AN URGENT NEED TO INJECT FRESH EQUITY
An interview with Ms Akram
Khatoon, President, First Women Bank
By SHABBIR H. KAZMI
Jun 26 - Jul 02, 2000
The Government of Pakistan (GoP) has been playing an active role in the
restructuring of financial sector in the country. State Bank of Pakistan (SBP) had
injected Rs 9 billion in Habib Bank Limited (HBL) and Rs 21 billion in United Bank Limited
(UBL). Shareholders' equity of First Women Bank Limited (FWBL) has reduced to Rs 49
million from Rs 200 million due to forex losses encountered by the Bank in 1996. Even for
the recently announced Right Issue of HBL the central bank has paid Rs 8 billion.
Therefore, following the same cardinal principal the SBP should also inject fresh equity
in FWBL to bring it at par with other commercial banks. While shareholders' equity of a
large number of banks exceeded one billion rupees, the shareholder's equity of FWBL was Rs
49 million as on December 31, 1999.
It has been said repeatedly that imprudent policies of the GOP often
renders economically viable units into loss making entities. The same seems to be true
with FWBL. It has a very clearly defined mandate of extending micro-credit to women
entrepreneurs. However, during the first regime of Nawaz Sharif, the Bank was asked to
extend credit/finance 'Yellow Cabs Scheme". The Bank had disbursed around Rs 21
million under the scheme out of which over Rs 4 million is still outstanding against 43
clients. Out of this amount Rs 3.45 million is under classified category.
According to President of the Bank, Ms Akram Khatoon, "One cannot
say with certainty anything about the future of the Bank. The GoP initiated privatization
of FWBL in 1997 and even bids were received. But one of the women forum filed suit against
privatization of the Bank. The strategic buyer from UAE when came to know about the
mandate of the Bank also went into litigation with the Privatization Commission. Over the
past two years the employees are working under high level of uncertainty, their salaries
have not been raised and there is acute shortage of personnel. Globally the turnover of
women workers is high, it is even higher in Pakistan because most of the women are unable
to continue their professional career after marriage. Due to this phenomena and
restriction on fresh recruitment the Bank faces shortage of employees. The result is that
existing employees are overburdened. Therefore, it is necessary that the government must
decide the fate of FWBL urgently."
Though, FWBL is a commercial bank, it was established with a specific
mandate extending credit to women entrepreneurs and also to develop entrepreneurial
skills among women. FWBL is also headed and managed by women. The Bank had incurred huge
losses in 1996 but has been posting profit since 1997. Since its establishment, FWBL has
extended entrepreneurial skills programme for over 21,000 women. The average employment
creation by women borrowers is about four. FWBL mainly extends micro-credit ranging from
Rs 25,000 to Rs 50,000. Credits are extended to urban as well as rural women through its
38 branches spread all over the country, added Khatoon.
Talking about women bankers in Pakistan, Khatoon said, "Many
people in the country believe that strength of women in banks is low as compared to
international standard. But, you will be surprised to note that a large number of women
enjoy senior positions in both local and foreign banks operating in the country. Another
point to note is that more and more women are joining the banking profession. It is the
process of promotion, minimum number of years in a particular cadre and availability of
position, that many women leave the profession before attaining higher positions.
Here it is worth mentioning that Khatoon has attained the age of
retirement three years ago but could not be relieved simply because ministry of finance
has not been able to find out a suitable replacement for her. During May, applications
were called but the ministry seems to be too busy with matters of importance for the time
being. Khatoon believes the delay in relieving her is not being fair with other women
they must not be denied promotion.
FWBL has been a catalyst in the development of women entrepreneurs in
the country. It can play even more active role if more funds are available. Profit was not
the sole motive for the establishment of FWBL but it does follow prudent practices.
Therefore, its future should be secured.