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Nov 06 - 12, 2000

SBP for voluntary mergers

State Bank Governor Dr Ishrat Husain said on Thursday he wanted "fewer but stronger financial institutions" in Pakistan "which can mobilize and allocate resources in a cost effective and efficient manner."

"There are too many financial institutions in this country with weak capital base, rudimentary technology, inadequate human resources and managerial skills and a low capacity to absorb unanticipated exogenous shocks."

Speaking as chief guest at the first international conference on small and micro leasing, he called upon leasing companies to realize this and go for "voluntary mergers and consolidation."

"This will pave the way for development of export of financial services from Pakistan to the rest of the world resulting from liberalization under WTO." He said the SBP as a regulator was "ready to engage in a dialogue."

The conference was jointly organized by Leasing Association of Pakistan and the Swiss Agency for Cooperation and Development.

Later talking to reporters, he said SBP had set no deadline for leasing companies or for any other financial institutions for effecting mergers and consolidations. "There cannot be a deadline in such financial matters. It has to be done voluntarily," he said. But he made it clear that SBP had the option of taking some regulatory steps if his appeals for voluntary mergers fell on deaf ears.

The SBP chief said SBP would lay the foundation of a new financial structure characterized by hard work and competitive business practices. He said leasing sector is most suited to provide assistance to a new class of entrepreneurs who would lead the financial sector in future.

The governor said the country had achieved a certain level of macro economic stability but there is no reason to be complacent about it. "The road ahead is still tough," he told the audience.

SBP to keep tight monetary policy

The State Bank of Pakistan (SBP) on Wednesday signalled that it intended to continue a tight monetary policy, but is unlikely to make it tighter.

Bankers said the SBP dropped this signal by keeping unchanged the cut-offs on treasury bills of six month and one year. The SBP sold Rs7.15 billion six-month T-bills at 11 per cent and Rs6.70 billion one-year T-bills at 11.50 per cent.

The auction of bills had attracted Rs23.155 billion worth of bids. But the SBP accepted bids worth Rs13.850 billion allowing banks to retain Rs9.665 billion liquidity.

The SBP had set the pre-auction target at Rs23 billion. But it sucked in only Rs13.85 billion because it wanted to keep the cut-offs unchanged provide some liquidity comfort to the banks.

This move sent two signals across the financial markets: one, the SBP would continue pursuing a tight monetary policy and two, further tightening of monetary measures is unlikely in the near future. Bankers said what really reinforced the second signal was that the central bank left enough liquidity with the banks to square themselves.

Law soon to check adulteration in oil

The government has decided to enact a law to check adulteration in petroleum products, a spokesman for the petroleum ministry said on Wednesday.

Jehangir Bashar said the proposed law, prescribing strict penalties for the persons involved in adulteration, would be enacted within a couple of weeks.

He said that private companies like Shell and Caltex had expedited their efforts to check adulteration and their mobile teams were raiding their outlets. This would have positive effect and the PSO, would have to make extra efforts to remain in the competition, he said.

The ministry, he claimed, had succeeded in attracting more than $700 million of foreign investment since October 1999. The investment would be made over the next three years and it includes $578 million in the upstream sector and $133 million in the downstream oil and gas sectors.

US offers funds

The United States has offered $10 million to Pakistan and some Middle Eastern countries to combat "international terrorism", diplomatic sources told.

Sources said that in the first phase, the $10 million offer is to Pakistan, Egypt, Jordan and Yemen to contain terrorism in their respective regions through some international agencies.

A western diplomat said that the US has sympathized with Pakistan government over the recent waive of violence and subversion in the country, especially the killing of 20 people in Islamabad, followed by similar incidents in Karachi and Peshawar.

Bahrain, Pakistan sign accord

Pakistan and Bahrain signed an agreement on Thursday for avoidance of double taxation of income. A delegation of Bahrain, led by Yusif Abdullah Hamood, head of Intentional Economic Affairs of state of Bahrain, initialled the agreement on behalf of his government. Member Direct Taxes, Central Board of Revenue, Mansoor Ahmad, represented the Pakistan government.

Green Card Scheme

Agricultural Development Bank of Pakistan (ADBP) is planning to introduce 'Green Card Scheme' for the growers to help them have running finance accounts.

Philips seeks de-listing

The holding company of the Philips Electrical Industries of Pakistan Limited Koninklijke Philips Electronics, NV (KPENV), on Wednesday said after revising the current performance of the company, it has decided to recommend to the Board of Philips to de-list the company from the stock exchange.

In a statement, the company stated that the KPENV expects that the company would continue suffering losses in the next few years due to several reasons.

US aid

The United States Consul General, John Bennett has said that a six-member USAID mission is coming to Pakistan in November, but there is no possibility of the renewal of aid as was prevalent in 1970s and '80s.