan is not ~·6 1l6-1\Jem, tie 31!"Olmrn for I,olig.

DECEMBEIR31, 2010

lfIiie present-day lslamlc B~ nlk~ 1'1(1 is, ln llfIIy O'IJ hil iio iii, Hfly p'llr~ut lslamls if villwe<d fn;Jm <I ~eg~~ po,int (]It view - It ls even ~es.,$fri) m tn eo stan d PO'ifl'[ or the t ru e SIP'if~t 01 isl~mic tea,ch~f1Igs..

AJ> il011lf111l0,IH: Whio'S~(![IC'WHi~ dlssertatlen w~s "fJ! crtt~q us oil Islami() ban kin gUl at hadem ergedl l,IntU the 'lime ~t was pr'eseliited (in 19'94}, ~ b'e'Ueve- the exae rle nee ~l't the banl<iMI tMt ~mlefged ~rntM liIam er lof ~ slam su b.sl~q uent te th{l lit rit~liIgJ (]if that thesis ~nal'l ~!Ullp'rOVe!'li!elllt lI!~'OJI1 whaJ it was durirlg~tle ~1'l~Ha~ stages or t~.e eXiP!e:r~llf1ll:!I1t.

Hlowever, a I~t l1Iee{js to, he !ijoHe ~o reach 11 G~0~~r40· ideal 'iJlllrsio:n. Th:e b,~Hkers ali'(ltlhe Shad\llh $n~(I~an. i~V:I)~ved ~111 ~siam ie ba~ki llg will need to be more to le rant, ite::db le,a,n(l (I pen-m~ ndedl if In~y a~ to' IrEia ~~S~ that glJ,a~.

By pl~(ldiOg ~or OP'I!nlliIli flid ~d liIess ,. I am 1'I0ilsug.ije5turn~ that they :5 hOI! ~d g nvl'! up Shri'ahl ~~in(liple5 to> accmmlw~at'e IlI1IQre lliberall v~ews on Islant II'I.stt%'ldl, w~a.t i am ask~ i'I{J ~s that Ullli}' -sh(l~M !lOil hBsita.te ~Il re"'i8iw~liIg thai r ~Jlrill!p~p liers iIT ~ml e<r l~ l;iriln g~ne I'I1r~1iI (lQ rl" fQrmi'ty wit~l ~he origil'la~ 'teach ~Ilgs ,(If Uleilr h.ith.

We dOIil't want uiflowidilld Ul:lllmllsf'l1l t.l1at WOIU~~ d®faG~ ~slam ~eyomil it'S twe P~()tl!l re rm r d (I we wallt Ull rela~s-o"abrry rig II:! aUathme ~t tQ tnl" emio'lls tl1U wCDlIltldisaU,Dw id eas (ilm I!l nll:l er,staliltll n~ tlh!li UUI6 ~sl<l!m; otih E!r tl1aln what the ma~o rity ()fi~lh e tr.u:l it~o 1iIal sch:o,lan: ~ III ~e rsla'lll d, Tlh eo idea should be t;(l apIJ,re'c:iate an cJ p f!1ct'i,ce I s lam h("'les1~Y title way' it is alltl iilotW, p,romote 0 nil: b raf'ld o~ I S!<1WiI ~(; t~.aGIii nligs over alii ~t hew_

li'~l!O P rod ~ cts dl'D iliI i fliatE! th e b al~liroe s n:ee:ts 0 ~ ~ ~Iam i c: 8tHi ks th Else (lays:

Leasi~g andl Ml!lr:a~m~l{1,. Whi~~ ~nl IHililcilJ~~. leasing ns: in I~ fl!1;! !Ii~thi ~slam ie Full\!S of dllilrng b!ls,ifl!fl!l.S., MJlulFabaha is lIJ'tlih ere ~s ,8 de b;:lte w~etlller o,rHIY ope rat i ngl I ease is perm ~sSi~tI~e ~n I siam (I r filHlnc8 ~~as~ is :l! I ~oMdt(lo.

Ho ill'tWBf,.tIH! f8ict is Wh i~~ iln ~ r~ nc~ p~e IBasiln ~ is pll'rmiss i ~ I,e' i!l aU fo,rrliiS, so m eo fo rms (If ~easj ng co I'ltwacts

a re cicser to' the sp,irit ~~ ~s la.1iIl wh ~Ic othersaes nlJit. M nst certa i n Iy !~xor 1:1 lta lit renta~s, nnl!lC h ~ ~g.~e'r th~1iI t~ e !ifl!liwketc .. am m erelal ratef,l of intere $·t are Ufl de s,~rab le,

Howevew, so len g as we a reo askilHI '~lOf ~, f'I;.;'ed enarne ~IO r thlj se rvi r::cs. ,e.>:tl'aJGt~d 'rwv iifI an assetth at doesn't dell,I~!le ~II l:J.eilnij ullilizedl. we am 'wmlilil tliH' aHl:iwablHlew· rilolry bl1 I s~a m, ne tiro u b~e e mH'JfJJ es w hen we arel!.ski!l~ {'Of a fixe d retu rn Q n the assets tha'~ d ep ~etes or ts

~ de 0 I O{W aU owed M Ii ra lJa~l a as a wiily (lif £h)~ i'JJ(l filii aac i·a~ bill~ i nlls,g only as' a&eco n d b eest ~~t:enn ative. 0 nleD alii seB< a d~fi!ilUle ~gC~ O~ C,OI1 vict~on iin t,he if st!lJ-e meillt wh ne prepos~Ulg Mlilr~,baJHI. The< Hep (I rtsays ·",.it In eess [0 Jble PO Intlfld (HIlt. t~at tness aH;8f~ lliatiYB's [l.e, Mur-a~<lJ11a !i,1tc:] . .. an~ fli(]l m@ re than a see~lIiId: ~e$tsll~ ution ~TQ m tile viewpoint oif ,aJI ~diea~ lsiamlc sys:rern,'

An ~Uiclra,1 of the state

Bill1lk's ~sJa.m~c IlI"mkilng

We amil-t wam unbridlled ~~bemJism ,that would defano ~sllam beyond ills, true pi:crum nor do we walilt UllueasomJab~ ri'glid aHachmerrtto traditions thiat woul:d disaJlllow ideas on IUndersta.~dtng the true I!slam.

e);'hiaJlus'ted ulpon IOleing luse~. ~f ,a fixed re'.rtli mis d enl(l1indecl '~;or their IJS~,tl1.tl GMr~e s hiaJ~ I lIIot lIB i fllh e ~atl!lg my of leg i~i iliiiate re rlI!1:al ~ut ~ rI]hibited A:iba, TMs ~aUer arran~e me!llt is Iv] u raba tla ands,e,emt: to tJelhe mainstay ,of ~ slal'll~c b'~lIIk-illlg"

NJ,o liI'Ia~t~1' hiOtw rl1IllIC hi 0 ne sy m pathlgl~~all)f atoom ~ts 10 uml:erstarld the Iloililt of ViHIN 'of the :s.(lh!o,lalr$ tlilaJ jLlSmy MUI~ab,aha Ol!l'e wOl!.!ld !1i'ever be convir'lc'ed tlul ~nlf1ate~ pf~c_e (ll'Icre"~t sal~es 0:1 pewishal:li~ goods (Mi!Jri3iiJ,aha) ~s .ltCe ptwble ~n ~ sI[1Jm, Th~ ma.' Silm in g, ![If (]II! I' GOIP,I1elilti CD ml~ s~hol,,:rs ~nI th~s issu~, as i "deed ~ n rna!llY ot~er i sSl!.!el) ,I)!] I SlaJll, '0',0 u Id ~e lmdlew· ~stlOQidle~ther tlV !J Ili'i F1grec!hnl~caJ or pl1 ii'oso'p n ic;a~~JiJiunment;::; ..

W~liIg, pfeSfll'ltedtl1 e dlefel1 Sf)' o'f M u ~lli balHi in a d is!: []SS~i(l1n fDlUIifi on IsllamilG 8:01.fiIli:lliliJl I[)Il th@ ~.[jUi]wln'!ll ~In~s;

Mlalny dli,stJllinev~rs did nOlI agweti with the dHferelilce: betwe,en 1T'~:lJ.a and trad~llg

sl~(Ji1i id conto rm til) the prlnc i.pl,~s .of t~a(ll~!J plrt!s(;~ibfHj .~y Sl'Iall'i'ah, U M ,olrdlmHY peWS,Jln ~lim !lllln~ IiIrtim -frllm se Inn 9 good.s ill oaslii, hie ~s ut ~Ued to earn IPlrofit on (jeferredl IP,aymlll'l1 sales a's we~ I. AM t~l e 'S3 me g.oes for l:I~nks.

The dliffic;llHy ~1fI ndllr· stand i rn~ th is ,~r~ l][]1H lilt is that w he iii we rnenti 0 n M!!! raban a ~Il the o,~i'g ~n a I. c 1.a$s~Gai~selilse r we f~ nd n (I tlHHllt i nn OI~ any d,e ~ayed payrnem . i iii "t ~t use:cl~(I De trans ~laJ'Bln -sa.~es tran sactinn in l1Jlhi~h the s~H8fgav(!l alii ~~1iI8S~ piehmB ofhi:s pmdlluct to his IPr1ijspe()tiv~ uu ye'l ~n e I ud in 9 hij 5 lP'rQl~t mmrg iln (IHll1) _

tnere Is ae ilhe ram ellltuo III ,of <lillY cwe.dit t:iaa~ ill lt nor

i rnnale£! IJ rice s due to

de~aJy'ecl IP'~ym ant, Ba.'y

M u' ajia.~ was illIIl[Jln.eT tram;a.cti (I rJ p~a(;ticed ~ 1'1 t hees,r I i· er pewiod which ·was a simp~e crecm :s,a~e lin ~he class~ca.l IJrnd~rsUIMilIiiD wilh no mlellltiof'l (If ill~lat!l'~ Mc'e (jl!l~ to dHI!lIY in paymll niL ne 1JI'.e.seliit-day MllIrnbalha pIFa,~tic'etl Il!Y 15~a!!lliC B,ali!ks is a.

Tlh,e C()unlcU of llslamiic IdleolloQY says. that alternat~ves Ililke Murabaha are no more thalli a SeGD nd best :sol utio n lrom th,o ViBwpornt, of an ir::leall ~sllamle system.

(8,a;y' M LM'ilban:a} a~tlh e time 01 m-v,el;!lUon, UII.~ so'mles~~ oaUed en IigIIH~I1[H[1 I:H!Q ~ 1<8' do to Ili ay- rna ~o~y Q,1,Jfaln res~oli!ded lO lh,eir ()bjec~ HOI!i!'S, ~!i1 '~tlese words: 1'ho,se wh() devour ritla wm mot .stan:d ~>iCelPil ilS st1'l nld s· ,011 ~ wltJom tli!'8 il1Ji~ .oM ~y Ii!~s t() 1I1:_hi has ddven tlO 11i@!d~ "8!6,S, That is bl;!,mll!l$'B Umy say: 'Trade is, ~i~e Iriba, blut A lIa III h a,s tile fm itled! trad e al1lcJ 10rti idd!eln r~ba.'

T e,celm ic·,a~ iU{l1 UII1IHHlt'S 't:Cl

:sh~1li'~he validity IO~ MUlnlhaltJa. !lIn 0 u Itlp os ltive~y pres.ern~: r,e~;s(1 ns 'fmm Ou r 'a~ a nld S Yllli!a.h 1\1 p:roveUla.t dieslPile fhe alil~aw~nt s~nm~laf- nose who deS:ist arter i'ty IOf]l witlh Ritl~,.tlile tonner rlH:euvirng dire!~U(]lJlfn;J1ifI has been a Uo,wecl jn t~ lam. the ur LOlrd !>haH !!ne pa I'd ~Hled FrOIill 11/hat ~ h,~1,I\e ll~aIF~1l1i1~fDrtIi!B P1list; thll!~rGas;~ ~s: tor rBad. ilfl UI,e 1111!uaWI'~ ,oJ the Alllah (to ,~lJIdgle): ~,u~: thlose s(lholan wllo c.Qn.sider it W~HI wellear {Ule oHence) are lis I'~.m i{)a~ Iy Ileg~t'i lin ate, th:e,re (lom p an itms I(lf t Ile~i re: th ~Y is 110 t~clh n h::al aJ'1l11J IIilICllt i iI sha~~ ,~~ id'8 tli ~re ~III {to r!;l"'~ till ei r arllrllO !iHY to make~ltIlit erJ. '

cia:t!if), UeillTl(lc:nrlalit ,cDl'lditjll;ln iln

The Gi(llmC~~ 01 1$~al'l1lic Mura~allJl ~$ that the ~a!l~Si

c Ir¥v,arr hyM!t:i [if til e hiJl'l.

Mos,tcena~IHy! rI'O same trader wOlil deve rgive a com m odlijty (in! sa ~e w~t hout atld ill g ar mawk,liIll {rilbh) Il n it Btlt iliddl~ng l'I1a.rK-up 1l*l pn:rrlt lllIa~lirl ~s (Hie iii! hHI a n{j ,ael a iln g i't becau se (If de1ay I npay ment is tll!~t:e arlo,ther.

WII' at I calli e Cil c~e\ler Is UAe attempt to comlDlIl e til erwo i II wh.~ch m.ark·lu f! nl~.s be tl<n a I ~(JillifHI t~ b B ad d,e tI tle,(;Use the b lIyew ~$ Ii ~t in (I P Q$ itu(l n t(l pave-ash im m,ed i,s,te~y: H~s rlil abi ~ity t Q P'aJY c.ash 11 as been expl,o~tedl~o 1'0 reEl 11 i 1111 to play m,ore at iI. ~are~ d*. If t his is n'Ol rUJa w hat l~? It i~' de IitHi rlidii 11 g. fomedex:Ha a I'lm LInt for de ~ayiln ill tli! e (layFIH!inli whether t~e payer (l),o'lfuiwer} ~s c'ilipable QI 'CIoilng SO (l,r niot

n ~s irrtere'sUl1lg that ~\I'h,ene.\i'~r trnls i 111~giti m at@! hy~ rid of Mural:i'lIit1. 'HI,tI IBa'y Mil,l' ~jj.al ~3c:e odie m liI,ea by so me9 ne ss U lU"~:S I a.nil jC,th e Clu r' an ~c verse 2 ::275 !s IHe~ serlte.d ~11 diefence o1f!:l!ie arran lJ,emlHlt, even t h (lUI{I~1 the verse 11 as net hi~ fllg to ~Ol with t h~ perm lssl h i I ity of MLll'aba~a in its lilwdeFflii i~ leg itimate form.

lIhe tact is t hlat t hie' ve rse is (;(lndemllirMJI the uneers;ra~d~ng 'o~ some people '11111'0 ll,eU~".,e,d 1:111(11 nade a Fld rlba WI!iF(~srrmHar. lt is iil,ljt de,furnuliIg wh~t riba is. Hild tlif~t arY!!lllTll;!rnt !!netll1l COHtI(lt, th,en ,an tra~e snou ~d 11 ave b,e e'IU p'erm ijss UJ le~1J! Is I.am beeau $8<. acc,ord tlil g to til e aJl'glHltlrent 1j}(J~~t UpOIII th.e ClIU Ir' 8.111 H: VIHS,!': "i110I\l6. no trade DO L1~d l:Ie rl 011., How (iiLli! R~ ~a~,Had I 'I,!I hie h is !;,x(lh~ngie of i~e ntical C'O!TI~ lir!iDditi:es be FU b a wh en wh.iteve Ii' c,omes wahj n til e ca;tego ry 'o-f trade ~alil n,ot b,e HiM?

sen why IR~ ba has ·be,en ~nro'h~ blted ~ f1I I !l~,'i.fli[~ fl[d~hul nut wl1~ther Mi!H1llilaha, fares .milli,l better ~ n that reS~HI(;t The a.~ parenl re asn n\l'ilfl~l~ he Almighty has pn;l~ijb~ted FUba is til ~t Ure ~e ader diem a I'IId sfmm tile b,onlOwer. payfliiillilt 01 tn~ prim:;ifill~ amount plus 8! Ilf~-d8t~r" !l1 urne d ~ Il!t~west; eve iii whsn he us iii n I;D p()lsit!![)n -~o' re~ay it

TII1 is i,s ~ HI ife' GI8~Fly ® h,o'~l1· i ng til e I eM en em'll! P ~ete 1,~Jck or (loncem [Olr the plight Dfthe b (I Fr()llI(IIF. If d lIrilig t nle pi! Fiod lof ttlii' hJ.arn, the borro,w.,e r goes· ba nklfu ~t. 'fine 1<8 llldie I' WOIW Id $tm delln and [wt jlls;tttle prln,cillll~ ~ut int~re"Stas we~1. A humane soul 1,IJlouid !lB hetsH3fil ilil glll,i ng ~ ntl[)tltJa.t ki rid lof a Ii na nlc~al a ~l!'alilge mem, ~~Ia m has, '~h-e refo.re, IP1flj hi b~tE!dl ~t

~nl V~B:W lof thB S! !:Iolve, WhBIiI we klo,kat the MUlrabaha ana[Jgllm~ [It, it aiP'IJ'Gla~s to bec;~l'I1lpletely the s~nw as Rilba: 1h~ b(lnowe'r, eu p he un ist~ca~1Y tlh e buyer, jjCi'[jIU i~es ani a$Sa~frIDmfhe I'endler. the seUe r., iBe,cause thle b,oHDwel'/lbuyer cannot aUi()w,d to IJ !!H!:hasellHi< as:s~t Dr! cash, he go'es tor a tred·

Even in the c-a~e,oftlTe p ~ese!l!t '10 rm ~f M u rab'alil,~n, SQ m (;! be r~evelhat altih 0 Iilgjh liFl~rik-upfor delayed pay· ment i s_, :) I ~m'Vad ,. mark- UI!l' {Ill miUIk'- u.p ~s n,otall 0 WiJ{i, Why, 0 ne mig htas k. is ~t UI,O't a~ ~(I\lfed'? ' Obv i 0 u sly, bec:au~e, a!Jc,(Ifd ~fi9 tj(l t t¥em, 1ilI<lIFk.u!p1 Ollil marik-up h Riba.,

My ~ l!Iesti (I fli is: Hlow (l1[)1J Id it be Riba when ~t is being chMUled onWJ:de?lihe ,ob\l'~-o !liS answer' is· tl1U ~t. is UI,ot the Q L1!lsti CD ~ w~ ~Ih,err a 'GJer~ lain tlfllJ1[ s.actioin is tratle (j r Ii Qt tha~ deai d ~i; wh,ethe I' tliiere ~s Pi i ba ilil it ar n ~t_ ~t is tlh-e q IU estio n w:hdh,e:r till ~ arran ~,elimmt. trade Olf olther&

We have~ to lootk iinto Iha ll!\ilSOO why

Riiba has b,eemJ pnJ,hiibited in Islam! and fimldl out wh~herMUlirabaha falres airilY bellte r i ntnat res Priu::t.

~lI~S~, Io rC@iSIIl~: 1)0 rlFoW~r till pay a. deluliIHl1l ~nmHmt in ad d iiUD nto the ipri noipa.11 a ftef' (! delaye,Jj ti!'l~ eo th8~ !iflakes it Ri ba·wid ae'llI.

