The bank is going to float eight new different products of Rs2billion in fiscal 2005-06

July 18 - 24, 2005

The Bank of Punjab (BoP), responding to the market needs, is focusing on three areas for financing over Rs2 billion during the current financial year, which are identified as financing for engineering sector especially the vendor industry, margin financing for the capital market and the fish farming.

The bank is going to float eight new different products of Rs2billion in fiscal 2005-06 considering that three products of Rs. one billion will be launched within four months, according to the BoP Managing Director Hamesh Khan.

He said that the three BoP's products are: financing for tractor vendors, margin financing for stock brokers and the other is a dedicated fund for fish farming.

He said that the bank was also planning to issue a multi-dimensional virtual debt cards to its clients for their convenience.

The BoP Managing Director said that all the products aim to cater to the needs of all types of investors including pensioners /widows/senior citizens, who desire regular income while taking moderate risk, but had been badly hit by low interest environment.

He said that the bank's credit to farmers through various schemes had crossed the figure of Rs 1 billion and Rs 2 billion had been provided for issuance of agricultural credit in this fiscal, including credit facilities to the farmers for purchasing 2000 tractors in order to support mechanized farming in the country.

Hamesh Khan, while unfolding the bank's future plans, said that an appraisal of the investment and saving environment in the country had made local savings primarily used to be placed in banking sector deposits. He said that approximately $ 32 billion was in the form of banking/DFI deposits and $ 15 billion had been invested in National Saving Schemes managed by the government. He observed that in the past, the high rate of return offered by the government schemes restricted the growth of investment management sector in the country.

However, he said he believed that financial/capital markets in Pakistan were heading towards their true potential wherein various investment products for different types of investors would be offered.

He also proposed participation of common investors in real estate through Real Estate Investment Trust, but said that its development was subject to computerization of land record, which was expected to be completed in next couple of years by CBR.

The BoP Managing Director said that the lending policy of the bank of Punjab was not only cautious and constructive but also based on principles of prudent lending with maximum emphasis on security. The Bank of Punjab, he said, had been pioneer in introducing agriculture finance scheme to small farmers.

Talking about the capital limit of banks, Hamesh Khan was of the view that increase in the capital limit of banks would stabilize the financial sector in the years to come. In the past, he said, a small foreign bank, whose capital was only Rs 500 million, disbanded its operations in Pakistan due to a fraud that caused Rs 250 million losses to the banks.

Hamesh said that strong financial position of the domestic banks is vital to strengthen the financial institutions and the banks lending to private sector was expected to substantial increase in this financial year.

Talking about BoP business side, he said that the bank achieved highly impressive growth in deposits, especially in the advances, almost stagnant for quite a few years, grew by 496 per cent to Rs 39,438 million as against Rs 18,344 million of last year, which was Rs 6621 million in 2002.

Hamesh Khan, giving a detail about the schemes being offered by the bank and launching of new schemes, said that the business situation had been changed in Pakistan and the financial sector had to take the businessmen into confidence before making any new policy, as unilateral policies were not working.

Talking about the world computer giant, Microsoft Corporation and Punjab Information Technology Board (PITB) Memorandum of Understanding (MoU), he said that would lead to an investment of US $ 10 million by the Microsoft in Punjab in the fields of training of students, teachers and government employees, development of prototype software for land record computerization and assistance to the Punjab government for its endeavors for the promotion of e-government in the province.