Sep 04 - 10, 2000

Micro-Finance Ordinance to be amended

The Micro-Finance Ordinance 2000, promulgated on August 5, is to be amended to facilitate investment by foreign banks in the newly created bank of the poor and to make poverty alleviation programme eligible for 100-150 million dollars from the Asian Development Bank.

Sources said the charter of the Khushhal Bank (KB) created though the ordinance is expected to be reshaped to safeguard against political influence in the sanction and disbursement of loans, ensure transparency in its operations, and take care of the legitimate interests of the shareholders.

Under diplomatic pressure, the State Bank of Pakistan (SBP) has refunded to the foreign banks the compulsory subscription towards KB's Rs two billion paid up capital. The investment ratio was fixed at 0.2 per cent of each bank's deposits. Foreign banks hold 17 per cent of the overall bank deposits. According to one estimate the foreign banks' subscription was in the neighbourhood of Rs 350 million, with contribution of bigger banks ranging between Rs 50 to 60 million.

In a meeting held with foreign bankers, SBP governor Dr Ishrat Hussain also advised foreign banks to seek approvals from their head offices for taking equity stakes in the Khushhal Bank. If approvals were delayed, it was pointed out, the potential sponsor would not get the directorship of the bank.

Sources said that the meeting was called, following representations made by US and European banks to their diplomatic missions that forced subscription for the KB was not justified and was sending wrong signals to foreign investors. The western diplomats took up the issue with Islamabad. The State Bank responded in a positive manner, says a banker.

RBOD water to be drained into sea

A major dispute between Wapda and the Sindh government over the Right Bank Outfall Drainage (RBOD), project was resolved on Thursday when the Chief Executive General Pervez Musharraf upheld Sindh's point of view, that the drain should be taken to the sea instead of putting it in river Indus.

The long outstanding controversy over the RBOD project was resolved after a "heated discussion" between representatives from Sindh, WAPDA and the Planning Commission at a high-level meeting chaired by Chief Executive General Pervez Musharraf, official sources said.

"Today's decision by the chief executive has saved 3.1 million acres of irrigated land and 20 million population of Karachi and Sindh who are drawing drinking water from the Kotri barrage," the Sindh Irrigation Minister, Syed Mir Ali, said after the meeting.

"It was a more sensitive issue than the Kalabagh dam project," said another official of Sindh.

IB may come under SECP

The federal government plans to transfer the task of regulating investment banks from the State Bank of Pakistan to the Securities & Exchange Commission of Pakistan (SECP), bringing all non-banking financial institutions under its ambit, said a reliable source.

SECP had been regulating the non-banking financial institutions for the past several years. But the State Bank, while passing the regulatory functions in respect of all other NBFIs had retained its control over investment banks (IB).

This was presumably because of their nomenclature, although the Finance Division's Notification of July 13, 1987, whereby investment finance companies (IFCs) were established, had clearly stated, an "investment finance company means a company registered and granted licence under this notification to undertake and carry on the business of an investment finance (and shall include such a company which has been authorized to use the word 'bank' in its name)".

Govt to fix onion MEP

The government is set to fix minimum export price (MEP) of onion at Rs20 per kg to avoid domestic shortfall and stabilize local market prices.

Tobacco to be put on export list

Federal Commerce Minister Abdur Razzaq Dawood has said that tobacco would soon be placed on the list of export items.

He said that after studying and examining the existing trading system of tobacco, improvements would be made for ensuring balance, so that growers should not remain at the mercy of cigarette companies.

Minimum capital balance raised

The minimum net capital balance required to be maintained by members of stock exchanges will be increased from Rs0.25m to Rs2.5m for the bourses with trading volume of up to 7.5bn shares in a calendar year and to Rs0.75m for those having less trading volume with effect from Dec 1, 2000.

This is one of the major decisions taken at a three-day meeting of the Stock Exchanges' Coordination Committee held at Bhurban and which concluded on Sunday. The presidents of the three stock exchanges and representatives of the SECP attended the meeting which was presided over by the SECP Chairman, Khalid A. Mirza. The Commissioner (Securities), Tariq Iqbal Khan was present.

WB to assist in Portal Project

Federal Minister for Science and Information Technology Prof Dr Ata-ur-Rahman has said that World Bank will assist Pakistan in setting up its National Portal Project for the growth of Information Technology and e-commerce in the country.

He stated this while addressing a meeting of Pakistan Economics Forum. Prof Atta-ur-Rahman said that under the IT Policy and Action Plan, a working group of 20 people headed by Dr Irfan Haider of Institute of Business Administration (IBA) has prepared legislation pertaining to various aspects of e-commerce and currently these laws are being vet by the Ministry of Law.

Sugar down

The wholesale price of sugar has come down by at least Rs 100-150 per 100 kg bag or Re 1.00-1.15 per kg but consumers still await its full benefits at the retail level. According to importers, the price of sugar from Thailand has dropped to Rs 2,500 per 100 kg bag in the market compared to Rs 2,650 per 100 kg bag two days back.