From the point 01 view 'Clf plill~osQP~liea:~ liI.FIdmtmnHlliFljJ or MI.Hj.jHll1a's .. acMptal:l~lily, 'ILf'Bhlll~ie to II] ok. ~nto~1l ~ r!la~

it anangel1!11611'l with! inHaHid p:r~ce'i

Gallt~em [)y willrever Flame r the buyen/l)O'frOiwers a FfjI ~xactl)f ~ 11 tlnll15a ['Ii1!!:l15ta.te Df he~ p~'e's,s.liIe$$ if the re ~~v;an~ asset gets a.s.stmyed" TtI-e lellld,erisder wo,uM de:ma rldtwlTl h~ In the Dif~~~"

- -

'ISLAM~:C BAN:K~iNG BIR BA N K:IIN G REVIEW 2010'

DECEMBER 31,2010

Ilalsp et p ri (;il [pri 111(; i p,al) phis 1:08 m,uik I!IP l(inIel"" e~sVR.ibla}" ~Hs ~~ i g ht U ke iln the case IOf Riro.a -Das,e,d loan atraJl1,l;lBm ~lIJt, 1/Ii1J)1J Idn>a IIIW, d flil!~enS'1 bee alu!;>e tlii e' 'pjIO~$' lender in thisease liIas IU sedl th e r~gll1f te rm~ r!ollo~y t![l IlI~U(jv~~hL:jJthe has n ut g HII'ElIl .. Hi b~·b,~.s,ed lean b!!lt has e nlere!:! ~ ntc an ·ls~.ami(l.lUy It}~~thmate' Mlilrabl11~Hl. 'tmnsac::MI1l. ~t. ~s slm p~ya straUgMl (~ill8l)' d'elluseahll deGJar:e alii oltlii'erWise IlcUl hib ite;gl arraa g e~ mentas nlalaL

The< supportsrs of

Mu Il(ib<lh a pire sent two co HIdiHolns. hl it wilieh they thrllk

cHS'tinglllishes ~t, mrlilem QUit!! dearly, lram Riba, Olil'e ~I'tlh em lsth at !!I f11 ike the case 01 Riba wher,e cash Of cU-IHil!le c:irniaUII1!J aSS'B-ts :lU'~ I f'lilo ~v,e(!, in .Ml!lratl1llha th!! sllb~8'C~' mat~ ter is a n;fa~ co m Iifl,odlt'l'. Th e othle r CIClIHii n:h:H~ islha,t wh He il'l Mlulm~aha they dOln't anDW J'I'I<lJlrk·[][p on markrup" they tle~ i.evE!, ~ 11 Rli bil, U[Jtsue~st Of! ~lTte~:eSit is als,o c:harl,;led.

As fo r the C D'f'ld iW::In of

real asset, It

n!a~lly ls ilil'GIHlseQl!lmlbal wh'etne r fhe 00 JIll mOld [il:v is real or UIIl re ~l liheim portalln'lth il1g ~8t:hat if the en mmodMy in ques~~(1!1 is d eW()j'~d w h'lle ~111: tJ ml'()wer/bl!lYllr ha.s!i't ~aid thl~ IImOIJ nt, \!I~HJ is 9 Qung 10 be respolisiblefor 'the ~[lSS? Th e a J:lS wew is 0 bvio LIS Ily t~at i1 wo u lei aetllie 1)10 ~'rower, How tMI1I lis it .any (!uUersnttrnm Aiba? WMt d~U~r .. eiH;~ has the p Iwslca I presentatlen of MleJ ~1[)liIlliilllld ity GalJsed to thetlri3JIJ5,aot~o n1·

WIHlt re~~e1 h,ss beef)

olf~e red to: th e IboIiI'owe rt.c.uye r?

On the IJ;O i lilt: that 'i n MlJmba[ha.. rlmrk-up is cliJargl~ 0 ntfiy I(moe and no hllrllh'BF eVliln whleJn 'lM tUJr· "J)wewfill'l!IYer deli!.lil~ts, I wcl'Ul'd say tihat nat (';tOlIJ1lmitniing 11 d ~l!Ibl~ $~" doe$!iI't mslk:e 8! sililgle5in v,~Jidl" W@IUldl~liIe 1l'~ader.flflOr the leg itilmacy o'~ MI!I rabaha ,a(lc~f;lt i flioore$1: tIl [) as va~~d' if it ~was d,ec~de(J1 titJ,arr comlP'OIJnia iJiiterest shall !'J;~I Ill} cMrg,a<li

fm1.he rmllf~. the poH(lY I)j IHll Clllilirljil'lg mark-u~ Or! d E!'f a 1,11 lit is flI!llt 8'01'ern ~e i IiIgl

pndiced I:ly th~ ~li1stiUIt~o'ns' ella urn in'IJ to be jJIIU rs UI i Il~ ~ :;;·I.1Jil1 lc ~aJl k~ n~. TIHIY ch<lwgs .~~diti@md rmi.arik-ul) '~mm~he defa.ulteu· bl!l~ dOlJl't ad d nt te the we:II'e"liIl!les Qf the1 f ba ntk~. Instead, they di8trijl:llJt~ tl in ch!;jJnly, ~IIJ loth er IN 0 rds~ they die! G l~iIIr(Je w~atl'hey themlse~v,es cen-

tee (! Ilro~utrs. Uillf 0 rh~ 113te ~y 8syet, the and ers.1\8Ii1d~ flll am'J) rtqstth e Sil 11 ri' ah experts lslarnlc Ibal'!it:,er$ alii d eC~HIIClm i~ts ~s that tiN e () I'Illy ,m:cic epta b l~a,ltenul'~i 'lie to Hn~.a· I:la.~,€ c! b alii ki rig is: th~ model (lif Illr(Jlfit"llJld~ 1055·S haJi nlll, ~ilH!k i ng!"

n,~;t m o,d e I IHtS never

1lJ11n.J:ortr-na·· te·· ~-. thl c -1-lIld!eirsF IId- 11-- n .....

1'_ nlJl~!, y, _ e It ... alii! n~

amongs.t the Shari',lh experts, is thatfliJ,e on Iy ac:celJtajb~e altema~ive to R i ba-based banking is the model (11)mitlit~and~~oss~

s,nalli ngl banlking.

!;ddertl[) ~e haraim. HIJ;lw~\I'er; ililMeadol IU~His~ngttl.u: hllwam IITl Olley for tliI'e,ur owm be nel~t they ,t! ~\i'e it to s()metloldy elM. Ho'w Godl tnJ8it ~e ju slifle(J?

~flh e rellgil(',wse>.:pre ns e!'lg ag'ed in the p rOlnl CltiOl11 lot ~slam~e bal1kllill w~m pre p.ared to 3{;ce ~t ~I,amh::alty lIaHd, new Id@:as, ·they wiDlJl(I dig, l!lel~ . tIl ·ta,l\e

i U1tJ) ~1l)ln sid ~raI~~ III the (Jl[)n· ,"e'1l1 olf ~ri!i!cij~al~glulilr.IJJ1·

sUIII 11. l'lOIrld bey!) nd rh ~ rea I mOlt the DIDO'ks wh ere rt is meliltllililledl, tne IlInfomlmote n!a~itr ist hat in 9! ulil~erst3Iild~l1g Ihat PUll tDaJilklJilgl is ~Ih~ onlly a(;tep't~ ~b~e mo~el in ~sl8m ~s u na ~v~.d. as; It IS: Wi! II km'lW nl, It ~s b a!>'sd I[) 1'1 a H ~dfith wh~ch i~ !]o! .s.ayullig WIIHl.:t ha,s !:lee nI made to @~ pe<l L

ne Pr~ph,~,t (poUlh), dedde tian i$s~ e bh aft aro'se ~etwee!1l t:w~ irHlividl!!al~

will 0 we r6 lin £IisplUt~ 011 the q!.l esno 1'1 IV heth er ttre ernou lilt ea rn eel I:!y a sl~\i'e IlI~h)!ligfl(j HI nis,:]j] ~ln Or d etacte mester; ~ e settled tne t1ispult:e by stat~ng:

"Tlh em is n u bfi'liI!!Imt aHawedl wh,e re nil) risk ~s tailte nt. ~ ! n Oithu words slnee (he die falrto' ownler llM;s, JilIJ;1t beari!'lg the wist: !:If the slave lint case uiffie~h i n g iii n!OWiw:l1 \!lOil! ~[J n ~ve h,aIP'jJ'e fled to 11 im, 11 e dmdl flIQt d eserve t:o Ilirljoy th,€ D,etnfll~t o! ~iiS ea;mil!lg ,. lt was (ililly the de i ure !if]!<lste r, the rea ~ wisk ra k~l", W nod !!s,erli'ed to IH)[;k!et tlll:e muel!l ties earned by ttle slave-

Is~am tc ]IJ r~S~rJi.Hjfe nee is l'elJ'~Hite w~th Ili an y S!.I C hi exam pJes whle retn af d,lec~~ sion im;id ~lIJt~JI '[~J II. s itllla· tion d~ riln 9 til e'pn)~ her's time WitS m,ade irlt~ aJ S3'e:roSOl J'Itt, IrnYiola~~e Shari',~h Pthir::~pl,e .. II lJ)nl~ Il'oob at the ratioriale' ol the d ecisi,oln i J'I tn e (;0 nte)(t ![I·f tli.s' siituatuofl iit was f,akElIii. i~ rn~kes <'I lot iOf seW! se.

IHolwe'lfel, i! [It is gllin ~r" a~ils.l3dl i "bEl :ii. SIl@ri',,1:J j):ri JiI(l i· ~'Ie, 1t ddeats the' very Pili rIJlose 1111 ~ sp~ rif or Sh a~f ah.

TI'J,@ (;0 ~d il~on o~ IiIlJ.t aUm'l· i IiIg IIIIJn;;h asing in t hie ,ag reeme !'It 011 h IIi rig ~~ alii ot~ er example. lihwisill ~s tM e~se when~ ~llH Sl:JlIrii',ah exp'ert:s (1,(1 11 et .a ~~owsale'ot' an ~tem wlmse p:o,ssessi.o,o hiM nnt ~~erl Ukilln bylne :!;iell'e'r, OIll(J!! a ve I'd iG1 oj a. S ituati 0 nl" spe annc ruling ~S (ledared Slnri';JJlll,. no die D1lit6 is a.lllm'Jl!d I:ly 'nile dliH!JIHlitlg I ~(mlerS o~ it

Th~$. many i 11$~a!iflie ~l!Iles' are forcibly inciliuded ~lIthe list oif th~ GOi:l·gW6il Shari'all ever! thl~~;t!11 tllley 1i!a!\I'~ ~~me to dOl willh HilS i1niessage, The liS!1.l(fJiic l:iali~ Irlg p raG:l:Ul:i enfilr5, the ~],anl~er-s. that< is, takll who1te:lJer ~hleitr sGholl'a rs telll mem as the ~I ~im~te ''lteruie~ 'of ~h~irf.aitlil, Thus Jlel'p~m· ate$ the llira.ptiC:;9 ~t ~5Iami(] barnKillg wilha confident lall{l~ oif Isll~,11il mil i~stac~ even thm~glh g(jlme ()f wh!a:l is prae· ti~M ilil it may aJ;tl!l@!lIy navill nloth i n:g~o !ClIo Wit~1 I s~am,

The !fIri~r is tire .[)ean Faf;ully aj" ArtS' iifJd SflfJiaJ &tMaes, Ul'riwnstl.y of CfJIltrof Pl,mjab" Me c;qn~f} (fjfJtiled at ,kzrm'llfid@gma.;J:cof'l1,

IFB,SIIIM,lrkeILiink, Slv;ing.li Accaulnt Going great with the froating rate

f8ySfli ~ILJ'Jk Savlng$ AccouJ11 ~ OUr Iii!e:st ot'Eirlrg to ~p YOLl COl 11101 antlll~ !!OJ SU\IIrIgS too way you a~ y,WitBO ro Now wnn our Inml'\latrva KlOOfHn~ savingS product I YOU can OQnet t Iran UV3 chang ng mSi'ka1 rate,

~Un'k'~ fieawres and be1Its

I. ~ ~ng reQU'rerrlen'l or As' 5OO,r.;a:vIII Arua..~ r;rnfIl r.i'LI3S nnkocl WTih KjI:OFl

Iii Pn:fl is pald on mil1hly basis:

,., Pro:i~ Is calculated 0'1 \10.11' daJ1 ~ ~

I. Eaw aGtJBSS ~M ~ <r.::l ATht1I[)etiI Card

£ '11 ank taysa, [)'~' .....

~ N'TERVI EW B R SA N KJN G R EVI EW 2010

DECEM BElIR 3 t 201ro

Consumer boom was a disservice to society

An 11n~:Ni!8w wiWh SlmJudidiin Alit CEO. Ban'k A1faJla1h iLlmiitil1 Stlharn Jama:1i

II[n Ihlis conversation wi'th 1~1~ Aesea~~~tl! Az]z lamel1Lrsm'El eon:sutm'er~ I'ed! ec:o:nom fc ~QQffiI (lit i<hl~ !le:st~~"rllN~aJ'~ iHlt! .stJre"S.SJ~ on the, ne:eid weI"' mlalk,e. ~e rm ce.s ~O

elr:l~l;IIJiW'8 longl term

.omwtl1l· ~n Un~ C'Olmt~ry, -Sluiallir(g hilSg rO;'N~lil stf~tegie$fQr~ltie b~nlk' he reads" Aiiztaj[l{s' ab,[(uf l1IisM,cus arB~;sf (;In!] his plan S<~O in c:reaSl8 Dress m:e by eXP'\Jnd~ngl b~anch I'lFit~ wo,wlt as weill as: Dyvelfl~ 1unirnlJ innoljlMc:!iJI~ss, ~laJllkiin:Q. IB'(l~o.w. are·the .ed i!teoLramscw1 pfbs,

DR R'ilsearc h: Wlilla.t ,d I) )rOIl!! Irefle&t Wihl~'11 !iQ!JI1 I'oek baGi&: Ollil t.he !~o IIISili mllir bO(lIill~lha'isaw a. iliaI'd lalilldlillilg ill!l:::!ij U7'

Slr,ailluli:M I n Azillz: () III rl ng tlhee@olwrmJio bonm, HH~ growth in eeasurner bankingl was out of 5te~ with in(r~lifl,e-s t~at large~y r'E: mal Il,e.Jil sta{l nant;

HI(!I UISHIh(]I~d!! th lIt dHd n ot liIavealr cOlliJit:ii(ln'enstart®d Dillyinn split un Its filld oll[HH Ill:':11 ry item s, :8(1, lhe IHl 0 11111 ~r1 'C·OI1lSLlt"lH:r b,iilllki ngl, 0 iii hi n£l.s,ig ht~(HI be r,eferred as II dijsservi~e 'til' S(i,G.!ilty. Uougl1 "l:h~ Hwd,e~ tih at iPaki stan fo i [() wed hall beefl s.uccessf,u I~y IlllfIpl'emi!8li1tei:l e.alr~ ~e r i In m I!I I::h olf S () UI:h ill 111 dNlmtn E a~l~ Asiia b IJ t Pa.k ~sta.lI1·· s ca..s,e w~s dinerent

We believed that H we starl: semrlg Rs1 bil~iol1 worth (Ilf !li!o6i~e phof!esi. OF hl~ '[hlfit matH:!' a.m@rnabi l:a:si ir1J[:I u ~try, ot h<e r p e ~i II ~1 e fill I i 11 diU S1:r I e S wO!!l~d ~iI'(]IJ' !,Ip to SU(lpOW~ UrI! majn indushy, But the Jil ~v'Bllo p m eMit (If i t'I{I LJSUY UII SIU !l'p'l) rt that glFl[)wth d i dI 11 't occur. All 'a result, we CQlI1- ti,n uedi irmJ porUJ]g H"I~ geoas,. to th.e illllp,ai~meliit 01 Ull.l ecorwmy,

Arild ,o:.l:Ililp[led w~th that th,ere WIHe many I.HJSGHHWIQL.ls. ~~emBrnls ~11 the S:Olc~ety t~at benlefited from 'tlnl tact tl11aJ the eC~fl!;lmy w<lm rmt h!li~'y

£IocJU rll Mte:£I. W"€ dr~d In et e¥~f1I liav'6 (I p·ropeu ~mdit info,rmaHoln bureau a~ the tKm,B,1i.1iI d as a rssu II f1i'iI.llJIY p,eQ'I;lle ~(m~wed mueh beyom;! their r'epaYIifII,ent capacity,

To~ay W~ ha.V!lJ sealed dowflithe busmess h a~ol!l't olfle-tenth thesue it wa.sil1! :2005~2{Drng.

IBI~lR: IHo'w diildl ~it anec~ IBalillkAlfal,aln' s b'!ilfSi II ess and wfJilal"s yOUI~' s:tirrategy 'IlQililillQI ~orw,ilJrd?

SA; In 1'997, Ba[llk. A~fala~ waSI[ne 38NI l:Ial!l~ of tl~e lhe de'f3LlIlt rate ml ,clred[it 4:2 Ib<J!nks,. o.Ulr 'strategy was ~lIrdJ.s, (lc;Il(Hdill.g to Visa, Is

,At the 'start of th,is ylear we haa g,211

ln HI@ cr~dn eard b'IJSII1eSS. We were thefinlt 'to, rrntNIduee no joirlil1g (H' annual lees, 'S(]I we b'e()a[JjJe it~~

r€ipayFl1erl!ts .. Oyera.~I, 1lJt ~hre pe.ak ]In 2007, .. w:e' had 23 percent (l:ss-etts in me COIil"Suliller SIIOIiTlIHIt of Our Illo:a.n beokarrd it has I"IOW M 1(1 iii t() 17-113, pere em.

!BR R: Whl8iit s,tel~S Ii!:Siln be tak~'1'1 tOI 1~!elveloIPliMI ~:ndlJs.~ trial ba;se~har~ wu"s ,Sl!!ll~IPo:sed to be IGreated b!y the cr'81dln I,ed! {llmwth:ll'

SA: My persnnal rtclip@: is IO'~:.a: d IHef~l1t klnd, on~rin:it w~111 b'6 Ulnpalafablefor politicians find th~ peopltit am:!:, I:I~Gal.]s~ it Mg ins wi~hl S~i'I::rmCI'l, No C~IiIIi1'try move$~orW!lrd! wltMlut it. At ~e~st on~ generation wH~ t)3.''{!! 10 sil:trince. nV(I, memo .flfi!litic)I[l.S ,oI Ghiiliiia didn 't !knoW where Uli~ y,tJ))rld WllfS, and now tlile(;Ol!lfillr~ ~s rMIl~n,g its r®w'Hdl$.

FrQrn a I;Ha.c;tk.al stand po~nn. an eeoncmrc \f~sion ~LH th~ COJUIIltry must D~ !8staib~ list ed th <l!t is s bared by ai ~ I;Ml~ it i CCli~ ~~rhes ,arn1 is Irep~ese~m.l~ive of the plloj;lle's wishes.

rhe, clefalu It rate on ered it' cards " aecordii nglto ViS31 iis abo ut 23 pel~ce'nt, ~n Pakistan it',s abclut1 6.5 percent and ours lis all D uit 13 [peroant

Qbviouscho,j,c.e 01 the market Blut (lU r 'poIFUoi~o has now sc·a~8d d(lvlflI fr~m R.sS bm~Il'i1 to Rs7 ~Jllion.

branches;, we, ,are gO~Flgl ~o IJlose~ ~his year at 386 bral1lches.

i)r!1lil"liIilations !}r'1)1l'I' bee.ause therfl' I!~e :ilm~~~ rn i~es~of1 es a~ cHig 'Ihe way thi'at awe liio:liinev'Bllf

Thull was a p,(l i nt i 1'1 time when aU (j'CO,[lCHTlists bHHH\I'~ed th,illt Oldy mmrrtri (IS ~ f'ldowed w~th t'lahm:lIl re S (HUCe s w u I ~SIJ C c,eed. That: t he.1l ITY ~$ 0 lit of t hie llIrm~!lw nJi[)lll. ¥'I)U are ~~~k-

ingJ at kfl(JIVf~M~.e

ecnomi'~s now, Now, iJO'U n:tl'ijes. that ,awe IP,ro~I res si ng .:,u;e tlflB [met; tlHI! h~ve at!)!: IJ~ 0 rI !H1illCIlti 0 n an~ kn o\w~ed g.ec

IB Rift Wh,Blt a.reY0!ll

l!:I rawths~l')llIhlJ,g ies ImI~1IiI is !aml'i [Ion mlel~n? .

