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Sep 06, 1999

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf

Foreclosure laws being amended

The foreclosure laws are being strengthened to ensure effective recovery of bank loans from defaulters within 90 days.

"The government has decided to amend the foreclosure laws to ensure that advances are not turned into infected portfolios as had happened in the case of yellow cab scheme", said Senator Saif ur Rehman, the Chief Executive of the Prime Minister's Housing Project (PMHP), which is being proposed to be financed with Rs 400 billion from the banking sources over the next three years.

He said that he has already discussed the modifications in the foreclosure laws with the Governor State Bank, presidents of the Nationalized Commercial Banks (NCBs) and other foreign private banks in Pakistan.

IT rates up 3-fold for salaried class

Income tax rates have been increased three-fold on the salaried class in the federal budget for 1999-2000, sources said.

It is learnt from the relevant officials in the Income Tax department that, suitable adjustments have made in the IT schedule for year 1999-2000 to fit the new rates.

Sources pointed out that two major changes have been made with regard to the tax rate for the salaried class: 1. removal of the 10% surcharge on salary for assessment year; 2. increase in tax rate (on the whole) as reflected through the computation method given in circular No 7/99, for persons whose salary (inclusive of allowances and perquisites) exceeds Rs 300,000 per annum.

Al-Ata Leasing changes hands

The Securities and Exchange Commission of Pakistan (SECP) has allowed the transfer of management of Al-Ata Leasing Modaraba to the Crescent group.

In response to an earlier request by the Modaraba, the SECP this week responded that it had "no objection to the purchase of 375000 shares of Al-Ata Management Services (Pvt) Limited held by sponsoring directors and other imdividuals by the Crescent Business Management (Pvt) Limited with consequential change in the board of directors of Al-Ata Management Services".

APTMA opposes import duty on cotton

All Pakistan Textile Mills Association (APTMA) has expressed surprise at the resolution adopted on Tuesday by the Sindh Assembly for imposition of import duty on cotton.

In a statement on Wednesday chairman APTMA, Humayun Ellahi Shaikh said the apparent justification given for the resolution was to ensure better price of cotton for growers whereas the true position in this respect, he said, was entirely different.

APTMA chairman said it seems that the Assembly members have been misled by the vested interest of the feudals. The government follows policy of free import and export of cotton which ensures a level playing field for all players in the cotton business, he added.

Microsoft to open its office

Microsoft, the world's leading software company, has announced to open its office in Pakistan.

The company said on Tuesday that it had planned to set up its office in Karachi and was awaiting Board of Investment's approval.

The company has already signed an agreement with the government of Punjab to invest about $150 million to train about 200 computer engineers.

Insurance Act being revised

Increase in paid-up capital limit for the insurance companies, besides other radical amendments to protect the rights of the insured are proposed to be the part of the coming revision of the insurance act, 1938.

Informed sources said, it is proposed to increase the limit of paidup capital to Rs. 100 million for the life insurance company and, similarly, the increase in paid-up capital for the general insurance companies has also been proposed.

Banks under pressure to lend Rs l50bn

The banks and financial institutions are coming under mounting pressures to advance at least Rs 150 billion to Rs 170 billion in the next 30 months for the government sponsored populist schemes and in other areas.

Of this indicated future loaning, the banks are expected to provide Rs 60 billion for the public buses and another Rs 5 to Rs 7 billion for taxis, Rs 75 to Rs 80 billion for the Prime Minister's 'mera ghar' scheme, Rs 10 billion for self employment and at least Rs 15 billion for the revival of sick industrial units by way of offering assistance to new managements, waivers and write offs and allocation of fresh working capital.

"Actual burden is coming on the nationalized banks," a senior executive of one of the three top nationalized commercial banks (NCBs) confided. "We are being forced to offer from 18 months to five-year term loans in these populist schemes of housing and public transport in addition to financial relief to the sick units," he complained.

The foreign banks' involvement in these schemes is confined only to the extent of providing advisory services and structuring of loan instruments and would be willing to open the letters of credits for the importers participating directly and indirectly in the housing and transport projects.

Pakistani bankers are more than certain that foreign banks would have no stakes at all in these populist schemes.

The nationalized banks are being pressurized to offer loans at the grass root level and to the authorities (SMEDA and PMHA). These authorities are on paper only as these have been created through administrative orders and do not enjoy any legal cover.