Interview with


May 26 - Jun 01, 2003



MR. SAFAR ALI KARAMALI LAKHANI was born on 12 September 1940. He had a desire to become an engineer but due to some domestic circumstances, he had to forgo this idea. He did his B.Com in 1962 from Sindh University. In 1976, he acquired D.A.I.B.P. from the Institute of Bankers in Pakistan. 1982 was the year when he completed his L.L.B from Karachi University. He has an extensive experience of working in different banks on junior to executive positions. He has attended International Banking Seminars at New York, Athens, Switzerland and at Howard University Bostan USA. Having served in Habib Bank Ltd as a Senior Executive Vice President & General Manager for East & Pacific Region based in Singapore controlling Habib Bank's operations in 11 countries, he is now rendering his services as President & Chief Executive Officer to Soneri Bank since the establishment of the bank in 1992.

KALPOINT: Tell us about how were you brought up, your education and achievements in life?

S.A. LAKHANI: What ever I am today is because of my parents. All credit goes to them. My father was running a business but after Martial Law, he started facing some problems in his business. I did my Matric in 1955. I wanted to become an engineer. When I came in 2nd year, my domestic conditions were not favorable for me to go for engineering, I hoped for better financial conditions for the family but that didn't happen. I finally decided to do a job along with my studies and got my admission in inter-commerce. Then I did my B.Com and joined banking in Hyderabad as a junior clerk on salary Rs. 105. I worked for 6 years in National Bank of Pakistan in Hyderabad and then got transferred to Karachi. My father's income was not enough to support my siblings, so I had to share. In 1966, I joined Habib Bank where I kept working till 1991. My last posting was in Singapore as Senior Executive Vice President & General Manager for East & Pacific Region controlling Habib Bank's operations in 11 countries. Currently I am serving Soneri Bank as President & Chief Executive.

KALPOINT: We frequently use the term "BANK" in our daily lives, but most of us don't exactly know the correct definition of the term. Some say it is just a financial institution, while others believe that it is an institution that deals in money. Can you please define the term BANK comprehensively for our Citizens?

S.A. LAKHANI: Bank is an institution where surplus or saved money is deposited and lended to the people in need for commercial purposes. Let's say you have some amount of money deposited in a bank; a person who has a business but no money applies for a loan. He doesn't know you but you and he trust the bank. The bank will give your money with some percentage of profit to the person who has applied for the loan. First the bank would investigate whether he will utilize the money properly or will waste it. After assurance the bank will lend this money to that person. He will put this money in his business and will yield profit and generate employment and simultaneously the bank and the people whose money is deposited in the bank will get benefit as well. The basic purpose of the bank is to serve the society to create the employment, production and to safeguard the savings of the nation.



KALPOINT: How can we distinguish/differentiate between retail and consumer banking?

S.A. LAKHANI: Consumer is a new terminology that has come in Pakistan in last 4 or 5 years. Retail banking is a type of banking in which banks generally give advantage to the commercial sector. The bank gives money to you if you are running a small shop, factory or a restaurant is called retail banking. But when bank gives money for consumer purposes like if you want to buy a TV or any consumer product, it is called consumer banking. This idea has recently been introduced in Pakistan.

It is the first time in Pakistan that we have got excess liquidity in banks. It means there is more supply than demand of money. When there is more supply, the bank's income is bound to go down if not reemployed to earn income on it. Therefore, investment in consumer banking generates better earning than traditional banking.

KALPOINT: It is said that exports of a country are supported by its sound banking system, how is it done?

S.A. LAKHANI: Correct, bankers who are handling exports must have the know-how of the export trade. The bankers who are dealing with exports should have contacts globally. My bank can't export unless I have banking relationship with international banks, which is called "Correspondence Relationship". The services being provided by banks today to exporters are vital for the exports of a country.

Present government's efforts for exports are commendable. If you are an exporter and want to borrow from the bank, today it's so easy only at the rate of just 4% per annum, which is almost nothing. It was too difficult 10 years back. Government. wants to encourage the exporters to export more because when the exports are high, it will bring prosperity and earn foreign exchange for the country.

KALPOINT: What was the aim behind establishing Soneri Bank since there already were enough private banks running? How far have you been successful in attaining your objectives?



S.A. LAKHANI: This bank was established by Rupali Group and it is brain child of Mr. Badruddin Feerasta. There was no private bank in the country till 1992 as in 1974 all private banks were nationalized and only foreign banks were allowed to operate. When Mr. Feerasta came to Singapore where I was working in Habib Bank to engage me for Soneri Bank, I put him question why do you want to establish a bank? His reply was that when he had no money and he wanted some facility from a bank, he had to follow a bank for six months, he said I want to establish a bank where customers especially small and medium are attended immediately and Yes or No reply is given. To guide them and to help them by making quick decisions was the basic idea of the bank. Now we are tying to follow his footprints and the reasons for our success are quick decision to attend the need of our customer. Our bank's slogan is "We have more time for you".

KALPOINT: Trust and confidence of the consumers is the key to success for any bank. What are the main problems that the local Pakistani Banks are facing from the international banks like Citibank, Standard Chartered bank, ABN AMRO bank, etc.?

S.A. LAKHANI: A very good question indeed! The ground reality is that if anything is made in USA or Europe, we'll always appreciate it. Secondly the foreign banks have edge in technology. These banks are connected globally through network of branches all over the world. Local banks don't possess these expertise. But another fact is that we are friendlier than they are with the customers. They say they charge 9% but when you calculate it is 13%. When we (Local banks) say 9%, we mean 9%. They started house loan with 22%, we started it with 13% and now our rates are 11% whereas even today their rates are between 13 to 14%. They generally cater to a specific category of customers like corporate and multinational. We serve every common man of Pakistan.