S.A: We: w~~~ ,con'tinue to ~O.cus (I1t'1 the COlns,u f'!iIet .sElglmilmt,. h [)WeVelr,. 'O(]JrrS~Hnerr Vla·s: rneVelr am:! 1l(l'W h i"s now oLir brea.diillnd Ille~te": Our mainstay is (;[jr~orate bankingl an~ ~elld~ng to the SME'secto,r,

Alfld U]~n 'IJe ,aJ~ ~ooldliHI to'ward $ ~ rad e f~ liI,aln Ci\!. Riot just diOmes~ic !}!111 also ~'ore~~Fll tJ,ad~. We Ullidilrtake

(;,QnsorHu.ml Unllnc~~,g of i nnast u act ure p rll:lj ects. We cat~ft d(lthata~(lI1Ie, U~ ~ be:~iev~ 'that: nO !:lank oth~r than state-awned ball ks ~ ave· th.e nTiIJ sel,e t'() fimll1lc:e' ~ ®v~1 0 ~ numt Il,mje:cts, 0 n a stan d - ahllHI sas is"

ElRllt How d[OI y01!1l1 dlE!iil1Je SM!!::, d [! YOUI feel foc'lIs:s~ilillgl Olill~hle: 8 oftl'le ::I ME Ills a gl(lOdl i,d,ea?

SA:: lh at's ill g oo,d strategvfo:r the I11liHofl, hut for llnanclal ill:St~tutil)ns a blall!ket statement ma.y liiot be 8PllnJIjllJri.ate. For sxample, I dOlin~h in k BlIHlIk AII~a~al~ Il,SI'] go a!'lywl1ere be~ow the ,s·I'IlI:li~~ seeter, Matte rso'l" d (I(:U IIIl e IiItaUQln are crtnca I 10 d Q~ iii g b!.ls~ness wit~ ~l!I1la~1 buslness~IS.

For 1!I:;i smal I bus;i nle ss es awe entitles above R-s2 1Ill~~~ lion revenue and med~u.ml S~Z(l d en te'r~ rises ,~nl Fl ::;60 !lf11il[liOI1 plus. A!'lythilllg be~ow H\S11 mUli(m Ilend~n{l, l[Fom a (lOIillIITH)rcial b<llilk':s pe~:s,~e"Onve, 'W 01 u lid t1e l1rIiCrQit~il(l!I1ICe, and we ~lil1Ve spildall:;:ed InMW.nionstor tllat in Pakistalll.

O.R:Ft BAFill. Iiills a :sig nil1l~

G:an1: pre:se IiIlc,e IliItlhle

liS I 8!liIlilJi(: B,a.!lIi illlg spacel, whlillaire yOI~JU p liln~ i ntilfla.t areaJ'

::IA:: We ,an~ tlfle se con d l.ar9~st I sh,1I1l i() b.~.1!lk~li1g window 1m t~h'l clo!llntrv. And we- hull acVB ry ~ nt~ ntio n[1JI DOnlJ~lt II)Ulr Isl.am~c VIUil~o'w imQi a fuHflle.digleti bfink 1m fa c:! , W~ ~ngag~d S~P Qn thiis, and got (leI'-

WlIs$~jJI'I to dOlse. - .

But ma,rketc·o,nldUi<Orls haveclilaJlge~so liTluch that \'lie Wan'l to, wa il IU n U~ t~ e ecol1l()rmy is ~eUeu. We feel] W~ C8! f] g Llt 1li b e,fl:f:I~ ~,~;tlJ m om' it th·ern,

areas,

Ag rl sect!) r ~',n Pa klsta III is a d~mcl:llt sector -di'!'fI,cliIll: t.o ~~n·d. b~cause tl:1ef~ ls very IttHe ducurnentatinn. Agail1., u 'Y'tI!.! [Q'Okat prlIJ~i:'iJe banks, w,e haue lendImg Il)l aOQult flsEl._S bmiom IJrlthe ,sglr~ sid,e. S,O ill! eur peer gmulp, rIlled[ilJm sLted banks, we are ~1iI the lead a sta r <I:sa.g wJi.c.~ ~lu ra I 1e.1II dililg hil cOIIIcerned.

IB[RR:~ What ,dol YOII!I~hink na'(lds to b'(i dQ~e; to ~Ioc!!Iili1lellfit the ru raJlse~tor. so I:ha!t D:aJIiII!:s, can I elililill~othe l'arlilill~lifllil i~lillol~iSh'Y~'

SA; lax agiricUl~t~ r.a~

income, 11 wlll beenne dot 11i1fIMted and banks wi ~~ be afl,~e 1110 ~efl(j_ Eventually cerserate hUl1I1hlg will tm.ke II 111l111t:i and ~~Ild~ng to' HII~ agriOIll~tui3J ecollomy lj\1m I~o,w-

IBi[IfI.R: HQW wilill ~ihre CO!llIIil.~ try ti lIilinc>e lomg terrill mlilifn~ stru ntu r,e IP r()~elc;ts" now Ih!t: !)lFis'i.llrresliOwly redlJc~ 111iI~1 Itlill sil'glnllflcanc,s:7

SA: Co mmsrclal 0<1 iii ks by lhe~,' {Ie1iin~tio'lil of (j{)~rI'g i:luslrless should' 1l0~ IH~ inlJ.Q.I~ed i n IOilil!]! tarrs l'iHliflc·in~- tne pretnernls tha:t [)F~s [have; entered the damain 01 eemmerslal balll~s,. wherea..$,.s.ln-ce tlhey are backed my ,govcmufl e ['It ~1!.Hlds whl~GtI air" ~Of]gl 't~rt1il in Illat,u n~.,. they :shQuld inveM in ~1'ffra.SHlIch.n and dlfiV~ lopmBnt ~ m~e,C:I$.

The regulators must s.te, iii allidl emiore:e tliie J"lole 'ilT eac~ illlsmultiClI'l. U,n [!;!-S$ tn,a,t is diID!'Ie, ~OmlrlilewClia~ l:Ia n ks willi t~ III d 11~~Hn,s e~ves ~~Il iiIIll C i ng ~on gle rrn [p,Hlf~c'ts,whli.[;h iii my view is

$llIh:.idlal MC1l.Llisti [it is

bas~~ om sho rt t!8lrrmJ

~ep[isits.

lin 'the currienrt QU!arter, we a.r'e 11all.lnchirwg fuU fl€ldgiSd b r,anch I'BSS ban kilfilg~. with om siister CCU'Icem, 'War[idi Telecom.

BRR; Ca!i11 we e~IIiH.lct BAFL to blilCIl)ililileliQll:lllrrllS~ slvehil ftlll aa rl :sector?

SA: I dl~IiI't th ilnk VlH'~11 b eo.o!lll e ,s,g g re.s·s:ive II n f~ e a(]~i MCHH bm only !1i11)r~ \=illuth:wsly D'e,o a illS e QIJ r iltXIHluien~:re hs !i1ot [tle:en very positive; default rates. are very higlil iilil rl!lrall

We !Wlust u,se ~!i1shll!UI(ll'ls 10 r- Ilh e p U 1I'1'I'(J:ses th ey ~'IIere c r,eateclfo r. plJ [) I ie: sector banks that~H! the belll·efiCliaJue$ or ~OV~fln metlt~ Ll !'Ids S~I(H! Id be i !'lvesti rUJI i 11 ~ 0 ~'g Morin pUijlll,C.H. Blit If lifllii.r" k~~ t p,art~ cij palMs exp ec~ Ill' r~\i'ate !HHlh)w llomml.8n:ia~ M.iI ~S~1il hi ke~, ~ ea{l~ r1~.b is

to grrow owga!'lica!~ly HI about :2:3 .p~r,c'~nt. anrn in be,comem. lead~F1gl pt[l;ye~ ~~ Pa~~stal1l ~t's al.1,out1,o.5, tlfll'l market OUlr Spolilslors

rt ." ... pemelilt. Amd i,n {;omparil-

SUpf)·o ·e .. 1 us, anu now we

luve become title 6't~ SO'in to tliltl' r@:S"t 'o~Hle !liHlr~

largest l:l.ii.nK: iin tlil~' cOl!ln- keto we ,U~ d[o~lng aIlliJUlt13 try,. Arnd th.e intelilli!;ln iist~ p-ewGelilt •. We do Ilill)t see th~ remail1l wUlll~nl the top 5 S<I!flilll gr,owth as weS<l!W ill Mil k.s i III t tiE: next ti va

ye.aJ$" pn:vllo,us years; iSSilJ.ilIllCe is

la r am ~l!;lw,l1 nIl [).r.n (:(1: 11-

We 'i r1~Hated coma] mer cef1ltrati!}11 i.a Oln rc.co\1,firy

b,alnldligl wHh f"QGl!lssed I:uld reschemllu~~rI~.Ji.

att(:lntion. 1fhli stJ~lif1I~(It

s~ffered ,great~y betwe'e~ .2007a.ln d 2009,. BiUlt till aJ 'll/a s a res l!! It "Clf sh Iri il khl~ (jlsplosalJ,h~ inc(lrl'll~ 1111 tiM l'IlIarket,

WI;! <lim th"e' !Illlrket ISlldler

S~m~~aIF~y, f'Il®rtgag€1 ~Li'nd~ i !]g! i:s st.ag n a Ilit; W6 lila lJeli it seen alllY- gwowth ~Ii! th~$ product illl 2nO. A~ 'I'he IHost ,fms hadv an]]!!s ,are n~ l1Il,ore t~a:l'l '~he ~liif~ows tiHl~: ue eOllll inll in fHlllfI

DECEMBER 31,2010

- -

[NTERVIEW B R BAN K:IIN G R EVI EW 20101

achieve .rhat 1,!liUI i fIIthe next :2 years. 0 lIF' me.x{ ~~.CI!IS is the SEHIIi~· 1I rb !III Sp~CI!, Wn~re w"" ~,eUtive tne I,ow ·c'o st reso UI rce s a re

UI f1taIP'IHHI. .

B RfcI; Whlal$It'HH!II~ ~I be dOllile to r,ais,1I tine :savilinos I~:a:~!!! of tl~~ (l'D U ntry land Vi! haft can ballilts dIO~'O f:aJc~il ~ I~tue this?

SA: I thfnk: I:I<I.III~S have a S (1 C i al re SIl'OJi s ~ Il Wtyt ~ create iP,ro~ UI'IJls that ililalilce savlingJ~,AI'I<I our :5haJreh~llden;' view is iUl al~glilmel1l1 with rI1Iil1!e. Our FOil nde~ Ohaurman I liJ·L 811 ei k~l IN,litlHry:a iii Ma ba mk A1lN.aJhayan and curcurrent Gh,ainti!ailil. 1-11.111. Sh,eikh Hamdan 113 ill Mlllb'3.ra.1k A.~ Mana~'<lilil Uti pos,ltiJvedly inclined to the snelal aUld eC:'[)liIiHliI~C w!.lIII"~'iB~lIIg (J~ Paknstanis.

We a re GIO IifI hl'Q IUIl' 'lI'it~ saver foclIssed preducts and hllv~already lalwJ;)hed ,some pr'Odl!lC'tlil tar{le<te·~ towalrds peIlSI(]imnS_

LU·;ewisfl1tlle society

must ms~on@. as w,~,11. We as a nation, for the- ~a-st so malny years.. have s'pelflt more llham what we enne(l. 1h~ psyc·he FIluSicllill_!'lge,

BR: Wl'lat is "iiiew :01111 MeR?

SA: ~ ll1ink it':5 ~mt the be:s:t way te !'IHH!.:S~ re a b1m~:s .s.llstainab~llny. From the PIBA p ~a1t'l(mm we IHlive made our oplntnns KlllOtWfl to tht'! r~I!I~Ol!tor ®swelt If YOIIU look a~t the Ba:se~ m rsqutrements, it 1lr'I811tUOITIS rls k we~:g hied i[)ap ~ta I il.~ Ellijluacy rati(l: times nave eha 1iI'~,~d am d ban ks m I!Ist Iii (I W !.twit: at tn e r i sk-,~sset base. CARl w~~ ~ pl'o'\I'e HI, b ~ Iii~Qr;eeHediye,. tnan j!.l~1 MICR.

BR: But simco, M~R 1:& wlh,8!~'s be i nlll .8Jp~ 1113 01 to,i!I:ay" w~a:~ :Slho u I d tl~HI snUl!U blanks do? I~s I!!,AFl loolkilrlg to 3JC~llilll I"B otrla?'

SA: They sheuld BHherr !ille~{w torn,eth,er to ~,e~l1)rI1e pfof~Mtll.e 0"11' inl]lIr,l c1l.!pH:<iII.

Bank AJla~\1h ,at Ih"e'

m,otm)'I'It: is tnOtt loolki"ngw

area, I think it is a bit IHiffJI~r"

At IthEl same 't~liIlIe thEl _go'v~rli1m~nt slwLl~(J .fj~ uSi!l1g the m~ney I',ab'ed frum hea.slIry bWs and P!Bs, to blHld i r~iga~~~1FI ~ystems", roads. and dam~, etc.

BRR: YOI~r oper,atlnll eX!l,eIilISes ilrel 01'11 '~IIil~ IiJli,g.h,er e~,d C'Olill'lp,a~ed to oth!i'f b'!lllllllCs, ms ttlle nlJl it str!l1llgy ilil pl:u::o fortililat?

SA: We are iJefin~~ely (1111 the hli'~1ii side, and ~ Iha:ve a p ~ a us i lbd e ex p I,Rl1ll UoOlilfo r it. VIk ara : n I he II HD ~1lI:h phase, 1Iml are sU11 ~P~lni!'lQ b r,gli!che S, At the start aft II ls yt'lt'lJ W~ tl~.tl 321 branches. we are gIO~Il.g t.o' close til is ~I'.tlar ,at3S~ bH!lIlc·hes. Mow :a.ddh~.sJ ahcut ,fl5 ~mntll,es iili.nd h~ril'lgl peeple to m<3,nthie!ifl, ~l.l"fI~ (]Il:Iv~l[)ulsly rn1eoan hliglier. C!)!Sf,S,

QUI' SgDOIiIS;(lIFS W01!l1d like 1115 'w grow 'w a.11I .o~'hmillm liI!'Jmbe-r and thelil tak~ u paue, A~dI we hope' t'!]1

(I.G'Quire ,anlY banks, HowElvelr.! It we do fil1ld a dj;!,a~[hat ad~s val.lue tn uur huslnass 1IIiId if.oUen£! :lJt 11 qloloo pnee, we may ~a \I'e a look 3'1 lt, iilill~l1lotlgh 'IUditionaUy H is Olrgl~,!'J~C UI r,owUlI Hut( '111 e sabscrl tie to.

ISIR.: How maJliliV b-ilIl'lk:S diD YlHi Hli~li1lk thlelrre -Sllf.lIJ!l1 d be i~1iI1 IPal<ist:aJliIl?

SA: lihe aumber of balnks i n Pa.l!;~ stan is sm~ blelllllli' VI' hat t 111'~ (:'0 1I1'1Iry':s ca pacity lis, Semi-l1Irlb.a11 ciUtiEls IlaYe ,j ust II few 11 ranches. ~f mOrH banks prep UlfJI C n 1Il1ID,etltlto FI Wi B now -eve n to Sl!T1a~~ef (,liti~sSJlld can:SUIiIl!j[:S: will tUH1~liL

SR; !SInai is; y(lUrYt9W on Il1IiIoblfe or lJi~ctbless 1tm1~IiIIl!?

SA; We are aJready in that s P1i!.CiB; ~f1 ths W;9it91t1 Gili'd so ne me we w'ere the 10 nlly b~n k apart Hl'liIifI U a, Ue w<l!l~e!t ~s there Ii!'ow. alila IlQW '!IUii l1<lJve 1;[1 stan Ii rlitJ(]ld HIt illy pnn.l Ulct:s~l)lr it hi th'il C LlWrent \l1J 1I!rtew, ~l.l"e (Hij hi Ulm:h· i~~1 flJllllledged lIrancl1les~

h all !kin III i' wilth C)Uf s~:ster C;Olilcem, War~d Tejeeorn.

'IT"tl!i itlH:nn 0 I'o~y handshakf)l behve-elil lhe tWOI organ iHllUO ns wm be 11 ~6.Y clulhHI~e. fl~se~U1 ts one ·of Ol!!W ~rolu p com paIII~~S that ~~ Ul<enyw proIf ~d e tih ~ jJn;: Ii i te'~tlJ H! tOI enlb~ the ban~ ~nd t~e talen HII ta.lk to each nther, te chili orl o:g i Oil Ily s pe ak~ n:g ..

We. are ilntwdl DC i Itll

pnd.LIJCM 1l!ndl s~n/i(;e® 10 r varteus types of transac-

ttun s, re rni lttanees, aln!1

poss~b~· access to

iI_CC.OIU fits ac ro ss the

!)olU!liIl.ry. It 11Ii11 ser~ie- two p u r~ os.e, s.; I[lJIie lt w lll aUow g reater reach eut te the e'&'i')liIomy and <It the SiilllfI€- time wm .al"SOI docurIle!ilt: the eco,n'Dmy.

