Banks in Pakistan: An experience of privatisation process.

Byline: MOHAMMAD ILYAS

ARTICLE : The purpose of the present article is to highlight the factors contributing to the successful implementation of privatisation policy of the government of Pakistan towards establishment of new commercial banks in the private sector.

In pursuance of the financial sector reforms introduced in Pakistan at the start of 1990, the Government granted permission in August 1991 for opening 10 new commercial banks in the private sector.

The main objective was to strengthen and broaden the financial network to cater to the anticipated growth of the financial needs of the real sector of the economy following the beginning of the privatisation process of manufacturing and banking sectors working in the public sector since 1972.

This article dwells on the performance of the 10 new private scheduled banks which were members of the New Private Scheduled Banks Association (NPSBA) as on June 30, 2000. The names of member banks along with their date of incorporation in Pakistan are given below:

(1) Soneri Bank Limited (September 28, 1991), (2) Prime Bank Limited(September 30, 1991), (3) Askari Commercial Bank Limited (October 9, 1991), (4) Union Bank Limited (October 9, 1991), (5) Bank Al Habib Limited (October 15, 1991), (6) Bank Al Falah Limited (June 21, 1992), (7) Metropolitan Bank Limited (August 3, 1992), (8) Gulf Commercial Bank Limited (now PICIC Commercial Bank), (December 27, 1993), (9) Prudential Commercial Bank Ltd (now Saudi Pak Commercial Bank), (April 4, 1994) (10) Platinum Commercial Bank Limited (October 13, 1994)

For analytical purpose the performance of the above-mentioned group of private banks has been restricted to the past six years ended December 31, 2000, for which complete audited and published annual data was available with the NPSBA.

The new private scheduled banks were incorporated as a public limited company under the Companies Ordinance, 1984, and had fully accredited scheduled commercial banks status operating under the supervision of the State Bank. Hence, the objects for which these 10 new private scheduled banks were established were to carry on the business of "Banking Companies" as defined by the Banking Companies Ordinance, 1962.

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