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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.