The plj)tent!ia.~ hn'liIl oltJ'~le ban k~ng is .anvw~l ere betwee n &0 to' 8'0 mill ion nt'eW -GHanlts i n i?akiSlallJ, IOlokln.g atthe bu~c~elecom su~'s.c~i tlers_

8 ~f~jllJ ddii n Aziz: n~s' lJ1ien~fi:e :e:n~'e'f IEXe~~tive Ofifice:r ofla~'* Alfa-Itah IJj m ~[ed, forever 'three,. yea rs, Prler 'to thijS'1 ~hi€:B<a,n~ing, ZJlld Fi~ance: M ~.A,"di€igJee ~bldl~ er had over 3;9 yefllirs off eXJperience ill :the banlk!ingl ~e·~tQJ~ .Mth IIQcal~Cy .laA.~1 inrem'ati(lij31Ily.

lrliis; ~!;l'f€~g n ;6;l(1pe rie'ntes lim::ll,rd e th:at in ,[:1\1 rrna, HO'rigl ~ong u. I{:i~ ~ge r.laand 'tttle 'u .111. E~ where he ha~ often r€,!n~s8'ntEldl banks ilfl~h:eif Illea-Ung Sf with the· gifn@iral~, Cl~' ;t~e Asian iDev~IQJllmermt B)anl~ Aziz is' alsO'lo!f1o of pu ill ii{l 'SIPf1iik!rn~1 and! w~itii~ _g af!l d hun; a book 'II n Ol,i,e's,t 1]f M inlgle.' to. his :~frd it ..

publl~ e~p~glly!M-' 01]$1- dpe1'lllElg new Islamic fu_l~ ness; oorrnmutliity, Du:t. of a :e91¥Ice' br:sltichas as per lO~i3J~ >54 Ibfanitihes 8iU~o\i:e{~he ;d~m<lnd of Ifle c);J~tElme~ ~~!Jfrrlry; 'Zl-oft'et" -' ~m]" ,e.~ ~I~ e:%~~ndirrrg

Ils~m'iCi ~kfM- The: bS!n~ ~s!amic Baill<:irgg faom!~e:s -e$~at!lli.s"hed 9 J;!~ocl1$s' ir'l" through aedica"t€~ 1-sIa:miG '~~ anl':i r11 Ihmlhches' in @~~( irl eJm L;(ltll'o'ennlO.nal ~iJm, Pres,entry thlffec._ar~ ~lIiking ~lianoo.e.s". 'liM !bur btarM:i!;'p iii' ILati:OfeQJ)1.:; "~O"\.I'tiirinm'en(~of Khyber rn wMcm" 2'· :a~' IslaFfJlic ~~lur:J'kJj~ COt1!$trt~teC! a £rr<l'Piah ~pl~!WIt H~~r Sh:a'1a~ 'S!up!ilMS"qrr 8o.alfllJ ~oI!I!y i5:r:4rtQ!"l ~Sr;rn 1:Slilllrn~ (€lS~h .su:bse~u8r1t!y

bM~"iilg (:Qlmwr,. I"e!,!,ame:d a_s ;SS};J, liO 'gJJ~t~!,

1$1.1111110 BaflJ!lili)tg Ij ~1!iiIlc: ~il supewise th e 8anl<'~

Of Ii(JhyjOOf! telamirl o~ratil)hS, pre~~nl~

lin IDeoeJ1i"iber 2CQi2, 00)( cii~pri$i_n.g ·.,ol' the, ~olloWii'lg cfecided 10 in~tia~e Isl~ffiic. d"~lall'S:

Sar!i.1jr'lg SelV[$rClf CI;J$,.· 1 •. Syed MlJnMlmM Abl:Jas'

rom$i'Si . _Pcpl", r¢ ~~e 2. MlJl~ Muli"attl!1'D~i;I ~~id

Bankh I!S ~;r:wl$in[l . ' . .

~slani.rc· :& Ocmven.!l:in8Ji is. Dr. ~ MunamlTlM

B<lirl.~ng ,sioo by' flroe: We'-aie' 4. Mr, ;Sh<l!hzad I~ba:l SitJ<liITii.

5. Mr- MUti~~liif!a;d AW~,

T"G!J',aJ !n ~~~l;aliG i8ai:'ikil1'9 tnet!stl¥. 181~micSa;fIikiqg

(3~O!;lp The '~nk of

KnYOOr. is p~dillg

l:sl'ai:nte. ~nklng'

OIIITwst ~n :a1lblg ,_ <

IPak:istan tnro:u,gn 19. full'Ilec(!;i!S!9 o~nches;! 4 :§u~ b~ane~an~ 19~~C> CQ!Jt¥ re~,

Pl\a~ .& !8e'wioot!

Islarnlc bMk:lngd~ eOK fs till; R Iollowiflg

~ ,and $e.i'V.~s.

D!'ij;Iosit,

l O~nil'lt .~:l,mtS

2, Interest FlrElE! PLS~~ving

Ago~lJrI~s

3-, Rb Fre_e Certirlca,te:3,

4~ eall D~~ooIfS !i, HI!ilil F~

~~'s:iL [le~cerrifU~1e

0": Th~~ h",,¢ ~~e' ,~~o aec~!tleij ;011 th!.e 's~nfJhl! p:11lt1J!I]pleS'·'aSElp;pll~tlle to PU31HtJancing

1.; INita',

Bil~ajll IMustafa. r:vtal1lagillig IDiooor& CEO

Sp~l~1 ,- FUlrtih~:r ~~~m;;TIcm jn

P'v~11 ls!laJl1l1io bllru'1f>hes ne"I'MJl'K thro,ughlhe (;(lun~.

2~ Mijra~b~a\

a, [limiJ:l isht~ Mbshaffiil:~ 4, Mu~n@!~~1'1

S, M~<lirnb~h

6. WaJkala.

1, Snru;e. P!J]~n-ase

8, Import g:~pM I:.!nd~r

lsJarnk 8.an%ln9,

g, FO~-e'igf1 Ou~ey (Fey)

~.r-o, enh~n'de: pt;Orespl:tlrr~ kJiiOWJe;dg~ Qf ~e:,,:)~lamio~ 8~1'111:[llg SI~lf, tWl~bl~ liM~m .~~, p:i'o\.ijoo.~ qu~iry ooiYio;!ll" LO!1:i& Gi.j<Si101'I'i!!!~"

BRANCHLESS BANK~'N G .BR BAN K]IN G REVI E:W 2010

DECEMBER 31, .201.0

Going Bralnchless: Paving way for ftnanclal inclusion

lfMGo rice ~t of" 'fii na rlelia~ lneluslon' is m;wl widel~ acl.;lii~w~edged b,y ma.IlIY eG[JIiI~m~s~s as am irni~erlltN~ ~rowtl1l s:tHf~6gy ~n d evelo ~ ~n gl ece IlOm~e$. It liflay be den nled as a du rab ~e Sil ~uti(l"n. a~ IilWtl at oreati [I~ i3tXp imiii\113 I iv,eli hm;rd ~II'IJl 0 r:runiti~~ tbHmglhlenh,M~~fl 'f~nal1cial .. HlCIHiS ter !:IHl l(lwer i neome and Jifla,g iln alized strata ol the. S,~(i i'ely.

Accurding HII a Vlimi{l Bllrnk sliwe;y liiI 2010" iiJFOUiild 'L7 b Imo n ~ei(mlle do 11 OJ[ have access to fO'lr!iflJa~fi nJ'HlcU,p ~ sa rv~,c'e<~. n.~ State' B;;m k slIg'iJ!ests. that lonlv ~4 pelfcern ~)'f '!he mwa~ POIP III l'aWon is t:lIl.nk;edl in Paikistail1, even thou.iQlh 67 pen~ent of tlhe total J;)oPIJ lati o iii ra sld ss ill fLJ riil~ a reas, Fu it nIIHm))fr~, 1011 averag,~,lh ere is o'n~ b'!111 k b ~'a I1IC Il Il'er 20,(10 n pelo~'~e,

One 01' tneearlue:s:t sewlin!:! of thl~ un tlaln ke~ ilm Paklstll!~ s:tiliil1!d lli hii'm U III iled B1lJ1 ~ Um~tedl ~,Iwlncllie~ its 'mobiie b,ankingl' in12Q07. Altlhough 'Very si lin P ~isti.o, the Ibeta ve'r.sio'n of the bl"alil,~h I (!SS; balilkillg seFlJ'i,Dfj Was the fil:sHtits-'k~n,d p.ay rl]enrs s(!'lut~ow! thate!1all~e d C (!sti0I11e!'s with GS M mohUe [][l rl!n eGlimu; tac eawry 'CI"LJ!tsi i1I1 P I ~~ilil an C~iI ~ naln$a(;~ioi1ls UiS iii g tnleir llrIotJ,i~e pnones., Go,mtlined witlilaustomer insights and th~ {;ll'nt~,,11 ~8mlk's roblllst r'B g Illatoi'yfm.FI1-e work in pIiH;~, nl~ o~portunity to: illtmd u,cllOi·atl'.'ms~o'rmatio'lira~ b ~a~l(~h less banki ngJs,e rv~ce ~am!l Ii nJ 20'~ 0"

IJ!I FFERENCIE IBE.TWEE:N B RAIIICHUSS& IM'QB:IU~ B:A!NKING

Nlow diee iTiI'8 dsyi'l'~nyml[)lu S with 'fir1l3r1cla.1 ~liclludorl', I.J ~<lHC hi~es,s· 1:I.:wk i 1iI~ rllJi8:y II:I~ denn e~ as the (lel~\ie ry of f~rlancial .S!erv~ees 'u~slde the ci:llilvellltiolil.ill o;;mk b iii tic-hies IU si iiI~[;O IiTl mIH1 ~ca;thJ'rl s 1I.Ml ~rlfo II1I1I~tiOrl tGt hl1lologies amd non-bank ret@Ji~ agents, It may be distinr;! III ish'Gd ~ rltio tWI) catt!g!(lwies:

1) n'B 'tla.rlk~~~d' m(l£lll~ cOllst'innes a ~~cerlsed nn.aril,c;~a~ ~!1!5:titlJ (klll'th at de livers 1 i Ii!,ao~ ~a~ serv'ie" 086 th~Qugh a. U'iirdl party a[jt! nt [) r f'Il,ert h<li nit, that ,c af! taci II[tate-aceo U lilt e pell ~ n~, JHI_Y!i!llenls, casll 51s-rvices a ndi (]ifhSf ba rlk-

lin,g services, UISlH1Hy IU$illg ~ !'IH)bi~e pllo~,e orIP,(l:i fit I[)f sale ~e rm ilil al, fh,~ GIJ S'IO.l'tlflf lICC'l:lIJIl't ~:; maintained witl1 the t:I(lnk but oliJ,erateat Ilf~Wgh the ag ent 0 r vi a oiher nJO'IiIIIJ.I'aJf'lch c.haI11Hlb;. SlIth as, flllot!i~epllollle' (l,r' ATM.

2) In the 'mini bllJlk-led; moe ~~, a nrm ,&il,eil as ~ te~ecom Il~,efm.towi or o,t~ e r no rHJii!Tlk e!~tWe.s S uch as P'J;lst om ces, malKl15 UI$6 ortn ei r rMai~ matwork In OO!ilju!l,e;tion Wit hi th Ilrd pa rty ag snts 1trl

lhe 'e'st~Il'~~snmeJH~(lf 11 wi~e !lehvo~k. 01 III yl\a\'l.ns/ag>i;!llts is 8,xpec,led 19 ~nCIr.8a$e ithe outft1ilch (Jtf fifili1nlcials{:lrvic;e S M: rm~cll Inwerc,()sts co I'IiI pared to a bf8J1Ch.

Nloln· ace 0 UI nit h n Il.ti.~lS I)) r 'W(IJ~lk-in' CIUS~Q rime rs are i.I~~jOI entertaln ed at a ruJ Ell Omln ~ Dil kaan wh ere 1they a Fe el~giibill to. m~lK~ lm~itlt j:)~11 P<'lY~ rnM~ nts, semi 0 r rece~ve men ey, pure h,a~e m olbi I e c;ailtd 'IIOUG hie fS an d ma,ke p nstp a~d fiI'I(lb~ ~ff! h i II P ay~ liillents, Tiliscan he ~p CO'flve rt the !111J;1I1- ~a:l1k-a(:c,J;llu at-held-

G~obany, nGAP les.limates, tha.t as, many as 364, m~lIIiorn l.mbanlked im:lIVildu3.ls, could be tapped by agen~~liIletworked banking through mO'Dna phones

Q,Uer CUS;Hll11Iers baste IbisI'! killS senr~Ct1! s,

~ iii h Brent to b, r(ml)!h !e'ss 1J1I[lk~II~1. tl"wb~~e Il,ailkhl~ (m-bank.illll) was irll~iaUy startedl aSS. h in hl.:lec IlSO ~l!!. ti_(lnJhl,~~a~e dellendelR(le Olil the um:(I~till'llal branch banKingl £ys,b~riIll. The reas.o'lls, for t:aldn,gtih iSltlrajectJ~ ry am the flI1]'TI.ill.~ of costs ~nvo hJl'!d i [I Im.ncl1 t:lalllkln,g anldi MS prrDpensity to, fi[l,s.liiciaUy 'a)«(: I ude' ttlhB'la.rgiOIF part ot thii: IHJiP·U [ati:on.

Acc~rdl~g 10 the

Co~sult~ti'!le Grol!P \tll) AS:Slst the PMr (CG.AiP},. the nUIi!n" ber ~d lIn-ballking $~il"vh;e dlelll,I,~y nme'flt;s Ih as m.!:::a~ .. 1$d cOiilsid~f1i!l:I~ysin'G6 .2Cm7. G~lotlall.Y, CG,AjJ estimates then: wUI ~e , ,[ bimon ~'eo" ph~ w~th ~ mobile p Ilone and a_so ~mli!f!'1 ,a~s 364 miWo!f! LIIllhan kJ;!:~ i IIJdivM l!Ia.~s ~o i!Jld tie tal!l~ed 1:11" aglelilt-netWo))rl\®d 1:1am ~ i III gt h ~'o ug ~ f]l~tri~e p~ko'n~s. ~J'I P<li~iSUIi, the State Bal1l kf~glu res sug{l16St. IMt 'tllieJB are o'l1I~y 26 rllilBo.1l bank a'C(lIOl!ni\'s hi c,om pa.r~s a f1i. witl"! the 95 Ilfl~ I" IU(LfI 1IIl0bile IJ,Jhofle i!JSHrll.

UIE UiB'IL OMIN I MODR UBL Olifln~ is aJ1l i!'lliiovaUve ba nlk~ln.g mj;l.stY~:E! for the f1l:a.sStlS tnffir lIo'~S Ii ot req Il ~fe st~i!ilge I1it KYC reQu ilrem ellll:S '0'1 til e State Barn khH aOC'(lIU!1t ,~pening. TQe minimUlm r~q 1lI~ r!'lmcn'tsf(l~ t] Pi:ln illgall a:cco'lllntwirth lI!B L Om~ i are t~~ DLlst{ilml~r'$ !mQbHe' !1JUIInOf:lr a.l1Id GN I C nlU.1II1 be r.,

ers ~nto ~e,gulalF balnkaec e lint h(l~(leif"s ,a.Dd:i nCll'v~ p~JF,a.1[,e 1them 1!J~thin the ~I[)~d oIllJie JJotUIli1181nlBtI eGO~U;illny"

Un li~e oUter tlral1cn~ess balnk~f!g! m,odel:s.. alac,to,r that lis UllIiQLleto UBl Om i'lr s·m,n c:UDIl ~ nlg ~s III.n ~t is 'le 1:c'o"Ag nust:i c', [ine8!:rl~ nog that ~ cl o~s f1i1~t d is~ r~rTiI ~m st~ ag,ail15t Cl.Istorrh:Hs OSJ'513d 011 '[~e uy~e ,(If moil,ile net:work they belong to.

lhe val,u e pn) PlOs~t i 0 rI fa r c;us:tto [1,ii,ers i.8: 1the ease and eHicieficy or t hie service ill tenm; of Umie sa';!'~ nI~ and CUll ve III ie nit ~y ~ocated Du k:aans fo'r avamllIg tr-(ijlS-

~n Kenya am{l Ta.I1IJ!@l1Ii!l.

Satawicolm's M~Pes~, is eonsideredl'to ~e th'8 im~hbe;alrer oIriH! 1:I~<llllchl~sslm· Oilil1 k~ rlgi we r'ld. fts st;l.gl{l eringl glro,wth and sueeess has 1lIi.~de Kenya. a fO.(;al I!)l[)int o~ orow~li!g i ratce Hi a t'i 0 iila I lntsrest in m'ob ~Ie ee I'IHr(erce.

Thie lnltlal Go.lilm~~t

i 111"',0 Ive(j c reral'l ng a s~rvie6 w~1ic h a 1llll'we~ IIll c r'of~ na nee bOf~,(lWefS tOI easi I y reeelve and rep,ay ~ lliiJlS I!IS i ng iRe networik o~ Sa-rar~~om, M· Pesa was !atew re- lau nched w~th ~ (1m,s re nt vallulI!I p rnpcsltien: I.~. serdn,g r,emlit· tm III Ci)lS3.n ell ma~i rtr{l p!ayr1lent£i; '~JCfO:SS ~ltIe 'C4n uillitry.

As with l!'!H. (I lin liIi, the mass a,pp,eal of MHesilis partly the e<aSll il!!ld simp Hiefzy 'of its <ICC (I unt l~iP'~n in g" :SnfalFicom SI!I bsc r~ liIefSc.an regi~ler!l(lf the M- P"e-s~se rvioe lJy 't~lIing !.Ip ,a_s~m p Ie ~Qrm ilIfld Il l'eo.5le fl!tiililg! a ny leg itUIin ate IdientificalUon ~mo:r.

UI'I~ike- UIBl Omn~, whioh $ Ll PIJ;IJif1[$ th,e i!JS'E! of allY Itw[)He network, S;1~3J~tOi1l1l repl,aces thecuswmet:s S~M withsJI M-P~sa enabled one. M~Pes<l'$sI!lCQ,ass: is e",ijdlern1t l'mmthB 8.6 f1nUliOIl u!;e~s It possesses 'DI,n o'r 'w 1~~CI11 ffir(lre tllan eo ~roent blel~ieve tile ~r nmlil'e:y is s<l'f~. Furlhelrm (I n~. :81 peirce 1'[1[ of tl]e use.ls fil1d M·P'esa 'Ie ry e~.sy to use. Analys~s po sl1t th.at {m ~ of thtl is i,g nlif]cant r,e llS0'1i1 sfo r M· F'e~a' s: SIU'C'C es.s is. ~~lecar'e

UBl Omn~ ils, liI"eico-Agnoslti(f, melaning that it does not cUslJriimiinale~ .agains.t: ClllS~ tomelrs based 0111 the type of mooUe, m!et ~ wm1c ~hay be~mlgl ,to.

aoti{)lrJs .• lihe iI.glent syste'1IIl is avaU01bl,e- both (lin II PC a~ wl~n as Ol1i ,a flilobll~ pIHJlllf,. ihe ~lIIceflH\re ~tom a Dii kaaiJlla~ ~nt'® p,~ m pecti \leis I he plrol;l1l! b i I ity of if! creas·ecl 'folot traflic a.ild tM ab mty 1tg (nne r adld rt~l))nal and diffew!;!!THated se:rv~ce's to ~xist~f'lg Or II1~W .GIlSWf1l8r;s.,

CO 1M PAR~SOiNS WillY til G,L;DBAL TlWlIEINID'S

II kil P;ak~stalil,. int~ rMliol'lally, bri1tlclli~e~s bank~ng ~s largeiy ~feva!e nt ~!i! d eve~o~" irJ'g nla!ti(]lIilS, akin~(]I the maJ~ 101M: vacli LIm I,eft ~y the 'fina.rIciaUy exc~ l)de:d' rlIw,aJ fllm,ta,

with ""hiGh agefllts were ~~llecteti. 5iiil1~lalrly, UIBl '0 rn I!I i also at!oll;ts a str~c~ 3J,J e"tseleeUon: p roo e:8"s.

