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May 14 - 20, 2001

SBP softens rules for banks

The State Bank has relaxed rules for the banks in making advances to a private limited company.

Previously no bank was allowed to make advances to a private limited company without obtaining personal guarantee of the directors of the company in addition to the normal security that the bank may require.

Now an SBP circular issued to recently to all banks makes it clear that in the following situation the said restriction will be relaxed as under.

(i) In cases of foreign controlled private companies whose directors in Pakistan are merely paid directors either the personal guarantee of the directors in Pakistan or bank guarantee from the holding company abroad may be obtained.

(ii) Advances made to private limited companies including foreign controlled companies resident in Pakistan against lien on foreign currency deposits held with the lending banks would be exempt from the requirement of obtaining personal guarantee of directors of the company.

(iii) Advances made to private limited companies including foreign controlled companies resident in Pakistan against lien on foreign currency deposits would continue to be exempted from the requirement of obtaining personal guarantee of directors of the private limited company when the foreign currency deposits are replaced with special US dollar bonds registered in the name of the borrower issued by converting US dollar deposits.

SBP has further decided that in advances made to private limited companies (including foreign controlled companies incorporated in Pakistan) are fully secured by lien on rupee deposits held with the lending banks, the requirement of obtaining personal guarantee of directors of the company may be waived by the banks at their discretion.

SBP earns Rs 8 billion

The State Bank of Pakistan (SBP) earned a net profit of Rs 8 billion in the first half of this fiscal year and the figure may rise to Rs 20 billion at the close of the year in June.

Sources close to SBP told that the profit of Rs 8 billion earned between July-December 2000 was Rs 2 billion more than the projection made under the IMF standby credit programme. They said SBP and the Fund staff believe that the central bank would earn a net profit of Rs 20 billion in the entire fiscal year ending in June.

In the last fiscal year, SBP had reported a net profit of Rs 30 billion. The budget 2000-01 had projected a net profit of Rs 23 billion for SBP but under the IMF standby credit programme it was revised downwards to Rs 16 billion. Later on this projection was revised upwards at Rs 20 billion.

Money changers sell $50mn

Twenty to twenty-five money changers have sold about $50 million worth of foreign currencies to state-run National Bank in the past twenty days and many of them hope that they can sell upto a hundred million dollars every month.

The selling has let the rupee make a modest recovery in open current market and more importantly kept it stable in the last two weeks.

Leading money changers told that they had sold about $50 million worth of foreign currencies to NBP since April 21. Many of them said they can sell upto a hundred million dollars every month.

Sources in NBP believe that 20-25 money changers who have so far opened accounts with the bank can really sell upto a hundred million dollars per month. If that happens the State Bank will be able to reduce its dollar buying from the open market. In the first nine months of this fiscal year, the central bank bought more than $1.5 billion from kerb to meet shortfall in the balance of payment.

Reserves inch up

Pakistan's liquid foreign exchange reserves rose to about $2.099 billion on May 5 from $2.065 billion on April 28. According to a State Bank statement, total reserves included $1.070 billion held by the central bank and $1.029 billion held by all other banks. On April 28, the reserves held by SBP stood at $1.034 billion whereas all banks combined had $1.031 billion.

Air fares raised by 15%

Pakistan International Airlines (PIA) has increased its fares for all domestic routes and sectors by 15 per cent effective from 16th. The fares, it is learnt, are being increased in view of recent increase of Rs 1.01 in the rates of jet fuel JP-1.

Arif Habib Securities

The Securities & Exchange Commission (SECP) has approved the listing of Arif Habib Securities on all the three stock exchanges of the country and offer for sale of shares to the general public.

Arif Habib, chairman and chief executive of the company has also been allowed to divest 25% of the issued shares of the company out of his personal holdings. The offer is likely to be published in the newspapers after completion of all necessary regulatory approvals, says a company press release.

Deal proposed

The Royal Dutch/Shell Group has proposed arrangement with Premier Oil to exchange its 49 per cent holding in Premier and Shell Pakistan BV (PSP) for an increased holding to 28 per cent from 20 per cent in Bhit Development project in Kirthar concession.

Balochistan Glass

Balochistan Glass Limited proposes to raise Rs 55 million through foreign direct investment. An Extraordinary General Meeting has been called by the company on May 26 , to approve the issue of 11 million shares of Rs 5 each, at par to four foreign stake holders in the company.