The foreign exchange reserves of Pakistan surged to 1.54 billion
dollars on Jan 22 as compared to 1.487 billion dollars on Jan 15.
UBL seeks approval to shut 200 branches
State-run United Bank Ltd wants to shut down 200 more branches by the
end of 2000. But it cannot implement the plan without the State Bank permission.
"We are waiting for a nod from the State Bank," said a senior
UBL official. He said UBL closed down 219 branches during the past two years with the
permission of the State Bank.
The number of UBL branches fell to 1424 at the end of December 1999
from 1643 in December 1997 when a new management took over.
The official said the State Bank considers an area "Unbanked"
if there is no bank branch within 2km radius. "UBL has asked SBP to change this to 10
km so that it could close down commercially unviable branches," the official said.
He said UBL management had prepared the blueprint of its plan to shut
down 200 more branches and the only thing that is needed to carry it out is the SBP
The official declined to say how much saving UBL would make in its
expenditures by closing down 200 more branches. "It would certainly reduce our
operating cost. But I cannot give numbers," he said. UBL had 15619 employees at the
end of December 1997: The number fell to 14006 in December 1999 with the closure of 219
branches in two years. But UBL officials say the workforce did not shrink because of
closure of branches. "The shrinkage was natural. People retired or left the
bank," one of the officials said.
UBL executives say closure of 200 more branches and resultant cut in
operating cost would make the bank "a better buy" if the government goes on to
'Ishrat hints at further cut in mark-up rates'
Governor State Bank Dr Ishrat Husain said there will be further
reduction in mark-up rates if the inflation rate continues and give room for further cut
on return rates of national saving schemes.
This, he stated, during a closed door meeting with FPCCI managing
committee members held in Federation House in which the newsmen were not invited.
Participants attending the meeting told that the governor asked
business to forget about tariff and protection to local industry and added that 'the days
of import substitution policy are over.'
Ishrat advised the well attended meeting of trade and industry that
they should focus on export-lead growth strategy instead of seeking protection for
sustaining their viability.
Yield on 1-year T-bills cut to 9pc
The State Bank on Wednesday lowered the yield on one-year T-bills to 9
per cent sending a signal to the market that it was time for the banks to employ surplus
funds in private sector financing. SBP raised for the government Rs 2.85 billion from
inter-bank money market by selling treasury bills of various maturities.
SBP said it sold Rs 2.25 billion worth of six-month T-bills at 8.4 per
cent; Rs 450 million worth of T-bills at 8.99 per cent and Rs 150 million worth of bills
at 8 per cent.
State-run United Bank has introduced Remit N Win scheme for inward
To make the remittances through this scheme any person can buy ZarAmad
cheques in multiples of Rs 10,000 and can win valuable prizes including a dream home worth
Rs 5 billion and 100 Umrah tickets worth Rs 25,000 each.
Banks reinvest rupee counterpart of swap funds
Major local and foreign banks are reinvesting with the State Bank, the
rupees equivalent of foreign currency swap funds they had rolled over in late '98. They
are doing this to earn a guaranteed 14.5% or more return at a time when the yield on
one-year treasury bills has fallen to 10%.
Senior bankers say this is one of several reasons behind the present
liquidity crunch in the inter-bank market. They say over half a dozen banks, including
local and foreign ones, have reinvested with SBP in past two-three weeks huge amounts of
the rupee counterpart of the foreign currency swap funds rolled over in '98.
The SBP had $1.450bn worth of swap funds rolled over by these banks
after Pakistan plunged into a financial crisis triggered by May '98 nuclear explosion. In
December last, SBP started repaying 20% of the rolled over swap funds as agreed in the
agreement reached with the banks at the time of the rollover.
Private sector credit picks up in Dec
The government made a net borrowing of Rs 19 billion from banks during
the first half of fiscal 1999-2000 against its net credit retirement of Rs 25 billion in
full fiscal year 1998-99. On the other hand credit to private sector that remained zero
till November 1999 shot up to Rs 23.5bn next month.
A source close to the ministry of finance said the government borrowed
Rs 56 billion during JulyDecember 1999 and at the same time it placed Rs 37 billion in a
special account with the State Bank. The government keeps in this account the rupee
equivalent of rescheduled foreign debts. Thus the net government borrowing in the first
six months of the current fiscal year stood at Rsl9 billion. In full fiscal year 1998-99,
the government had borrowed Rs 68 billion from banks whereas it had placed Rs 93.4 billion
in the said account. In other words the government retired Rs 25.4 billion of bank credit
in fiscal 1998-99.
Rs50m credit for Iraq
Pakistan plans to provide $50m credit to Iraq to enable it to import
agricultural commodities, modern equipments, cement and fertiliser plants under the UNO
oil for food programme.
Pakistan has already supplied goods/equipment worth $30m on deferred
payment to Iraq in the past under the same programme.
Official sources told on Monday the federal minister for commerce
Razzak Dawood will lead a delegation of officials and representatives of FPCCI (private
sector) to Iraq on Feb 12.
UBL expects profit
State-run United Bank is expected to close the year 1999 with Rs 1.2
billion pre-tax profit (subject to audit adjustments), noted the UBL board of directors at
its meeting. Two years ago, in 1997 the bank had posted an operating loss of Rs 3.7