B RJiNCI1lLES'S, BANIKIING I NI DII!SAS,1Ii1~IR lMANMEMENIT

The 111 ~iq u ~ty of the· 20 Hi

Flood Crisis pwomlJt~d tne bali! Killlg s£:ctor to .ap pm p(iare th eir res,omces W he~p via.Ums, U~lLc [ha~ilnQl' been '5 i.]c(;eSS~lJi~ ~n jJ rev lOllS a.i tI dis t:l Lneme IJit ass~g 111m ernts •. (iloUa ~ofate;d olnoe ,a.'ga i n ~n Ulluile'lin 1,Iintlh the" G i;DV,e rrulln eorut I))f I'l,ak~stanalld MADRA to rnalke -ele·c'tronic paJymems to ailpr(lxima~ely 11.3 milli~m

at[:e:ctedl Ih 0 usen 0 Ids,

Maki D,g! bra riC hless ban k~ lin gth eir prima [11 aven 'U e o,f d ~sb,u rse m ~mt. U Bl is IU si rig !1Ii8 Om fill <l.CI;{J'U nts aad d is~ I[H~i!ltij[lgcaltds, so HIM res pecUve re,c:i p ~e I'Itscal1 wltl~(!mwtheir cash at AlrMs. i(l ensure e-ffi~iellcy in the d lsburssment

D re ()El·5S, I uca I m SII) urrc.es

\'iI~r~ ~~1'8d a.ccrurriirl{ll to regilDI'IS tor S~nd, Pun,~a:b, Khyber iPaJk;htlJlnklma. and Azae! Kashlmir uri!der t~e su pH rv~si.[) n of U[3 t stall

AddirU(]cnany,. UBtals.o h ~fil d .S.'laU with I rae all 101 sg ua:ge ski ~is to wmik ~t th e C"a~~ cellltres to gliide arl.d as:sis~ Ho'od ,aJfected pleo p ~e with ~hlt! ir Q aeries. More over, U Bl IJ,IJ i~1t iits own in h,aS:lrHlUu rli to IlliJ.anli1l'r@~ co ilIs~s~elnt 0 Ii ~i ne CO'11 n e,cti'IJity to~he N A en R ,0._ ver ifh::~tio'lil syste IIIl wh i Ie ma flPi rog imlilv~d!,la!.s~:o Walan carQls,

'lihe first ~m stalhn J3!mt cd Hs20,O(]0 ~a:(;;~, liras tDeM ~Is~ trlib u!ieda l1I1Io,ng 1 Ilf'l~ I UII)~ I~oolij al'rected I!lteOP Ie '~hrolUg~1 UiItlL W~t~llI ear~s. 1rIl ~s has takel1 overaU aus~~rsemeJiit, thus far, to 1I!l\[)lllild 201:1 i IHoill wnllch nl!lis b6!llilfuMed aq ua~~ Iy lJ.ytM fcdlerai a.~d ProVi~ c iaJ g overnmelil.'IS,

OIUTILOOK

Br.a.riJ"(:hLle$s barllkif1!gl has r(ji\JI[)!IU~iQ,n~zed the very illul.arnhlg Ol~ HI~ 'firilai'lCi:a11 secwr' by au g l1neflt~ I'Ig it to: \'II,elcome th,e IJllbanked ~IUO the fill il,1!l oja I worM.

~~ is tilel"€ to heip lh'~~ ssgI1i1lJ;!nt (if S[)al8ty who fuel o[)m- 1l~1:1~ to ~itl~lltil~r cas/h h'1I odd places iin j,e®r llf tiler!: Wil110 feell lItie ~eetl: to, ,Cj) nee-al their valll!le to Iwevent olt~er ~eop~e freml' ilil(les~illiltly bOlFnJiII'I'UiIlg; VI~O adopt dilfi:oull Qharmels of Sllmlling mo:n®'I"itO their I(}v@d on~sacmoo Ulfl country. FrOllil1 Ilhe fil.Gt.ory worker in HohriOO, !!he m i~k. shop ~wn:er in Sah~W8!t bw,a.n.c~hle)s:s [bo.~i!1 ki ng !!!h~li$ to I11!!iIGh (]IU~ to !those fonl'/ho!n1 tliJe WOiTlu of 1:Ia:n1<~i1ig Se€lif1iS iJlIf!lflt~ in:g 81m! j}e-~olll~tlileir atG€S!;.

Pal(istl:al1 's .!l:dvem Into til e wo r~d (lit b ram::h le.ss ID,an k~ rlg is stijllni3.scer.~,. t1(iiWrJlVef, the E!iXIl'erien~eo~ the; i!ltematijolila~ p~aY6rs., th~5far, ~~mrurilS:lmte H to tie a pmmisin~ endeavor',.

A 5 III rvey, by eGA P's Mawk

Rais Mahaned Ahmed

Pickens in 20Ht COlntillilc~ed til) assess wh,~UiJeor bran ehless b.a nk~lIIg ijs rea Illyc'a:tElfi IiIgln hlNIl.~r i rn'~~ m I;!! gm'U Ils, riournd tMtEHl.CIii or th,rn higH p rlot~ 1 e pi enee rs b 1"0 0191111t 1 JHl iITI i III (J Iii IPI~{J'P lie: into' '~n6 lonna I Hlil al1l,cia~ .s.ystem"

Th:e smvey, whiC~"l'iaIyzedl t~e operatlens '(I'r Ba!1'co Postal (Elrazinc fIN'O (~iildia}. GCa.sh & Smilrl:

MOllley ,(PlliM.pplr1es).c W~Z" Z~T (Sou,thi Ah~(;a), W~I~:G ~C,a1iTl bod ift) Ol ndl (lIt co u rse M·Pesa '(Kenya &. Tanzania), also found tn:at S,7 p,~rc'~lIt I)f the i ~ ,ale [ivec.lienw' wlere PIr~'oI'~IOIJS~!I I!lfllJ,anlb'ld.

~t was. ,als!!l fO!1J IlId~hat Illranclii ~LliS"s ban k.irn I1l s~ n/~ IiI1I 0 r-e lP,r~!{i(!u sly un baUl kerl i flid ivi d~.~r,s. iln co rJi ~<lri:5i[)1iI to tne I~fge:st Mi(ll'l]1 iF i nalil~e ~!flslitJUtibm: (Mfl), whQ 'aISl;D tlltglet the I!IInbalflk8d mllriMlt ~t, thienlfme, tl;loik I~n try thw,ee year$f~w Ibrallnhi~es$ balilknlng SerVI:D e~ 1(1 sLlw~ass the (I liltr~,al; hi (]If eve flit!!!! r~rriles~'lMiF I.

~t; Is ~ nd eed ,evidel1tt:~a~ Ilmril~Iil~~si; DlIl1klif'l1Ji ~s!ilElnl'· I ngl ~t$ P UI rIP'QSe' by ~e.aah ~Il'g ))ut Nl ~~il uiil~b,a:nl1md. Whi~e it lin ay be to" e.ady t~ dle-c lam It as alii Unm i rnen~ Sl!Immss, a !>Bl"vic,e like b ra,nell ~,ess ba III k~ III g, wn!6tMr 1J.8!J'1I\~I€:d I))r tBile, cem~ied, has cre·~;tedthle rI1 u ell ~ nlfle dedi i iii tO~{js. h:mrllwdsfinanoill! i!llG~usilML And behl re we lk'ni(l\!,I' ~I:. sll,Hd I1!vW~IlCI'! of the lP,o:s~t.i\le ei1e,ets of 1;Ji1rf!!1ch ~e"Ss b a,rlk· I riI g 0 iii th'B ·e.C(J J'lilJ llIl'y wm ho'peillJ ~!y sta~t em erg i rug.

fh~ w!:-rMt is ttlU;fj/:lUy w,orkiflU as frr:HJlJot .A.;!J\1JySl ttlr U.SL Orrmf and i1fJldsa BaGi1810rs degr:ee In Ef!O'fwmiG.s with rJeve/opment SI1Wles from $OAS, Uilivers,fty {If ,L.rwdo.ll. H~ tan: btl f~ac'fifJcJ at kCi,eco'm3.B@ub'.co'ffl.p/c

BR BANKIING REVIEW 2010

DECEMBER 31.20~ 0

21 YEARS AS THE

TORCHBEARER

OF WOJv[ffi\J'S EG'ON'OMIC 'EMPOWERlvIENT

~mell 1'l13.\fe ~lwl3iJ"s'.!ltru~'g~ed 'td ad!iieV,B e!oonQmicSil:<!b~IL~ 'OrI' ,t~ejr caWr! in our sClt::i,~ty.

AtrwB l, we Silirive to pmvid e tne'm with the financiiill 'freedom '~hey need to 5-'!JIceeed.

Mehta rma 8:ena'zir Bh!I!J:tio' Shah-sed iaidi1t1e oomeTSIDne' of 1:nlS, prom.ise in 1989 with FINS L

Weare proud to be d!eli'v,el'if'l9 on matt commitment -fOr 21 yearsr providing i:n$'tituti~'r:lal oredun: to women:, aod also prov~din~SI fin an r:iF1 gl for SMEs. W.~ii1 the recem dec'ilsion of the demor:r,atic. Gov'ernlment orPakisilt.;l n ito enter FW8 l into the Pub I k SedQr, we <lim to ~p8 n,d our services

as we cater \YO ill wider ,aucHefloe of w,omen 'wh:h a vts.1:on,

~llbrmmes aoroos Pakistan

.. ~chi '.' GU~lYw~1;;1

• Laoore ~ Gujrrat

.. Islamabad '.! l'iY'd.e;rabad

~ l'Iashawar '.' Jh@lom

.. Rawalprrl dl ,It Kh!:lhp:yJr

• At)botilabad '. Larkan a

• QUe'tta

• Rahim Yar Khan

• Sargodhal

• Sia1kot

• 5hn:;~.rp~r

• Suldrur

.' Wan Carm:,

" Ba!l;..aw~:dplJr ., FaiSillabadl

I. M~rd~1!l '. Multill"l

GNing wmn,en the power to sucx:eed

WI

Fl~st Wl1]mleaB,ankLI!c:t,

H~AD' O~,FtOE~ S, T.,s, M. fouooa1io!l Bu~(il'i!lg!. Ol~ ~Of2OJ21 IBeal!!"lilo~i Road, ,em Dr. Z'iauadin Ahmed Road, Civilll.Jnes. Ka,raohl. Ph: 02 ~ -3til651004..:9. FAiX: 021,,3566,11.66, UAN:l: t,~ 5716 161', i1b1]R)',ei;Jt 1000(1-67616, Web$!~~; .~ .. rii!!'~w~lwtll.eom.pk

41

DECEMBEIR3~, 20110

Concentrating on trade finance

iln oo:mblnil~:1h1M Iwlimntall ,ent1~ res?

IHI.;: ''!He i!i!rwl~ ,desftOO te bllY FIBS but~h~ SWOT ,sRii~iS' mid LlSlirr6l! it Ilad a QIlUpra !II \!{!ry'serjr nus Ghalknges; h'i'a!; not ~1!lF ~p ,Mt®.

Tille ~~nks we ~uired were -availalble ,aoo tile majClF clwm was' the:lr bmnoll !ileIJI!Illrlk am1 $lb.1e 'Care ~e~Il$it!;. OthBJ (I[lfiIrlllel!;ir.;> vre.relhe dBj)ll!lil mJi!: and 1!be cest-

I[)ffuii1dS. .

We were noteoorely 11i1iPDY wi~ th.e iJepoon m~ 0'1 ~~Ia.s Ban_k but, its ~od 'SME ~(I'rtfulto, ~S' v;e~ attrElDtr.1f! for IUS. The il!'lilOl.wt was· Q{lod, bl!lt: 1!1e neue'J ~liSOO 1!til!It they hjW,!lsl!IGha sgricius problem ill 5MEs,3i; well. \!m rea!lised iu;ub· ~,q,Uet1l~ lO tile ro.keoorer. So !tie progrnmme-tla.ootll cOIl~umer lend1~ mode~ did n:olliW!K

II ~Iiwe tliIattbe' ~ustrilllle-:r is not: thail bad ~p,t for a JEW b:1adk sh~p. Ilf 1I01J~ngag(j wl~h tltem 1!~I, it will wurk, Wf1 nill/V£! IJB~n very ~iucc.ess-ful in Ulle pasTlJiilfOO monllmood eu r recovery Me hM q.on-e'LlIl·

mR: HtN di~~ 'daall With the dha1~ 0'1' lliIISrrglng IJift'sll8nt CU!tl!ln38, mi:lltm ~!iilployoos'

My IBmll.k. We ~a\l'e ill separate ~Bp:allmllrtt to dffill willi tl'i€' NPtL. is.fIu~~ bllll ~l!Jr jEHIicralsystem 'tlJkes. V€iY long kJrlhe eases IDI SeHIe,S(]I\!1B have till h:mk31: QBSe to GaSe\\lliliknrn3tjollllg~ha NPLK,

BIFm:YWmiisyoorOOlll'tilQiloosl Offumds·,aoo:wmt isYllwrWget?

til; After' the !'l1lerge~ OJ all the Ibree tta.u~F m wouki be ,iImlund &.5 peroen.t _jJl~ it ~Wi'l is film an

ealY !aSk and! \W!'!ill«l, smrre ~1l1Ie. \Mte;n l{(JilJ O'p~jfHi brancnl, it roJl~Mt Isastt t!,riO ,~ro,aftrru:l:m:I mmin ·1litB cuBfunoors 1lIiId IDI attaflil fo\plty. OllJrstrafegy wil~ be ~ I)fiI builtlng lon);l:lJ;!rm retdiplit>1:J~5, amll \!lei am 001 tirin:glhe oo.st of fund's d'oWJ1 lQ 7 fj, ~[It {lradualy.

licarmort discl~thest~ ngl1~iI1aw. but I am ~re)iQlIlI1at I willi rea:l~ QIleate Inpplfs i1 the m9Jik~ O:imr thrurtliltlcotJ1nmission ami t~ fliltOO1@, we wi! aI~rocus of'lOUrd~D1t,GmI t)USTFIBSf;, we'lw~ stIl'i1e~ drsmbmi~ ths but we will :mnmlf)Ge a flIiI1Ij@.r ~n~.re ~n 1ihs segll!ent SOOll. We wtl'll:ftfelr ,51J9f" oem cash Ilack on ,every ~urmase: mo other lJanldli dOing that

EmFt 1M:IaI: is ywnlfew '00 lie N_Pls of thai overallllndwstltl'

til; There al'e tl1~ ptl'lil1eoojn Ihis am&. Wfl,_ in IPikis1an warn to I@eplhe pt!JIilbnro .ou~ If ItiIB il.l1lm'l I;IaJliks deIHCI: a, prl~btoof'll aoC(!)ulirt, theyilisl:piCkil:.iillij reootve l Bli!~ou:rk\!fJj!iII~m isso ~U;iet~ b tmt 'l,!n;! ~ve to 1!:eeJ]' '!lOOse Md I.MN; onl OUf t.odks for ~BS.

$ooQ:nd reaoon ls·lIiIirt we deml't hR\-'ellOOO ru,anW1il~ bws: olher-· wiSe\~ ool!ll(l ta~ the wmpafires and dearare~heml ~n};)rt!!wt~ Fi[liiill'y, oureconolfl,y ,Is,goilllgiljjwaug~ a ~n IPatdh, I1Iniessiliiait had (lafch ~

over;lbe problbtll will per&!st. '

BRR: 00 you haw _ 10 WiI" Wire 1m -re !M&A~ COfiI" dlilllllll!1i 1IiIiI:!I. JBw' Il!anJols are sliDI ClUI:lIiIe1remltle~IIM'~

HI.: 'We may laiJk ,aI: OOItr1~ OOtf1k willi! 11][) odd b~anc'hes vibklh t'\!Inl

comp!em (luracqulsililln.

IBRIt: mm isYOUfMN 001 h _ngde!lateof c:Mr'I beiNg a ~ mOOS1!l_I\13 thanl the·l~om

IHl! My vie\v .is iliI!itllil;! ean W S~rTIB ootltlr Qriterfulliiill"dlr.e, eXist· 1~1l! (JOOS. 1I'h~ StM~ Il3w shmJl.d put its fo[lt dOiliillstlthat thi: bOlll'ks act lire banm. They have to o~me Wilthl OOI1l1.e 001'1: (If oolulioi~ to It.

IBRR: IW!l(OOl eyJllO w, 'tr,p h agrl~!?

IHL:We am, duing our Jese3!I'CH ~n aJIll hntSiness flinanGing. i ~ assigned the UWk to my Mal'll 1lJiii:l hflpefl!llrV ~~willofif!')e up 'IfJilli Effil'll'Jlhjl1(J OIiHhl!;.

IR .WhaI: lam! YIlI[.r_ ror' Ihe ~liIg ,and Ill~n1'es:s DanJ.;QIgMm t:hat~ are tftlpetI to betJItH'llttUm?,

IHl: We afll wurmg 1;in1 a few p'rOOueffi <lind S(JIITl(l d~'I!;: wiltiJ fue telcos ilJl6 in the ~i~r.n~ 00,0. BIltt: unlesS we are 11 nmi.lr(J~ 'Bntil% I can no~ .say n1l1ich o:n!his.

1!lR11t HI'iw 100 ~I:see Ii!ilCIIl* ~llJr8.liISIlmti~ 1JJe, b3J11t;jl1g ~riImce IDllile l'18)l,1I. fiW to too

~

IHIL: 'lihe SOOflElrni teioo.s sucesss was ijlattlliley llJe!ie ve'Y u.oor frieoo" 1)t;lIfIis is: ~Yl1yU1ey h1Lve I'I1ltn~ to' tap' Sluoh a hug~ fWlrket S,econd~; 1Jhe'j mMJe ~'r.;Q!'lii~~ty ohearrer Wlrutl ~e o.tl1e~ attern_~t is 1M I!In~lifH~, W~ am try;ing m dlll tIiIe saJlli!~hflilg\, but tlUnlaJi! re.rouroe ls litie: prnt."!bm. Thruis me bfg[lest im~imetJt iilll t!J:;l''iVE\'f.

(!I.ua1li~ 01 oolu~a1i1:m ,at ~e I.I~~ \leltillies isalM a protiietM, 1IlIilh tile ~il~l(fn ,()flb~ to tOOf iliiSlfr tutes, ~rs are riol: PfOOl,frn9 Q;uallry [lJfOOUc{s;, ~he rigl1tdibJIle Is n~lh~rf.:,. which mOOJlis addM j:!!iESSl!l[~ on·theiir~rainin@. Theil! is a _to ~Icare~e d~'mect ~ *, irndUSliry 81M 1ih:e €-duo oati~n:3:1 inlSli1il!llicnflS,

An ~n~eiMew wlilih IH!l:Isail lawaJl~1 Plmsiclel1 & 'G'E(JI, SUl11lmllt: Ialnk

Halldl®r IMaw-ab .

.~luggliin.gw~til;11 th'e '\I,ari ad p;(JfrUoCl H{l orff Am Ha,b i: 1:1 Ba1n:k! EMas Ba Alk, aru dMy B:a,l1k, lawl:l ~ is ~!iJI;s:y rl~'(uigan~Sin~ anti rl~,~tn.li~~u f'1irl~gl ttl 8 ~ntity he runs, $narin{l hls [hb~lj~I~i't:s wii[~ BR IResl~a.n::h, Lawai d~.sclf~!l:E!~ tIi'is !p~~nrned business niche', the r1IU m@'el-r ,Of o:ranlc~h:es he iiye~ I 'illid th,~ strQte~. gj'e~ ITEl Intentis to. adopt 'ttl stMdl out 1fro nil ml'llrl'lsi..

tIl~ lbilllk. SimirrurlM, \WBUI I flJltiJeci tl1~ wank, there Vlitir6 ~2IlBo~I€IlBr llralilCo;nli}ere 'M1S ~(1 ooed for slf~h smfif. IIn(i ~(m do mt lilee,~ mOJelJi!a!il 5 pe~u:ns 'I'~r a b~n~.

la~R: Since tIiIe:mam a1iIiIJl~ liIIledium ,simt:I ~ tmt. 1m I •• ~' in tradllfimaJic;e, doIiI/iI: yoo tliIl~, tItIg, is a rle2IiIl to C_illiltd1e-~'

Hl.: ~ believoe t~re ~'stiIl a tl;i~ crI tlJom fli ~ne tmtle flina:nee blilS~ ness, Sool;m~~, ~he Iffirge hanks haw tI1e illlheretil1! d'is~dVimta'i!~ DI tIl~ lIfl~llagellf1.enl layei ijJat Ws 1l1-- 1:2 ~ ilil tI1a,i.lmir~ prtJc~ (lure .. ~!!Ir mdvantag(l Of! Wllich ·we pnrje ourSelves is that we tum ·rIle p.rolJ'Osal a'rnlUnd tI1 (me 'll,reek's time at ~e Fliisxinll.!m. Sl;),lime ~s It;lurnmhe..