KALPOINT: Is there any rationale of motivating people for savings, when vast majority of Pakistanis are unable to meet financial requirements?

S.A. LAKHANI: Fortunately yes and unfortunately no. At present interests/profit rates are going down. One year ago, my bank was paying profit at the rate of 10% on savings deposit, which we have now reduced to 4% whereas other large Pakistan banks are giving only 2. 2.50% profit. This is not good for the country for domestic saving, but globally there is a surplus liquidity at present. The trend all over the world is to bring interest rate down just to push more industries and investments in the country. When there will be more investment demand for money will exceed to supply and rates are bound to increase. I agree, at present there is hardly any incentive to save.

KALPOINT: If you are made the Prime Minister or Federal Minister of Finance, what economic or financial steps will you take to bring Pakistan among the community of economically prosperous nations of the World?

S.A. LAKHANI: Laughingly, neither I am eager for this position nor do I feel myself fit for this position. I personally believe that the current Prime Minister & Finance Minister are going in the right direction. The government. policies are very conducive for the country. First they tried to give attention to the macro economy, to make it sound and strong. They have consolidated and privatized the business that is a fruitful decision and work is still going on. People ask what benefit a common man will get from this 10 billion dollar foreign exchange reserve. If economic conditions would not have improved and rupee would not have appreciated from Rs. 64/ & Rs. 58/- the Dollar value might have shoot up to 80 or 100 rupees, the electricity, gas rates & petroleum prices would have increased and employment conditions would have deteriorated than present. So it would have affected all of us directly or indirectly. It has given us a standing in the committee of nation. In past we used to be one tranch or rather begger country but on account of sound policies of present government. we have come out of death trap. I suggest them to pay attention to micro economy. Micro economy means to look after the problems of common man like you and me. A part of accumulated foreign exchange can be invested in infrastructure projects to generate employment. We must also appreciate the introduction of consumer banking trend. In consumer banking when there will be more demand of the products like TV & Refrigerator, more industries would come up and things will become cheaper and employment will be generated.

KALPOINT: Can we implement Islamic Banking in Pakistan with all its aspects?

S.A. LAKHANI: Unless you find the solution to the present problems, transition to Islamic Banking is not possible completely. Present government. has the policy to allow 2 or 3 specialized Islamic banks and to allow banks to have separate Islamic Banking branches is the right solution than converting whole banking industry to Islamic banking. People have the choice where to go, nobody can compel them. Once Islamic banking gets mature, it will be easier to convert other banks to Islamic Banking. Quite a few people are prepared to go to Islamic Banking but the present knowledge and research are not sufficient enough to shift immediately to the Islamic Banking. This mistake was committed by the past government. but it so happened that the money which was available at 12 to 14%, went to 18%. Unless you experience it for next 5 to 10 years and are satisfied, 100% shifting to Islamic Banking would be a big risk for the country.



KALPOINT: What is the basic difference between the operations of Private banks and Govt banks?

S.A. LAKHANI: Private banks are accountable to the share holders and responsible to the depositors. Government. banks are only responsible to the government and government. has the bureaucracy where hardly anybody is accountable. So the people in government. banks are found little irresponsible & lethargic, whereas working in private banks is a very responsible job; you serve the common man and you have to be cautious because you might be accountable in case of any mishap.

KALPOINT: We would like to have your comments on the work done by Kalia Group to endorse Information Technology in the country.

S.A. LAKHANI: They are very nice and friendly people as far as commitments are concerned. I am glad to see the way they are working towards the betterment of Information Technology in the country through their website ( and through other services for the nation. I wish them very best of luck and pray for their accomplishments in their future endeavors.

KALPOINT: Which category of KalPoint did you like most?

S.A. LAKHANI: I am a regular visitor of Every category concerns to the need of every individual of the country. I would like to appreciate your employment category. The efforts put into this category, are really praiseworthy in the current alarming conditions of un-employment in the country, both employers and un-employed are provided opportunity to interact and I congratulate all of you for introducing this service.

KALPOINT: What message would you like to give to our citizens and younger generation?

S.A.LAKHANI: Only make your mission to work hard. Never rely on Sifarish, believe on merit only, and the future is yours.

Q: What are your comments on the privatization policy of the government? Do you think that it is good for the country and the economy as a whole? (Rustam-Multan)

S.A. LAKHANI: I think it is good for the country and the economy as a whole, because this will create competition, create new employment, new products etc as the government cannot look after everything and it is not government's job to run banks and industries.

Q: How the banks can help in reducing poverty from the Country?

S.A. LAKHANI: Banks are doing a lot in this sector. What services they provide to their clients for the manufacturing sector, the production sector or the trade sector, the main idea is to employ funds to generate income and create more employment opportunities.



Q: Can we compare Pakistan's inflation ratio & parallel economy to that of other countries like India and Sri Lanka?

S.A. LAKHANI: I think the inflation rate of Pakistan as compared to India is almost the same but Sri Lanka's inflation is more. Our inflation rate is 3-4% same as that of India, there is not much difference. For the past 3-4 years, government. economic policies have shown results. As regards the parallel economy is concerned this is a common problem in almost all developing countries whether it is India or Pakistan, but with strict money laundering laws and "Know your Customer" instruction by State Bank of Pakistan will gradually eliminate the parallel economy.

Q: Does Soneri Bank has any loan offers for students willing to study abroad?

S.A. LAKHANI: No, Soneri Bank doesn't have such loan offers till now, but we surely plan to have it in the near future, InshAllah.