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Jul 17 - 23, 2000

Investment banks to do leasing business

The Chairman of Securities & Exchange Commission of Pakistan (SECP), Khalid A. Mirza, has allowed the investment banks to engage in leasing business on the condition, inter alia, that they set aside not less than Rs200 million from their capital in order to become eligible for undertaking leasing business, it was officially announced here on Thursday.

The decision was made after a day-long hearing held at Karachi recently on the request of the Investment Banks in this connection which, however, was opposed tooth and nail by the Leasing Association of Pakistan (LAP)

The SECP had recently extended the date for the leasing companies to raise their capital to the level of Rs200 million by the end of June, 2001.

The SECP Chairman further directed the investment banks to appoint a chief operating of ficer for conducting leasing business with the commission's approval and demonstrate expertize in delivering lease products to the customers. As the official responsible for conducting leasing business on behalf of the investment bank, he would be answerable under the leasing rules and prudential regulations for the leasing companies.

Khalid A. Mirza said that if an investment bank wanted to finance a whole project, it would have the permission to do so through leasing instrument. This was also the practice in other countries, he explained.

While opposing the banks' request, a representative of the leasing companies had urged the SECP to restrict the commercial banks to only project financing leases for greenfield and pioneering projects and that they be debarred from providing operational leases for equipment required for BMR (balancing, modernization and restructuring).

WB, ADB to give $3.4m for reforms

Pakistan has signed two agreements with the World Bank and the Asian Development Bank for $3.4 million technical assistance for reforms in the petroleum, gas and judicial sectors.

The agreements were signed by the economic affairs division on behalf of the government with the World Bank and the ADB.

The World Bank will provide $0.5m as grant for formulating and implementing reform programmes in the oil and gas sectors and for setting up a transparent regulatory system for the transmission and distribution of gas within the framework of Gas Regulatory Authority Act.

By providing suitable policy and legal frameworks institutional structure and training, official sources hoped, this initiative would improve an investment climate in the energy sector, rationalize the tariff structure and improve the distribution system in the country.

The ADB will provide $2.9 million as a grant for strengthening the institutional capacity for comprehensive judicial and legal reforms.

This assistance is an important preparatory step in this direction. The ADB has earlier provided assistance to finance two preliminary studies also for this purpose.

BEL depositors' money stuck-up

The depositors of Bankers Equity Limited are still waiting for the release of their "stuck-up money" as the management has not given any schedule for redemption of depositors' amounts.

After the BEL management's take-over by the State Bank of Pakistan in August 1999 the organisation has made a partial payment to its depositors by assuring to release the remaining amount on quarterly basis.

The SBP had instructed the BEL Board of Directors to set monthly targets of recovery and cut the establishment expenses so that maximum amount is available for payment to the depositors.

The last payment of 30% of the principal amount to all such depositors whose total investment with BEL do not exceed Rs. 2 million was made in March 2000.

The depositors, particularly small ones, whose money is stuck up with the BEL after take-over, said that they had deposited their hard-earned money with the BEL to get profits.

IMF mission due next month

An IMF review mission will arrive here next month to discuss the post-budget scenario and modalities for the new funding programme for Pakistan.

Sources told on Wednesday that Pakistan had "good chances" to acquire funding, specially after it imposed GST and tax on agriculture income from July 1.

Though modalities were yet to be finalized, there were fair chances of Pakistan either getting the new $1.5 billion Poverty Reduction and Growth Facility or having the defunct ESAF/EFF revived.

Rs8.75bn bids accepted

State Bank of Pakistan on Wednesday accepted bids of Rs 8,750.290 million against the face value of Rs 9,050 million, SBP statement here said.

The breakdown of the bids accepted runs as: 3-months with cut-off yield 6.8860 per cent per annum and weighted average of 6.8486, and Rs 590.690 million as the realized amount against Rs 600 million the face value.

Task force for legal cover

Overseas Pakistanis having dollar accounts in Pakistani banks are likely to be given a legal cover for protecting their accounts in future from getting frozen, following a recommendation to the effect by a task force submitted to the federal government.

Federal finance minister Shaukat Aziz who met members of the Sarhad Chamber of Commerce and Industry (SCCI) on Thursday said the task force formed three months back had in its report stressed covering three main areas which would ensure redressal of overseas Pakistanis problems and will also encourage investment in the country.

He said presidents of commercial banks were issued directives to ensure efficiency at their foreign branches while taking business from overseas Pakistanis to raise foreign remittances.

"Millions of dollars are being spent on these foreign branches whereas their performance is not up to the expectations, hence we have instructed the heads of the banks to ensure getting good results," he said.