'Wei ~ atiellOOd :slrnte[l(ll. We i1;we ~I!ltetl 8., I1UlImID8f of C!JIS· tomeI'S, l.mt:lU1ie Ii!it is circubtOO lC! '~l1e branch fI'lana@et'sabonrtwllmm to ,oontmsM WhOOl ruotbl. so H

potlfuliol ~w rnnnm M~'I!I mi¥ '00 000 sector: 'Iit is OllJstra.tam' ~hat we will tl~t 111l.1iJe mo~ Ulan 20 pe~eelilttexl1O~re in onesecror, When U took this POfl!kiU(),l"lle ca~ila~ liIlal"k:et share' \vss -00 Ilemlnt, $(I ~liS' am gli<l.~ual~ rediucjng it 1:Qc~hl1l

. BR, IR~ ~II baJi1ks ,ali 'lindfiilg it I1ifI1I 'hD,_ lIrnoatMiat iI'1I yolJIr \I1'Jw shmill!! lila: '!be SiiIlIlII bankS' stmtqy to soow_ presence?

iWsafI1I LiwiIJ: lEach oo.n~ has to have [,s mn llusil1ess stratE(l,y. Itn ·Dle last a to 10 voo;rn, small oonRs iFiiD1a11;i tMiedl~o create ,~peoiill~ Uons 1!Ike Alrif Habib aooJS IBarik,. '!hey ~raIlIted tllfocus Wl·thecapiti~ ma;rlfet but l!!nrtorll!lna'te'ly. man~ Q1ih.er ba!l!Ks were Iiltrt clear~_bilut l!ilefr ~.l:Ins and werre oonhlsed.

The ssocmd mislalkBftrattlle sma11 t>!Inks oolil1milte~ 1!(,[S~hat IlOOy re'Jied (llil interh~lik tlll\!Jnd tlooir asse1! ~)]l!!l!Iisi!iJrt Aoo~h~ lfiIilll mi5fa~ ';'lIijS tliiilt lliey' n~r ~ an ~ (ilfl tI1~ ,CltJSI: ,m operalimils, 1i~~J~ unlBss y01!J IRoop a"'n t2.~ onl ~~Uf opBr.1tionaJl C(]SlS, Y~lI can ~r I:ie sliOe(jssfu~

BM: WI1at are pur !Jus ~rng SUlII1ImiI'?

Hl.: Wilen We aD!lui~nhe ball'k, ~\Fe Mdl a vert dear mislliclnl in our lII1ioo as tQ wl1al we wari[b) do. We caJnUlot behave ,atK1 d'.o' tll.e I:!us~ !i!ess lilKe me' lligllbaJlll<s;~here is no:

C!l)n]p6rn ,aoo' FliialOItl ~~ l!!5,aIi!d them. PTimaJrily l(lUr rocus IS Oil! 'I.~OO '~ioonre" bm: ~'anythlnSJ ebll OOIil1I.S (l1llt oUhe rel~JJI1!5hi[l, mw Qt;ln~uj[]iJ8r b:3!Il~nlllt irroreStliI1e<nt billlkID~, adviismy etc" \ve:wjl~ do it

\Me !i!ffef bekr mtes (If re!u:nfI:t1l1 !he; ~!lciEW stglfTlBn~~at Dws: 1lJt!Urilti our ~l<lJlCh ~rk.as 11 msulltour o[lr~ {f:B~osit h~ increa5lldtol . Rs33. iJil[il1f1kol'lrl RfilJ·7 ruillicm w~nl WG took ~r

We willi have 160 b ra.nct'ms by thB 18 nd of next month. Next year~ we plan to relo,cate 26 Ibranch~s~tt1e year after ~ we wi III be opaniinl150 new branehas ..

1~,mhMJ~l~ etc?

IHI.! Mery;inlJ is Il~ dtJI!l~ a V!l!y tna:llengjl1geJiBftis8. bur I Mtlliiad the ~~rii:lnce Qf lliile!"9m before y,i,hklh II 8J)~lred here. We, kJ[rnJed VilruiJUscore '~ Mnsl§ting 01 alii tile three run'ks; tlteY were &l$i~ned wiithl~he ~t:l:bro !)1"!o~ one "tech nolfigicaJ ,sysrnm tmtwm suitq!lle· 0011k OOsL"lbei~ we studiedllile HR ~tilic:y and the opera· tiona'i Side Qrlliirril~i to Q[l:ITJe 1l'I'iIb 8 S'brntegy tlmt is soilabteror .u.e bank.

WekJoktliie SfaJfiI fn.to, oolil~d8oc.e and bmugW .ahHJul itihe Gh:mws yratiluarJy. TIMt e'~JlBril!m:l€ hoo ~n vary reI'l'aming; wBdltl nm :ooe. ,any glitches in ~h1iplemootfflg Vliharewrctiarmes we ~vruMOO WI

1eRR: 'Whatt Is the ~._ IflINFts?

Hi.:: We haue IDllliliid@1ii fur aJ~1!II: 65 pereemor allll1~ NPils:. I~' some more [f!crea.se in A'Has" [i,JPU; ~ 8IrIl ok \~ltI11 StlMm'it ami

Jjesim~ 11lV!l~ of 20 pelCtnt.

BRR: DoI}ltl!IJ thrill tim !he &I ~ )fl.1u haw at pPl!Seniare ~ll or you Wl!lurd ake ttl l!lqlim~ '1M! 11~

HL: By 'Yrn:~ of -acqllllriillg My Bi'lnk; W~ w,illl ~nve 1 eo b~o©hes; by the end .of Ile>:i month. Next year. we p:1aJli w, relil~ 26 braJll!]MS 10 mlu~ d'ulpliqal!1on

We may Ilook at some bank with 100 odd bmmllch as to comlP~ete 011 r aCQ uisiti 0 n process ..

Profile:' H u:sain lawai

I

H~si~n' L:aw~i srnlnietij h~s b.(IITI!:~ng lJar~'!ir in 1971 wlilh th~ M~5~im Comme:lrt~aJl ~arFIk, ,af~r wih:ic~, h'e was' invQlrved 'lin senior ~'Q$itidll:ls~t va~O;~s IOG~~ fblB!nks-and intematfona'l fin!3Jl'Jlda~ i'1ls'litutinns.

Cunel1lUysiltingl aS~lle Pres~del1rt arni (:,r&:tJ,SJummn Balfl:k limlil!HiJ" Lawai tu~S:.:t.9t!rnfi bO:at[l1 f'llemble"r fllt several nota.OIe, IGpal1 and iinioornatlonall Qfg.anisat~ itJi{llfillS. H'8' S .:pa:rtt~c:ulla:rl!Y'fGl[nd of sport;s a~d Ms, sey-

" ,,-2' _ _:0: • - ' ••

eral r~~H.lllllalil :and 00Im(lel-a.~~~~evell tQun~a!11eJds.: to his

credit

is like il! ~re<-<aIilProved nst wtJiah saves ppooassingDrn181. The (lIWfClVilI of ~dit 3tliillunts,~s. obv~ IO:Usty not pr~appm\!'eotl; we 'roll\:Jw tile liIomla!1 procedures i~liIlis regar(l.

iBAR WOOro1'~IIliy'm,~ II lniooe ~n tile dW1ta11 market bus'l\loo.ss?

IH!'; we ~~vero d~rsify Il,}ur

and ensure preseonce ~III uliher 1lf6otS. 1rhG ~r <itit6F, \!J'e Wiil~ hl'l op(l\f]ijng :5i) new brandIes, b[l~ ¥i'll~. to m.iiti at reast 2:50 bran~hes by ili!m,

RRR: I~~I ·ht alii Itie tltf8e baJll!m that fnim Sumill1l~ had illlmiliIrSItruct!!Jre.:md ,similar l~trielil'1S ~ \NUt was· the fdea beliiflildh mel1ei1li11tm \OOfiettJe 5lIfLera'ies

DECEMBER 31,2010

- - -- - - -

B:R ,SA N K:IIN G REVIEW 2010'

FIIR,sr W:QMENI BANIK LTD.

'G,iving women the power to succeed

~ Wome~rBan~ lld.,aSmijetlu~ "GI!lmmmifil tiank ~fl~ IJF:I dMr~OOt:JI, ~Fl'Mg~ )rld t'dJn b:C¥ 'lWmjlil,mf'VlQm~;~ set u;[Ir"m 1900 bY.j)jje rsfam Ii .wert~l ffrst

wofli!pn Pl'ime MQI~W'ma

Banair B~. e~ ll;h~,

etf'o!iSiofl~d 11 mil:mk that ~,mu'ljj me.~ the spee:1~1 needs oj willmerr.

I'IU~j;[tl)l,1Ji .' h~eJllby

Mrs. >iSMlctat who tOOK

·OVf!f-<lS·firB5iillBlilfullJ iM.il~i":2'OO~t •

~. mSL mO:del ~~~~, ro ~~. ::~ 1~ls of eoooom~

.. IV'lly. .!lIJl<" ,

ccrPQtare. ~ ihtD~rWJlJt~ BaIiik~~es'1ll'omell·v.tith tliI!!,sup· 1100 ;~; ~l1irro to 'He "o~lei;tJy¢le":d~l bD~ ~ ~OO;ig SI(t ••

iii lITe IT~OOal am!(!Jra~ ~OOKOO 111:

. ~~lt as

p~nti~ SMiE 'an,' Cgr~~lr;i1tJ~ rrmntS::'1I1e &nllils, !1InJ.~~ .~~~ p-oJi!;i$- jJliWflilte,;~~ owmtlb~, mr~ WI).nn~i b.Y;

··~.tb'bUom~

,i, W.liIsr:e wom!!n. hati,05l)o/~

:sn:a~~[J]r.llg Int - - - ,

• Where . a W'oITllln! tis #fe, Millia~lill!li m_r~r

~ Where wCllil'liffi enl plOyees ilire

00% ~r 1l'I[):r~' .

'~ministry o.two:nlBliI~lO~~ lInl!n'I:' 6ema!bOrn.tolii~ wittl Fil'St \l¥Mne[! :Biilik !Jd.! 'OOr ~narllrc ~~B~r!iI[1iIt tn' fllm WWllB'~l ~"1llilljor I)bl~ 'oolhe Ilf'l1lett' was . '. - df~le;

f1MlL Iiils. em- 1ru~ ill rntsin~ra~ !.lim>

I :~ the'. Mlln1~1liY. df,~l)rn1£in ~ [levell.)lImehta~ _~lJE! 1l!;l~I!e~~r . J.3hmllllillliltir of tlOO ~arnlt

TI)dl;ty, mBL's l'I1iss:i'em f(lr emIP~~I!1l'ii'l!\Omelll, rev.1111~ u:n!i!laWhed.

''1!iQ; 'bilns[cmm W sti:t"-lS ot ~lirIen from pa_$lil~ ~~a~ til' SocI@1 ~l3l1JiG6~1j ~1l'll1lfmiC·

ag~rtfs ~(c~rll,J~'" "

calli N,ow~ 111~,215 .. 1 '11 ¥IIw'l'!i'.b!1!!!1ki!lf~llih.com

!j,e'nJd, m01ney withIn '1'11 min'lJJileS firom ,Iny Qif Blnk: ,'dfalah,is, o,v,er 3mllblll',lmeheSi, Whatever ~lhe uFgell'll,cy. Banik Ailif-alilah .a,nJd Mo,n,eyGra,m!:s n,et.woF'k 'takes cali'll! otall y,oli.!lll' re'm jUan.ce' needs.

INTERVIEW BR BAN K]IN G REVI E:W 2010

DECEMBER 31, .201.0

Agent: networ'k is the key to branchless banking

An iililteNiewwi'th ,Syedi I rfan ~I, Illi~Qti(ni Bankingi P:ol[cy &,. R,guIMioR; [Iepartmen\Sb!te, Banilf 'llf IPa!ijstan

Manw Iqb.al . . .

lin 'this,in[f,roJrew Iln~n ~Iks ·atroutth:El F~tulfe ·uW ~:fanchless :aM lTI1riD~mk~' inrgj TJ].dlJ~iI!rY '~lhf Paki,stlln ~nd ·the l~e&soIi'lS to be drnwn flrtim -i&XJJ~~i~li1~~st i~ o~h~r CQlJn~ri~s~ lie iiJls;o .snaw,s's, fmls views O'~I the -RrQ,ma~ility pf IthisJJlraw~ ing ibanlkio!llj ~enre~ the. CMII®lng:es, it. f!~Q:e'~,,~i1_d how tJ1B S:Wl,le Blank Dims ~((cI)gaJ wilhttrat liin ICQOlrnj~. t1Ia~i:011l wilth i?aik1istan lei e;c 0 if) m lin leatl QI'n GlJuthQrilty.1Iih.e follliQvltilfl{l is'tl1e edfrred 1rnnsflifipt.

BllfI Frl.esear-C:~; WI1!8i.t does b:~mChtess bmki!1g oons-1li~u~e o,f; wfilat kind I~I pi~om:!i!~S ~m~1 services, d.oes lit OGV9r?'

I rJaIi1lAJI: lIh:e o'bie{ll~ve of blio.U1Cllr-ess ba!lk~ng ~s \1) @O o~tside th:e amb it of branch bili!!ki~g itselW.

At [llreSJem, 111'e hall-e 4[Jo oorm~ mercia~ ball ks i m:~~ d i IiIg Islam it ball~sanid S di~wllol):' mental ~ililalflicla,1 ilil$mm~(ms.

As ~),I"-ij are ii. 1)0 ulliltry oil 1 SO mull iOil 11 eOil!!le, i!]ith Ia:t ~easl 10m m i II~OIIli .~d nllt 1l80'!Jl1!;!", .8(1, wdmiaally s!):ellk~H1g we are pmvi(jing banking sendce rei aro I,I1i1d251 pe[~nt 01 ad IIIlt plll!)!IIlatil(llil.. But V<llri{llIlS stllldies sh01ll that bafl~tililg ~6i1etratiillil . i n iP'a~iiS)tanJ is ~e1>s hin that; 111111' 12·15 perGelnt of th~ !)1l1!!lulatiioil Rs·pmpllrl_y Ib!ari~d.

S()I, We llii{)lU,gh~ ·lh.al WI'! shou ['1:1 ~xpl.[lll! Oti'hl3f lI~ays iilrnd mearns 1(ll!Itsid:e th,e am ~~t ~f bl(l.J]Ch (J!lBfllWmS WI addr'ess • ttte !lIn balilke~ set~o!r alli~ w>

p f(lI:nl[lt8,fi nra.nci.d ilnG~llIsio'rn. Hlence we Qal1i8 Ui!) witih bl'am;:rh lless b.an'king re,glu !a~norn. .~

Whenl WI;! tllk ahout bralilclil· less !J,ain kll1g sky is the: ~ilmlil:, as th:esl: s~r'!.!'iGofiS cali! be pw· video tJilmugll glMt lofli:CBS, r~t~n stores I ~€ partl1ll6 nltall stillroo,! f'Ii'Iol~ile nl~rwrnr"k 0 per.ators, Il,ettolll P.ll llI1.p.s, & :ciNG statil(li'lS Me. It is llif b~alllllj (I,~ Ullli brant hless l:Iamlki pg tllat it 1~\I'Q;~:1Ig ~S. slat€- ~~ tlfle ,a.rt smartlBc hinl]~,(lg iBl5 alll d w~ :C;arl 'C'lIwry oiut fllilanciai 1I111d

1'l0 !II·rfmmcial trao:saetio,~ ulsilll:&! DelMar ~hOln~t GPIFt$, i nleme:t. Po,irut Qf Sale flIl;!chilies:, p~astic-o:ams ME.

Our mal n olll'It:tliV~ is' WI prnl'Ilote basi"c b3llkilll~ faci~iM$, such as an Oil el'l~!II~ of balll k a~!:)Q'IIII'lt. remittamres trans-

~he Siliaite IBan'~ has chooen lie bMk·led !iIi!~d~a'fip;g~r!i!st ~~e t!8~eoolfi-led mooeL Wfit we~s ~he rMIlO.IilSi bllhllild this l!:Iocrsl~ni?

11A: We chose the b.ar1lk~~ed Mlode~ spe(li~1c~~~y 'tD protect aepolsltom.. Under this mo<lel.

Habi b Balli k iis umdierg10,i rnQ negotiatliO'rilS with lU~onlol;: Bank, Alfal!ah j:s.talkfing to'

W3Jlri:d ..••• IDubaii Islamic Bank ,also pJansi to pUot lalJllRc.h theilF b:r,;mctil'less ban killlg Iby eanly neX!! yea,r ,201 1.

teni,cashi with!dfBJWai, (]e~'ll.its. j:\["'1mem of LiiU~~ !lim ,l.iIm)lUo~h ill d~S'ti net reg~ste~ei() ll'ehVClrk o~ agentall o,ver P'!!kils,tao.

TIlle basic barnI<11I1glser'lio.es a!ll[lw~~ by Starn Rank Ulil FI~uu IJfuons i nell Ulde:

Op6i1hll[ll lIrHI mainrrnirli nlg a !BIB AOO()'liIrlt

• Acc:ou liU-~IO-il'G'CGU lilt IFUlllJd h,jj(llsfer

Perso.n~to.~pelrsolil F!.Ind Tnl fllshi [:$:

~ Cllsh·~rn alild Cash·o Wit

• ISiit P.m,y'm,e'nts- :& mo bj Ie IP,t!OlfH:lS eEisy ~oads

~ Merclh,~r1it PaJ'ffW~S

• iLoaf! ms~ ulrseme rill I

IFI~[1aYlmelllt

~ !Rem iltta.nces

16R!R: lin maBlng tM IrlBgula'HaN 110f brall'l'cl1'ress OOIll'kifilg,

any ban k tll~t 'B'llfter'S irntlJi b rane h~ess ban I<~Ag) rliI od el

need So to 1118!Ve Aae I1icy

Ag r~i.lmelli witn 1l:@enm aild that Ag re-8·melllt !lUllImwnzes SSP tl:l ~nspect the boo!ks amd accolunts ohlgents 811910.

'111 ~~l1JaO~B'SS.~PW nllVe .aa1 a~~ro,plr~ate ~eve!l of co !litrol~ over OIl;f)lratIICiIil:!i and sUlParvrse paJYrnilllnt ,iiIldl IJlgarin'g systelilll SI n,C>!l banlb ,are ClJstoditBIn:S (If the dlilp'(lsi~Qrs' mOlney ,~liId SBIF' is tlile veg l.I~ator ©l ami

bolJl!k~_ .

U sOMeb'~ujyelse Q!iI the st1i'e~ starts, ~ro'liid ~ng b:anik~ ing ta.ci~~ty. ~'h!eOI th:e :8tale Ba,~k wOl!lld ntol' ihave .~. 'lJ'heck ~Il tl]~t. So tl1e 88 P pI~widie(l tM be.st~hlro.l!Igh it$ weg ullati@n tol PI~~I)eC'l: depo,sllors 3i1d at tMi same: tume!o ~~~i liit6te blllilUliQ tra.n!saGtio'rl outsf:tI~ l:i'ra.n.cJlie<s.

IBRIFI: Does tht m:ean Ula~ te~ecorn (lomp-a!i!les c-ann®l fllU ou~. 1lll1o!Di~ banking! &eiliVlCB'?

