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FINANCE

Nov 15, 1999

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

Prize bonds raise Rs20bn

The government has sucked in more than Rs 20 billion from formal and informal money markets within 40 days.

Senior bankers told that the government has so far sold Rs 20.5 billion worth of three categories of rupee-denominated prize bonds. The first of the series worth Rs 15000 a piece were launched on Oct 1 followed by those of Rs 750 and Rs 7500 on Oct 15 and Nov 1, 1999.

The bankers said the bonds of Rs 15000 fetched Rs 12.23 billion in a one month sellmg period. They said the bonds of Rs 750 mopped up Rs 3.76 billion and those of Rs 7500 raised Rs 4.56 billion respectively till Nov 11.

The sale of Rs 750 bonds stops on Nov 15 whereas Rs 7500 bonds would continue selling up to Nov 30.

Senior bankers believe that these bonds would suck in a few billions of rupees more.

Bankers say most of investment made in these bonds comes from the informal sector wallowing in excess liquidity in the wake of economic slump that has triggered depression everywhere including real estate—the erstwhile heaven for investment for the informal sector.

UBL deposits up

State-run United Bank said its deposit base expanded to Rs 128 billion at end-June 1999 from Rs 107.9 billion in 1996 which increased its market share from 7 to 9 per cent.

Shared ATM network

Askari Commercial Bank Ltd (ACL) and ABN AMRO Bank announced the launching of Pakistan's first-ever shared ATM network.

The joint network consists of 23 machines at 18 convenient locations enabling customers of both to have an access to ABN AMRO Bank's ATMs and Askari Bank's ATMs throughout the country.

Reserves up

Pakistan's foreign exchange reserves stood at $1.59 billion on Nov 6. The Statistics showed that on Nov 6 Pakistan had $1.390 billion worth of approved forex reserves and $200 million worth of forex balances held abroad in cash and short term securities.

Rs4.35bn injected

The State Bank on Thursday pumped in Rs 4.35 billion into inter-bank money market by purchasing treasury bills at its open market operation. The State Bank said the OMO attracted Rs 4.950 billion worth of offers for T bills from the banks. It said it purchased Rs 3 billion worth of bills for one week at 7.5 per cent and Rs 1.35 billion worth of bills for one month. The remaining offers were scrapped.

Govt borrowing at Rs 24bn

The federal government borrowed Rs 24 billion from the banking system during first four months of the current fiscal year against its net credit retirement of Rs 25 billion in the entire fiscal year of 1998-99.

Sources close to the ministry of finance told that during July-October 1999 the government borrowed Rs 43 billion from the banking system whereas it placed Rs 19 billion in a special State Bank account meant for foreign debt retirement. Thus the actual government borrowing in first four months of the current fiscal year stood at Rs 24 billion.

SBP allows NBFIs repo transaction with banks

State Bank of Pakistan has allowed Non-Banking Financial Institutions (NBFIs) to undertake Repo transactions with schedule banks with effect from November 15,1999 against their holdings of government securities.

The Apex had since June 26, 1996 restricted NBFIs to undertake Repo transactions, and has decided to withdraw them from November 15,1999.

Bankers said the decision would enable NBFIs to undertake repo transaction (borrowing) from scheduled banks against government securities which has lower rate as compared to clean borrowing which required other collateral. The SBP step would also help in increasing lending to private sector through NBFIs.

The step will also help scheduled banks to disburse more funds in the economy against secured government securities. As the market was full of liquidity it was needed to create new avenues of secured lending to revive the economy as well as utilizing the available resources.

In a separate circular Wednesday the central bank communicated banks and NBFIs that facility of retention of rupee counterpart proceeds of Special US Dollar Bonds allowed to them for a period one year will expire on November 14, 1999.

However, the outstanding rupee counterpart proceeds retained by banks and NBFIs till November 13, 1999 will gradually be adjusted by banks-NBFIs as and when one year's period to each transaction completes.

SBP further said all funds retained by the banks and NBFIs will be adjusted on or before completion of one year i.e. November 13, 2000 positively.

HBL target for loan recovery

Habib Bank Limited is expected to pull down its non-performing loans portfolio by about Rs 12 billion by end of 1999, to Rs 28 billion. The bank's profit of Rs 1.2 billion in 1998, is projected to rise to Rs 2 billion in 1999.

Dividend

First Habib Bank Modaraba (FHBM) has declared a cash dividend of 15% to it's certificate holders for the year ended June 30,1999.

The Company has earned a net profit of Rs 74.86 million as compared to Rs 69.7 million during the corresponding year recorded an increase of Rs 5.16 million (7.4 %).

Curbs on forex remittance to continue

The State Bank may not remove the restriction on outward remittance of foreign exchange through bank draft and TT without putting in place a procedure to ensure transparency.

The State Bank imposed this restriction on Oct 15 as part of a multi-pronged strategy to stop flight of capital in the wake of the military takeover on Oct 12.

Bankers close to the State Bank told that former Governor Dr Muhammad Yaqub was of the opinion that there should be a system to ensure transparency in back to back remittance of foreign exchange.

They said some other senior offficials down the line held the same view adding that this view might prevail even after the departure of Dr Yaqub to the National Security Council.

"There are indications that back to back remittance of foreign exchange may be allowed only to the account holders," said senior treasurer of a foreign bank.