Il: Th~y Gali Mit~r ~l'Ito ~iil ag r!l>0me[lt wil:h an :aru~ oli12td tJank tc ~~U ncha molMle ~arnk.[rig se!V~ce'. just Uli;e what Te.leliiQv di~(1, as they ean IiIOt C()lliIlie ollt~llrrth till eir I(lWIiI modell. What tilley dld was til par1lner with a !Janik i ,e. lll,meer M~cn:J'!inS!tlc!l iB~i!lk and !;'taJrted romng 'Ollli tl1;ft mo'~ile IM,I~ki n:g servic:es by perMlliliingas ,s.ulper Age»t 11)1 the b.im~,

IElRFt: Wlh1lt ~il!Si Ibeen t~e ["IJ;Dm~e of ibaiilkelFs so f.arr"

IA: We h'1i.VfI gl(){ a v"tljlgo,M response trem lne l:i:ankYl1g co mrnu Il~Y. ~ l1iil:lally, the l1anllocs \!~ere !iI'(jlr'l)rtlhC1D!'Jl1iqg; tihey we'r'e a ~rlt .~"p~lrehlltn.sh~-e,

1~(]II!I~ve[, branchless ballk· ing [eg.l!IlatuMs wert fL}M'I~d thlroll!;lna ver}Blilbmam co,r]SIJ Itatirv,e ID'm,ce S:S. 1~(lII: (lIn Iy mmtJers lof the State Barnk, ,g:ave thelr input liJ!Jt m,e~bers ~ro'm Mirnis'llry of .1 nfolr.ma!tioQ and Tedmo Ingy 31i1i:1 oankers ~mliTl the ba!liIkililg O()i[]ii mu liIity also llallilc~paMci In ~elf€~ol~ment 10'11 reglU fatiroM.

Anrdwe came ·!li'H~hre-gIlII8!· tio I1iS willIe I~ W'ef'e very weIll drafrted; \!ihiln~a dr®ft was dus:pflayed II)IU OIU r we~s~te tJhe :GGAP, the IIiIUlmaUo'na~ Fililanoe C:olFl)~'failil~IiI" th.e As~alil I)eve~o pm el1~ 13i11i1k. llflJDI-lIlll ~!aV,FJ1 llI~sitkvlloomments Oil ft. rVJr!:ue over, (Ill!! r bra I'lr::h I'~s:s tlaliik:il1ig mo£l.el & rog~l!aWm3 have bee!li Iite'raUyciD~jed 11J-1I 'O'I.~l·er co:u nt~ies,.

!l'xis~ililgIOUI::;.t[)1iIl1l3rs. HIBl':s b;ran:cl:1ll~ss b(jIilI!:~IiIi(li ,arr:1llilg~~ msnt Wilthl mQliIll is 111 liniill<liJI s.ta.gj~. Iv!;. n'enO'Matiarns are 111 1:11:e In ittl1l plll,ase, I :ilI'IUtipate lhla! they \l1illlllaUlf!ch lJ,ra!1ch~ess b<l!!IIki.ng s~!f'!I'ices by the mid of ths n.ext year.

I)i!lbai IlI:lamlt Balilk has aiso SBP's .Olppmvall to pi~ot II1IUMih the~ r bM~"'C~ less ban ki fig Cle plll¥melilt. lfllHl ~aln ~ wlll~ launeh t~eif' senrice,s eady Il"ex!: year 2[J" t,

MOB B.irn k is ilisn I[)"fierillg mabl I~ b;lll1lk~lIIgl ,SfJlVic®s tlJ Its @-;;(llsting (;ustoli'r1l~rsas M~i' !ilO~Hli~ ~elrvery cliUI!Il ne I silllce OIM !1M a ha~~ yea~_

laitely p;skari ba,Jlk a~so r;:on" t;j,cted IUS. HlHIiI we hiave a rg.aJt~z .. tiona SIiiO hi 3.$ ire s Wil, 0 U~ mlldngW uS: to SMUll' IiI'Ili:e<r.otll'l!ili'lGfl unst:ilution I wif.l1 an 0 bred '~o pliOvitle bmlllclllless b!.llllklngsefVi()e~. Att~~s li!litlme'~t i ~ time. w~r,areta.lmlil-g to all f,~ast thire[l Ilei!] j:,I!aYBrs wih Q w"1llill!o Imler thi~ market.

BRR:: 11I)[lW SIlOflBSS'l~'11 !UBI..

Omlill,md E'asypalu have Ibeelill In IProvll!li'flU 1ba:1ilf!!1J1i1ll servJ!Ces I'D lliIlltfer':;:CNed are8!S,'?

~lA: Tliie mll)'St ~m l)ol1a:nil:: acih i:e'i.iiB-I1I€ot: as f~J ~s Trel~liIo r Pakistal1l ,~ntd 11,Ul1Iee r MiiCl1(1fillS nee lEla nk ls COIiIJ (ltIme;d1 ~ that thrrliY ar~ j:,IH)JJud· iiflg ~iJ3Inch less 1J0000niki mg s~wic~ es~~wo Llg h am uIIld12 ,.0 ~Ci bralilth~ess l:tanilinJ9 ag~flts. ac:wrl-'S Pakistan, IB Uf, thitl: pOI~elltial is f,M mo~e ~h(lflll tltis, sin:oe eac~h teleo!l)mcolill ~a~y has 150,IDOtl agerntsaH amos:;; PakJstiJf1! whO - IP,rm/itie paGk~ 1lJge o:~ ~el!ecom I'll 1.1 WI ~r;ati(lfl Sielrv'ices. Th~s lillea!ilS that the le~eO>(lm il1d I!Isttry (lain have a.

We are ClIInrently workingwithttJe PTA. on developiing Irnter-opembUlty' mode'" to

e nabla' [banks and telle,com flilfms, to con diU:Ct: bus,iln:ess, traJl1:sactio:nstl1 mlllg h 'thiinl party s6lrvi!ce providler.

i tll d@veloping In etwl[lrJ\ 01' iI~eln~. (l"1iIr;lH agelillt ,gets ilil~o lwhvork, then the rei1~chal· lelii..ge t~ tOI Ireta.i n hiM, keep him harp,iW. to twain h imam! at the end 'Df dlay (lQernt sho ul~d te ab Ie WI niillke SGma me l'Iiell' out (If ~t. He' SlllOUW l)e mOl~i\/ated &. be prlil~italJl!l; (jlnr:HW~G M iNll U~(!J1't pnwide ba Flking s®r~\(iC"il[jir 11101.1 r!l IMelncllll~" lion.

IBRJA; WIl,at Idndsi 'Dr chi!lil~ 1:tJ1il1\llBiS I~st III dil.alJfilJ NIh agelns al1!1whilrl: is. U1:e tIll1!UFP?

IA: The dev.el(]:p me nit or

ag~tnt rn!two rk lis th;B keym suceesslul IIHanch less ·olll'lk· Il'Ig.Sin!G-e QIJIl~tOr'S rnillun targiM' is in feJc~cust1J,'f'l1Iers :rhla1: w~~f no't te p.assl I)~e witI11~1U~ se'H;ing IJ ~ agel1ts' lIIettwork. .

But semen mes customer doesn't wam: t(l 'go ~(l bllnk: il iiS. too 1aJrl he; wan1s r;[{;imU~s at ~[s 1I0.m sNilJis or iil~arby. fM ag~i'lilt!; ci~ mrtp.rovld~ SoefiJice<S at d(][)rs!tep but lIIlay IH;! 50 yards a~va:y .. BIlII: ul~~llIlIaml.y the IlJUIIiIl ber of tlalnMnig ser'!.l'iOBS witl SQO~ be a.'"·(dlla.b~e at doorstep. Cln~ce the plu~I~r:: starts ustng rnIl,a!ilk!:n:g fa(li~iIi1es.

IBRlR; COO Y~!!ll,giwl' a.n lexam~ pie ofa slil~ee.sS"flllllDr:al1llhless balil'lIillng model!lflCllillnd 'Iho wlll~ll:I?'

IA: TIllero (lfre so rI1(lfIllY of them •. ~I'Il:()nglhl:m ~am:olls is M- PESA iln K~i1IyaaM GGASH lin th'e PhmplP'in:e'S. AM 'Wnelre <111"[1 S,(lme ()I!)e,rat~ves. ~n M.e]dt,o, wh'o halfe don e a 1IJQn:dmfl!l~ jnb, and alsQ ~ralHI_ These two CO'!Illltllies: aJlfe q !lite cO!'lllp.a§a~lreto Pakistan: the,y hs.ve h uige ~an(l nu.ss, ~ i ke mml), so l1lIe'rlofhiat slm liar POID'lIIa/UOA S:UilJctlillre tun wiillh bel.ter 1~~e;Fa!Cy rate a.n:cl iii ig ner per caplil~ income.

A larg!l n UIIiI'I~.6r '(lilillltgrntQry wOlnkllr'S ~ifI these couMl'i~saml Inl P·ak~sI:.aPl W,[)rif;; llil IU [Ib an iltetts withl till eir dell~liIjjl~l1It lllmm~s IMln ill ~Il th!) ru ra~ areas, They: !have the rneei:lslor ~~nlki n:[J serv[{lesf(]ir thiEli d31i1l1· i I ~e sa,n~ the $loliuti(lI'ls are rliIo,bile p hones-

IBRIIiI: There is: a:n impression tlil looritaln :Quarme~sthat bariks liIiIiglillt not like to ,enter Inta m· ba:lilkTliIg,. becIuse ~~: IIII11g1il1: be 1!11.515, IPl1omab]!e ~i! tow'nil,S ,of !iIiIam!lils per~IlIs<'I.oilll1er. WMt rs. YOlllr vJew?

II\: Il's n m lM.SytD~wvio~ lJalilUlilgae rviCilS Uno u:g h

IBRiA: AsidEl~'ro,m l!IiBl oo~ tMail 01 ;)j~Il,roximat~ly 500'1000 the- T>e:Tem.lr~ iamele:~veIll1111lire. ~ients. '.'

which Dither lwu'll;s illal l!Joking ~t may ~e d~fl\i()IlIU to CQliIn!SoOt. fllli1Mlrol~(I Ilinmdh IbranChless all th!)s~ 5,QOo,QOO aQe-nts i[lID iba:lII~llllg :seN!~s'jl Ure nehvolrk or b raJW hlles.s

IA: Hrub:ib, B.a!i1lk rs 1IIW1d!e.rglo~n:g ba.['Ikil'lga:gi:l'lts,. OU~ wifhin riegQ~latioli!s wil.lh ut'om;! whir'll three 10 't~ve yearn II d a antiei~ 6111i!1< Alfalahl ~s ta:lk~!lg to, WarkL pate thiat fi:gi~rtl In,erw.[uk 10 r Ha~~o Ba)n~ & motnll~ have '1)1!Ir b:ralntlhTesi. IlI1r1k~tng) wm nF!lW ilIPil'rnval ttl (I,Mllt mo,olillill Ib~JI1k.· t[) 51J,noo agents ..

Ingl seiVIGB8 to Halbiib: Bank's' ll1ii GMllle:flg~, Ms.icall~, lill$

- - --- -- - - -- - -- - -- - - --- - -

[NTERVI EW ,BR ,BA N K.IIN G REVI EW 2010'

DECEMBER 31,201 o

bronclhress ll,al'lking~ But !wy bimk that devetops i~fFastroc~ Me and 1ak,eslead willi set the Iifl~Jket

Th [is rem ind 5 me o~oTle stury: some 2ml~300 yearrs ago two foreign shoems.ildlllg ~ompa,!1I~es sellit their represeliita,tives to t~e s!!lbl"conti~ nent, The wep~esentatuve t1~ ene eotmpii!!IiiY welllt baCl'k. aliid $j!idthat there' is IlIO 'Tla~kel s~nce 1Il01~O dy wean sn nes the;re, While the re~reseMa~ tive of second Oom~a!1Y went baaik and said ~ha~ tllerl'e ~s: hlugie' market beeaase nobody '!Wars, shoe.~, So"a 101 Qle pends (Ill J!lDur view anti yom ll,ill~,

lt is 1!l!;D'1 possuble for e~B<ry b@!liIk to pmvidll b~iliIlch r,BSS b<l!nkililQ nliJtl:ldeL Bl!lt, lam j,l\6'I'Y hl)'l!!e1!u ~ tlhat IiIl On! b l'8JfH::h,r,sss ba.nlk~ngl service.s Ipmv~'der~ wjl~ (l(lnl:e in1ocJ' liIlailihim., Each b:a.nl~ that ,i UltITI~N5 illtl(} th iis business haste filHld its IpJWlIl iii i ~he. alild! the patental ~s huge' s~ln{]e we are iI C:OIU nrtry of ~ aA) m iJlio'lil Ile() pile w~1!lh liTlajo,rity cnf '~nb<lliilt:~d,

BRR: Ir,s bWl.c:IiIT.ess bankingl purmliti1lble; how long wm H 'talm~o reach 'U1:~ breai!tlllrlS:IiI~'

b\! Diilper tranls;a~Holfl basls it is pfiOfimbl~. iM S~I1!G~ illl frastr~,hll:Uir:e cost ~s VlltrY Ii i gil, OIl'~nl!~O rs w~:11 starr malKilil!l ,pr,mut ~iltherl 'IDh,e v() I~ ums (III tral1isa.t.i:ion wm grow,

But !lam k:s :lIre iflot providililQ olni£lS~rV[Ce; lMy n.tav-e a ,~as~ &>et ~f !lmdlilcts, Hleue IiI1 i{lht be tew prod UC:tSllll:lt are net 1II1aking pro~n',. but, Iml.lilc:Me~ts llilnkil1!~ {iliives tnem 0 U~!I'e!lell ami l~el!}S t~elll~ tll:e regullatotry 'target .o~!il1aJncr:ai i ncllrusicH1.

BRR: If t)8ililk Itlranch ,anal tho bank's retail ',agent are pireselilt ~r1 one li!illage, dem'l jI',allll lhink: 1liIit cuSWlll'ile:l' w~1II Ilofe ~ranch?

~A:: II is the eustD!IIleir'$!ler~ S!Dnal dec~si~11 r but gioilllgi to tile bra!1loo willi nke,~~ r~~Ulfrre Iii i g~ er tra I'lSP (llrtaii 011 cest beca'use o~ the ~lig~,er !IlU !lllJer o~ bra nell tess agellf$., ~f it t:lost meR:;5{1 tQg1Jf t(ll ~il;!')k bW(!l!lc'hs"n:[J Rs.20 tua bra"ch~ less agcellit. ~ wm {lO to,agre n~, We (lS,~llotco,l!ltrOII pruces; (!iii! r objecli\t'eijs to P FO'iJr,de servuc,.. e'S, n is !'lOW ~ pto t~e ,CIUS,. tl)melr. Mo~e imp'ortai!l'llIy., it: is, cUlStolm eu:s' psych Q kllJ j~a~ m~mi:sal thlatlh:ey I'ee~ it more co I'Mlli! iefllt t~ gJlJl to retai ~ e:holP as comp~.~edi ti), deco ra~ tive bSIl k bwallc!h.

BAiR: Slim~e braJncll!ess bMking! dMis wilih .tI1!(J' I~ sDptlisHootad 'and II!!OMlIlIeatedl customers, what steps ha:V,9

beellil la:kern to bal8:liIoo COIiI:· Sli!nler P:~!)l'!lGtiolii reo;l!Ila1iotfl wilh~t!ila!ilclal rlii(ili!!lslon?

"It Th:~ regl!lilati1;lIiI has made it lillalilda~lJIy for ;IIiIY bank that Wallts ~o set-sp b r.aliJ()hlrJ'~s Ibankinlg rram!l:work. to Ilave a C0I18U11I1ie:r jl,roWGtiol1 milch· Inism ilfl pIMB, COlisllm~rdis· agreeme.fl! and 1;0 I~ pla~ns have to l)e mldres'!Jool hy' IliUilk ~nmnt.meQusty, Balilk~Il:~ selV~oo ~ro'!;l'ii(fe:r 'Mill te !]liven no wela_xatf:olll as law <liS C(liFIIS'U lliIer Il~otectio!ll is co nsidered.

HOWBlJer,to ed U:~"iI~H Gl!IS· tomers, we have ,ernibarke~ on a trniriill~ pmgrn.flIIrJ'Qtl in 1H1bO'm kt(! aweas to ad ~GatE tM customer tih rOiJ'[Ilii smge s~,ow; p ~eSielilta~iolletc, 3S customer iiternc.y and! awareness: are 'lie p~~FIleUSsllles. IBut,w'e h1l!ve not achf;eve'·d 8! ~ot. 9.'$ we are in ln itja I IP,ha:ses.

IBiRR: What S1)!rt 011 braJil(lIlJ'less llanjf(i:IiIQr p:rrodll:cts; are co-mili\g iilll rile m~m~"l?1

Ik Sio fil[ it ts th~ Ilg,lia~ olles - rn:mlhnoe prot1UctS'1 utill!ilV Il'.ilill pal' iTIfiiiltrlficll~y 8.1l(l a£C(l1I nit ope!l1ma, IIIwtl.ille phone ~op IJ ps, Il'Iitially there wl'll be very bas!le seuvilres. 6l1t ~I say f'or ex<Imple tomOI'l'OW lta!'llleer dooid,e~thllt they 'Mlir1it br;aJ!lch· less ba!1lkfn:g !Tw1;!:el tu lend m~mey th;ey'oanreasir(!l ~~llinch II~ailii ImJiduir;:ts with SBP's aptJrowls,. Ht;mever, ~he industil' liS at liIasCl:r1t. m:g;B, tl f1iII1lY M~ or~e or two y.eall'smr IOilln IpfOdluG!s W (lOme ~nl m!llir~et

le:AFi: WhatafEl~ol!ll cur· IlNll1iti.V wirldnllli Cirri?

!A; We erecu rre:nt1y WOrll;jllgl en deverD~illg i nlter·:D~er,alb,imy model. 1m this regard, we 31rl!. \'JOlrki nl!) with the P:iiL1\ilstafl TeIBco:rTlliIlll1lllioatfi:l'[] t\lutlio:riity. Inli's wm pfl:wltl'e. 11 med ilu I1~O lianks end ~a~etOllfl compalflies to COl1£llllCt Ilusilness tm[J~" till!} wi~11 each (]i~her thmUIl!11 tnircl party oorvice llortJvide[,

It wW l:Ie'lleIOt~tect'lFIjcaJl r~laU(lt[lin that will ~ct as a hlu b toracl~itat(l &: rt:'!jIte~i nan:cial tnwsacUo r1S, which is In ot all/anlablEl~t tha moment For' ill staliu:e, if you hta\J'rJi ,an ac{](]w~tW1ith ~ BlLilen ym1l wm I M 8!b~~m trMSfllF mOlnev to a IP,~rg(JiI~ wll 0 Ih as, an ~GCOt[jlilt withl HlBI. MO'f~o\ile:r" ~~ yo 1.1 11ave .'lIn aCCOluliit Wi[ll UBL Om nrl's retalll .ag:e m then YOLI wm b.e do tmns1l:cth:m wnlh Ea$}'p~.isa's retai~' ,~,gler1it

tB!RR: Whilit1lille p'~Os~eGlis 01 li!sing m1obiil!eoo Idlliivofl'r ~i'fl!a:nGia! senri~ 1'0 11lnb'Ml<ed tlHs:tofflell?

lii\: We .are very Of:!!i m~slic bi8~at,JlSle thsr'8 are ~ M liIl Ulln(]ifl

SIMsnoatlnrg fJJIOtllil~.

EVElI)'DUldy has <I ItrIQ b~ Ie

phone. 5'0 that's lit1e !!Il1i mate 'target .ami WtS wallTl peoj}r,.e~~

UISie IIIl eb i~~ to C:OIll:llllct Hl'lalil()~a~ hanssdu~n:s_

Ilf PB'Op Ii: ~fJl 6dU~ltooaM Uindleusta!'! d <!nO b~~e t,rail sac" tio n thl~Y WO UI~~ del,lel'op COliil' ~ldielii,c.e~!i! 'this J'liiedilu!ifl. Mllibile 1I/iIII b~ '(lne I;If the l1iI~iii! t!)'O~S,!O :p,rovide bal!lkililg se~l,Ii()ll!. t~ iiS. thrJi rnllIilil.lou n:dati(l'H1, as there sre 12.,000 POtS~ I[)fiic8S, '10,'100, ban k brllniCh· flS, 50rn,OmJi ~g~nts, out tihenr are as: milllll!' liS 1 00 Iiflill~tl)rn I1wf.)iI~ IP,I1roIi~SLlbscribllr8.

prome: Syed lrtan Ali

CUlHently workin'9 a{S'tlhr,g ~Hecto,f Balilkrrrg[ POIII~'GY .& R~'glUI$f'i~ons De!prur'tm~W1t (IBP&.RIO) State. Bank fif Pal~istflilfll II ~f;~n"I)VierSe'es th~ ,ilm~~em:~ntat~(lno~ 'lh,e tl>:~stin'fJIJt(]li"s.i!e:s & ~e,aulatilonIS in th!e b'ankJlilgl industry d1f [P[tlijsitalil .

Iidarni ha:s ~a~t ~XIilIHi'~n:Ce' inWliiole raJ1fge,.:of D,onoy g re,gllUl~a[!lry iS$)ue,g; ,I~ertainitru~ '~o, firJiinci,al ~l1Lstih1tHlris. Hte: has "aISo. b!een iln'VOII~~~ In ~~Sl!ir,ngl IB:ra~u:hl,eiSs; B(JjIFlllk~~ll ReQlu~atit(lns for f~I1I~!1oita~ 11~,S[jtluUon~s 'in Raki$~:an"a!1d ls Ile:a!d~n,g the, :State'Ba~k"of Pakisffl~;& n~J~l!m on Bramlnlle~s g.an~mg.

lrtan, who r'ec:ei1Vifld his: MBA d!e,gree from Lahore Univers'[ty of Marl'agemem SClieWire:~~:, ahl~ Illi,glld~< a Mast~fs' degrR;e ~111' B~~~i~rg &, IF~fm~~a;etroml1i U n i\ters'~try Of W,aJ,es"

Slt:andard Chartered

Carli t!:! bQ1II1!!: ~11y IiU¥ld for SOfrIIIthlllg1 c:~ it boll'mllCa ita wnbftl'iiiIiI'i With itIi COi'lK>Cinc.ll'? To di:l wtmt II~ mlill!.".L Not' wa! it CUI. A'S nol E!'W1'y'tihm.U If! life that rounl.s !;an be 'oounladL Can it 00'1 only' IDOk a'I 1l1i1a ~lU'ii:l'IJ1: it: I'li"lakes but haw it makes lihallllWfl't? ,And stand besIde ,people, not Bhova th~rn. WbfIh'!' ~J)l' Muti'(ln d~nd5 (m !lath p.erw~ Sim.P,:'l~ by dQipg good. ·CEUl g lI:arIk mtkt bQ gm.a1? ~ 11 Ii'rFJ' many plate::; Wei call home, oor ptl~ lremalns 1M S<I1Tla To !be heUl! For P"fire. Hlere far pmgress. IH~ fQr VIe long lfl,IiiI. H'efe ro~ go,OO.

sfaod'ilirdchan ered.cam

I)ECEMBER 31,2010

WEALTH n ~STRIBUT~:'ON ~R BAN K~N ~ R_EV~EV¥ ~Q 10

How Pakistani banks are aqqravatlno incDlme in,equalili,es

H ~s WB II IknOWin that into mild isUili.L.I!horn hi P,~Ust~m is h~rnh Iy s;l!;e\lled. N1Mrlw 40 perG61H (iif tlil~ pe,ople (,abo Lit: :n~ I1!1IHI~ol1) awe ~i'!J~n!JI OHhlW thf! IJ(MJ8W[y ~ine.

Whiile hea.lthy d~vl!lopmsnts, sw:;h as 11 dnlHfI<1tic increase in ~o l'liie remitlallcesJ11J ring tile past decade are rrJaldn,g a dent ~JliI poverty ~rt manly way~, the country's fillil<lrncia~ sy.stem co m p r isi ~g olf Ii! ~ ne 'ca~lj,g(Hies (if f~liHlrncia~ ililstit:unolll~ Iln!lf~llUlmciaJ~ marike)ts. (hiaJunig wuth resource lII'Ioblllis.ai~o'nl a,n~ reseurce allccatie l'I,ar'e, by ami larg~, sep!~I1i,g Ul~ interests of PO~I.! lillioll oihif!lr th1tn1 l\h(l d isagvan[aIred class.

lilii~s artj,c~~ takes a 1J;D!;lk a:t Ih'(lwthe prhlcip,al C!tlnlponents of tile fin,a.n·a~a~ S"y5tem. J'l.un,8W commerelal bamks, are agg ravat-

ing the ineume ~n'eQluali- Ag g ravatl ~HiI o~

nes ~n the cmlliltry. i neq u,8.1~ties th wugh the

H JUeeds to b"e IU ndar- O~ flIldlil gin d I!Istwy is

mBlhllil or ,id;lI[lU1t 14.5 Il'erceli'lt o~ UiIlP'OPIJ ~.at~o n, aJldi berrnwe rs are on Iy 4,25 mllllon ,Or ~ 1 percent ,ot ,[CC·(Hlnt liio~ders !I.nd :2.4 percent '[II ·the eountry's po P III ~a:t ~"'ll.

To1t1l!11 bank ~HIlI[)$its, at Rs. 4,352;, '{ blllle n, are about 29 aercent 11)1 ttre GDP. He number {J,~ j:)al1lk· cheques issued everyday

CmpOraUornlsif1l Palkiis.tall1 nalV'B the advan-

tage of ~BilatiV9ly easy access to Darn k bo[rli()iw~rn,g! which can be resc!hed uled

u ndeir diiffjlclU tt ooncUtions, and [no,t i mlfre-

QIUB ntly written llff.

24.46, millli'[l1iJ ar 9'6.9 IHH~,eln (JI~ total d!il P (JISit helcers.

4. These hDlcli~g depnstts \'1I[1rtlii R.s1O I1Il illion Dr !lbol/ll are GElly 0.107 iP'erCefl~: of t,l.ltal de'PiCl.S~tors and aeeount rer 36 A 5 il,er!}e"t ot total diI'Jp~sHs"

The ab 0 ve dlelJ eslt strl.! (). tu re olea ny shl[)wslhiat iI ~aifly largl'l chunk . .01 tJnnl< deposits nete nlgsl:Q, the rel~tiveW PO(lW class w~o ara l!l,etti:liI,ga, V\! ry s ma I ~ rate o'~ Ii rn,f'~ resr, '!I'M ,aViU, age rate O'~ return ml ~'epQsu.$. as of end [}~(lember20o.9 \lIas 6,14 p~rr;illit and nligltlily nega· Uve I n real term s.

filR U C,TU Pile Of BANK. .A,OV.ANCIES

F~g ure 2 sh,ows th~ structu re o,i bank adv.;u~ ees 11$ I)f I) (lJD e rn1 b,~ r :20{~9,

HIe above datill are an lHl!ifllis~,s,l\able e¥~dence (If Whl[l is Ibelilefitililg ~mrn the hn ki n(l .S.8Ct:Oi[, It aIJPfeil!~st~at the ben ems ot the b!llil ki IiIg SH'GhIIi are meant on Iy h'llr n€l 1)F~vl· leg e,d classes, More s~e.c,ili()a~lly, the latest !lvaHatJi'e data shews tnat Ul,e Fe arc 4.25.5, mill~on .bormwers with HI~M OIIItstalldJi!lg aclv(I!I'!'G·es o~ Rs3J trilliio 1].

M,o h~s:s tho1.n 75.3 IlI:lf.C,ellt o~ 'these a.d'J.lances were made to (lJli Iy 27612 b,uro,w· e rs, just (lOllllJt 0 .. 65 [[N~:me ~t D~ tUB t(llall b[lrr(JW!HS. TIlose b,oJro,wing fijve mlH" Ikllil 1[11' IlIllope ,~re a bl[) UJt ·45,1.33 or 1 J16p,erciIlFill {II th€ total borrowers wno a.l)~ 0 Ulllt ~o r T9, '14 pen.e!lit of tlHa I b aln ~advalil ~!!S. CO iII'Ij~r.S~~Y, lih ose b 0 rro w· ing ~Si50Q.mNB ame! ~ess. e(ju8.II~IiI,g 914.,2 ~eucent 01 total borm1ll'Ellrs, <lvaHed Ion III 11.0.7 PB ['Gil nit oil ~alllo; cremt.

Wh i Ie U ~s tnle thu thllS4l big bom)wers ii1ire I'IUl:k~ng ~l1vestm-ei(lts~tl~ gefH=~,a~~nl.g prodl!.icthm and I3"linip~Q~{lnent. the fad thll1t Clad it is cO rlUMrat~d aroiUndl just ~ ~emenr or borrowers who make use of m~ar~y 8.0' I)src.efllt (If .ba.1!! k IJ© rFlOW i ng e,an [l101! 1~6

iglnJored.

AI: '~11 is Il,a ~nt:, a iii U 1II11D e r of releva m~~acf(lr$ needl to' b~ k€llJt in vtew.

Fir!lu o~alt ~11 Pal~~sts.!l 1hie {;1[I~p.oratH sector is. \i'~rWa~liy ex'cI lIslively rnelJl'indE!liI~ (]I1iI Ibafllks to

Ii i111l1iltll tMJr [)IlS~M!;S

activHly,· Unlike other COU ntrl es , the cnrparate seetnr ~n Pakistan hillS hard~y i;;slUed alilY bond~ or dle~entlnes.

CI[lf pi[l r a.tkl WE: i iii Pa kistan Iii ave the ad vantage oif re lilIlive~y e8i~.yaGc e~ hl b,~1ii k borrQ\IIHilg" which can b(:i resc ned uled IJ 11 de r clitl~c UII ~

lake 111 ~ook 'at '!:~le FI{lllIIre 1, wlil~ch imd ieates the . structu re (11'[ rthlDocs,its in the Cril ulntrYSiS. (!f DeGelllllOHf 2(1~9'. The' tabla sl~ows that:

1. iIlepo.sits ililUle ilndlh:ddlI.a.! accounts 01 Ft!;5,O<OO O~ less, totf:!Uillg around !lls5Jl.2 I:II~III(JI'! ,arl! Ihi!lld

b£! d iSIribl,lIed alilllJlno

lIe pos;ito rs.

n~s til elll p QSeS 8.0 I rI1I~"Hlrt!liliit q uest~Il'n: why are dlep os li,ou keell'iMI

The' Jmpact of nOIll-per1foll'miirlf;ll [loans j:s aliso. onl tihe deposlors since' provislol:1l~rng for such l!liilns is made Olt ijf bank pr(lfits, whlich lill1 pminci:ple shou 1(1 be d[iS1lriibuted among de~ositors.

is ',aIJ,I[ll!It 3~ , 0:00 ,a$! aqal Iii st 9'S'{WO i nJ ·S ri Lanka, i comparatively small ec:OH,[li'I1IY~ I n this sltuatlon, tile benefits of !la~klng servlcs s are ~ a rg,~~ygohi1 g to ttl e we~Hlff urban classes,

~y 2,14 liI'IiBio.1'i 'lC(;OliHit holtl,en O'f !L4f pen~eflt tDf tOlt.a.! ace eunt Ih n I d-

·~L irhQs'ec twlding (l131)0>$it5 W'l)lrttl ~sHlO,o.O:rn 0 r leseere abuut 1: 9,[15, Iillllillio'll Oi~ 1n.,57 P,llfGfu:Jt of~l~e mta~ dfe posH nl}lders. Th'8~r shasa in

(;1l1Jn d i~i (I ns a liI.t! i110t: hllfff!~ ~lJelUUy writtenl ,off. The burden [)f such borrowillg is (In dlep'l)isllo'lS w~m 'g',e't l1e;gatiive re,a~ rare of return [] iii 'th.e i r "a .... i nilS.

Simifalrly, the b@l1ldlilg blU5.iness 'is s~ew~'d ag a i nst til e small b errc w-· ~rs, }lllm[)r~ilngi to J::elilraII bank. d~ta, -.~ total I of Rs74.B84 I:Il~~ioln was writ· tlm·off .by t~ebaFilks dlJ r~ illlg 2'CWS arid 20~~l'. Sf t~e amownt wriH~n~[lfi, tffi,l)s,e \'111m Iha~ bOil"lnJ'we·d more tllan RsU.6 mBUQiI ben,eti'l-

thel r saviln{is ln ban ks H th~ rate ©~ rstu rill is l1elliattve irn rB,'i~ terms, 1fI1® answer ls lint rnilar~yflrn p.erce.i'It lof bUlk d~!,HI.8itE (fl!lmandl d~p,osUs lind tlme uB'posits with rnarumy O~ six mcnras or I~s:s) are 1Il,~atll~ w~tl1 tll~ j)~I1IKS· l1IotflOf IHc{iUl:lility cO'f1jsidllfajli'J)rn Ilut fOI'l iql" lI~dity(;o msi(J~raHoJ;l, Al1ld the bal1ts ,arit m:3ikiflg fw I~ use o~ this tillJ1lsidl~ratioill ~ 11It! t:~ p~oitil ng depo.s.ii" to r,s,.

Le~~~!ljl, :~5"OOO RS.101l1,OOOl 3'Fld less Rs~OO.OOO and I~s Rs10 mlli'Iofl Dr mow

2~ 1:43 19.05, .2,111.45

'iJ,Q2:7112ifi

5.6~fi: &'9'1 • .1158 118&4,:811;7 1.:l8i,~J9

0.13 f5.aa 3!U!G ~.4fl

75,5C, :9E1,90' 0,107

rene,cUd ~ n '~he stn,ct~ re" (ilf del) Q sits ui;l 'Hlva,nces '(iO'iHIS} ,as w~u a.s S~ ch as peets as IO'g!l

BonoweJ:s of R,s'O.5 mililiion plus Iha~ R.s4.41 Imilliorn writi:e:ri1 'off per b,olrnlwer, wheli,eas t!hlc se who had bo:nruwmd less tih'!rn RsQ..5 m~lnon be rnBfHed emily tIDI Ih,o exJtelilt of As81,,000 per borrow'sr.

~o m~ d e\D,ostts is, :~ 5.88 j[I'~m8nt"

3. nlolde.m of deposits· at IRs(l,.5 11Iliil.~ioli or ~ess

sto,od Unlit Ihe LHllilkin:g ·seo:tor in P.ak~stll!HI is cn,alracmMl etl ·bya Lack of tlCltil Imadlh ,alld deli!h. In a

~ tha~ R~,OOO F!sSOilJ.OO or lea9

Rs1 Dt,OOO OJ' I~!i Rs(Ui IlmJIII[)n C-F 1!l)S5, R~1 ti' miiiGrl 0(; Ie$~ Rs1 0' ,1T!!1Q!nl and!'!b~!'I

O,i(l97SU 1.59 2.M 4.0'13 .4.221

IG.OO1J8,t2

2.3t1 57,41) Be.C!) :84.20 ~,3!l '~MJ:s.

n2:2 37',100

t 3:2.1 I!IS 3531,497 161J6!i4 :2.41}4,~3'l'

IIUJ(~ US 'IJ4 11.1li1 ~1Q 7·5..30<

ed lo the erxte~i 'o~ IR:54A mi~1 iO'1l per IHmQWff, wlle!'e,as those wh Q had b.Q I'rOIWe ~ I es 5 thai Ii1 lFI'sQ,6 1ifl1i~~iol'lb'IHleHrem olllly to, til e exte III Q~ R$~S1, 000 Il e r b©m]IWifir.

lIh e ii FI1 pact o,f 11 (lIn '~;I!~ rIO'l"liflJing Iloal1s ~!i; mho mi Ule ~ep,od,ofS :sMte j!inlllisill:llilin!J for SUGh ~o'afll:S is 111'13d,e(II!I'~: of Iil,an Il: plro fits which ~rJ pl'inai~~e sh.o!!!~d

Tne wffter is the t:r;mrer lM{w.ry ,[io'vernQf (P,oftcy), tHU:i CMef EC(NUHlvic Aavisor "Hhe Btate {fank ot Pakistan, Amoll!! other researcb IIIork, ne i~ !he 8tJfhor of .rUst,f)r!;t of !he State' Bar/k 0" p:i}kl'Sla~

Vo'~ma-m (f$n-8S) .{lm;! . VQiUffle-H! (1'988,·2(J03').

HI! {JaIJ be (eaded at fJ,sh~a{janjl,w[1}jobm, edu, ok.

I)OIP,ullartion 1:If HS nmmiorl, write (Ins an d III 0 n· pe~" 'ln~ In ii1mbilr o~ a.GGolu nl!o,rmllil{l 1 1M. I!! 8 etc,

h~~ders in banks is 20.2:3 s:nnIDCnJRIE OIF

@c(]oun[ fOIP 38.93 per~ 'C:eKlt (Jr~~O'Ull ~~p(lsHs a~d tliieilr 1II11!'l1! tier is

• AU Branches On~~nl,e'

• Netw'ork ofover ,5:0 Branches INI,alt~o'nwide'

• Conventlona ~ and lsla m lc IDa nlldng Services

DECEMBER 31, 2010

- - - - - - - - -- -

,S,R BANKJNG REVIEW 2010

fhe ,cl!,inesesym.bol 'W,ayfoo,ng :;, meansrhe "focus orf we'alth' or ·8.b'~nda.noffJ Q,' f'emittanoes·. HBBr; i~ en'ina i'S f,eferf<ed to as 'W.ayfo,o,~g~, b.ecause fo.,.almosF ",50 ;ea,r$" we' h:ali"iS h'8ip,fjd ChiD,a a,nd ,Hong Ko,fiIi1' trade ,inmmati.onall':V:;.

Un~'olck Y10iUr Ibusln,!ss pOtlent.ial ae:ros:s the Mi',dd~le' E,BrA: anidl'Chiin'Blwirth HSBC.

'W~tlh ,o,ver IflD v,ears 100f 'IXjpe!fliemCEI: acmes the Middle East regionl

IHI6 e!c is the i,cI!ea'll palrtne r 10 h,e'l'p yOUi 1:r,alCile 0 II1Itl1,e n'ew :s:U Ik. r'CIIJl~e,. Our '€lmnSiV'9 ,and IBsitalbllishs,m n'9,tw@rk ~n t:he Middle East arid IC~~fiIa means we' a'Ii',e pelrif'eoUy p'Clsit~on'e,d 10 servcyOUl hn bo~'l1lPlaloe'S:.

We SIf\S ,also thelr;st baliilk, ifll 'the Mlh:tldle E.as,t 110 f,iu:::iUit,atie IRenmilnb:1

I( R MI B'~, t!r,ade 'tralf'llSalct~o 11118,.

SO.r iif: ,j:@liEili mI'SiI leasn~o ,east is 'Ihe key 10' IJJ 11'11110 ckJingl ~h,e, p ot.enmi alii n \f,our' DusineSis.~ LIIllidook itwit,li1I HSBC elliiliCi oo,ntact: IUS tOdlay.

+92 ~21-1 1: , -111-HS Be ~ www .. hsbc.leo.m~lpk

The worilld'g, [I Orcaill ban k