Analysis of Banking Sector in Pakistan
CHAPTER ONE
HISTORY OF BANKING
Evolution Of Banking
The Origin of the Word “Bank”
Still most of the experts, do not agree upon the word “Bank” i.e. from
where and how this word originated. People have different opinions about
its origin. Many experts agreed that the word “Bank” is originated from
following two words.
Bancus
Back
Bancus
Some authors opine that the word “Bank” is derived from the Italic word
“Bancus” or “Banque” which means a bench. The explanation of his
origin is attributed to the fact the Italian Jews merchants transacted the
business of money exchange on benches in the market place and when
the business failed, the Bancus was destroyed by the people. Incidentally,
word “Bankrupt” is said to have been evolved from this practice.
Back
Other authors hold the opinion that the word “Bank” is derived from the
German word “Back” which means “Joint Stock Fund”. Later on, when
the German occupied on major part of Italy, the word “Back” was
Italianized into “Bank”.
Definition of Bank
There is no single definition which describes the bank thoroughly and
completely. Every expert defines word “Bank” in his/her own style.
Following are important definitions which can help us to understand the
word “Bank”. According to:
Professor Chrowthor
“Bank deals with debts of its own and others. Bank borrows money from
general public and advances loans to needy people.”
Sir Jhon Pajet
Banker is such person or the institution which performs following
activities:
Opens the accounts
Make payments against customer’s cheques
Receives amounts of its customer’s cheques from other banks
Renolyed
“Bank is an institution which deals with money. It borrows from the
people who have money in excess and advance loans to the people who
want to invest into some business.”
From above definitions, we can conclude that the bank is entity which
deals with money. People deposit their savings into banks which in turn
advance it to needy persons for productive works. Generally, banks get
money from people on lower interest rate and then advance it on higher
interest rate and earn profit.
Modern Banking
In 1586, the fist bank in the world formed at Italy with the name of Bank
of Venus and in 1694, “Bank of England” was inaugurated in United
Kingdom. The “Bank of England” has got legal right to issue currency in
1758. Following entities play critical role in formation of today’s banks.
Merchants
Money lenders
Goldsmith
Merchants
In past, Merchants performed critical role in trading. In fourteenth
century, many Lombardy merchants came to England and settled in the
parts of city of the London now called Lombard Street. They were so
resourceful that event the Kings had to depend on them and loans. They
dealt with not only keeping the money in sage custody but also changed
money for the travelers or merchants engaged in foreign trade. They
issued written permission notice to their agents, friends and relatives, so
that the foreign traders got their payments from these people within their
own states. These “written permission notice” are converted into “Bank
Draft” in today’s banking system.
Money Lenders
Money lenders are those people who give money to needy persons. In
past, these money lenders got money from general public at lower interest
rate and advanced other at higher rate which lead toward profitability.
Today banking system is progressed form of these traditional money
lenders because now banks are performing same activities of these
lenders in more sophisticated manners.
Goldsmith
In past, goldsmiths of European countries were financially very strong
and were very reliable in society. Common people deposited their
precious thing to these goldsmiths for safety purposes. Goldsmiths issued
written notices to depositors who are required to see this notice when
they want to withdraw their deposited things. Today “Cheque” relate to
that written notice of goldsmith.
So, we can conclude that today’s banks are formed from these above
three concepts. Modern bank is performing all activities of above
mentioned people.
For example, bank issued draft for further payments as issued by
merchants, it advances loans like money lenders and also accepts deposits
like old goldsmith.
In 1672 however, English banking faced a great crises when charless II
borrowed huge sums of money from the goldsmiths and later refused to
pay them back. Therefore a number of goldsmith bankers formed
themselves into a corporation in 1695, known as the Bank of England.
This bank became a very serious competitors to the comparatively
smaller private banks run by the London goldsmiths. The bank of
England was the only Joint Stock Company which was given the
monopoly of issuing bank Notes, though the original goldsmith and other
private bankers were operating very successfully outside London.
Development of Modern Banking
The effect of this historical development of banking in England has been
fairly wide because:
Emergence of a small number of large banks with side net-work of
branches.
Increase in popularity of bank accounts and large seek use of cheques.
In 1918 treasury and the Board of Trade setup a committee to consider
the matter of further amalgamation and absorption among the banks to
restrict the financial monopoly. The committee proposed that the
approval must be obtained by the government and then further from the
treasury and the Board of Trade both prior to amalgamation. In 1955 the
British banks made a departure from traditional banking by undertaking
hire-purchase finance for companies buying industrial plants and
machinery, and took interest on hire-purchase finance.
CHAPTER TWO
BANKING IN PAKISTAN
A
t the time of independence, the areas which now constitute Pakistan were
producing only food grains and agricultural raw material for IndoPakistan subcontinent. There were practically no industries, and whatever
raw material was produced was being exported from Pakistan. However,
commercial banking facilities were provided fairly well here. There were
487 offices of scheduled banks in the territories now constituting
Pakistan.
Before Nationalization
As a new country without resources it was difficult for Pakistan to run its
own banking system immediately, so it was decided that the Reserve
Bank of India should continue to function in Pakistan until 30 th
September 1948, and Pakistan would takeover the management of public
debt and exchange control from Reserve Bank of India on 1st April, 1948.
by 30th June 1948, the number of offices of scheduled banks in Pakistan
declined from 487 to only 195, because registered banks transferred from
Pakistani territories to India.
At that time there were 19 non Indian (foreign banks) and only 2
Pakistani banks (Habib Bank, Australian Bank). In 1 July 1948, of the
total bank deposits of Rs. 1.1081 billion held in Pakistan, as much as 73%
was held by foreign banks whose activities were largely confined to
foreign trade.
In the first eighteen months of the operation of State Bank of Pakistan, 51
new branches were opened in both East and West Pakistan of which:
28 were Pakistani Banks
12 were Indian Banks
4 were Exchange Banks
7 were newly formed NBP of which 6 were in East Pakistan.
By December 1949, there were 35 scheduled banks in Pakistan of which:
4 were Pakistani Banks
23 were Indian Banks
8 were Exchange Banks
Development Banks in Pakistan
The food shortage compelled the government to embark upon agricultural
credit and the agricultural development bank was setup to attend to
agricultural finance. All these measures, and the devaluation of Pakistani
rupee on 1 August 1955, had a very favorable effect on commodity
market and the balance of payments position in 1955-56,
Development of agriculture largely depends on agricultural finance, but
the scheduled banks were not very willing to undertake this risky venture.
Therefore the SBP sponsored to establishment of agriculture development
bank to attend exclusively to agricultural finance. More over, the
functions of the State Bank were also broadened by facilities for both
agriculture and industry. All these measures had positive effects on
Pakistan’s economy during 1956-58.
In 1958 government liberalized imports which increase the demand of
funds, so in 1959-60 two more Pakistani banks namely Eastern
Merchantile Bank limited and the United Bank Limited were established
and scheduled and more Pakistani banks continued to be established,
which included Commerce Bank Limited and the Standard Bank Limited.
By June 1965 the number of scheduled banks stood at 36. In 1964 NBP
also came forward and established a people’s credit department to allow
credit facilities to small borrowers.
Weaknesses of Banking System
Although there was development in this sector after independence, but
there were many weaknesses in this system.
Limited Number of Banks
There was little number of banks. For 10,000 people there was only a
single branch. In developed nations this ratio is 4000. Therefore the
saving ratio is very less, and same is the case of investment.
Ignorance of Backward Areas
Banks were opening branches only in developed areas, they were
ignoring backward areas. People of rural areas were not getting banking
facility.
Undeveloped Money Market
The money market was not very much developed, so the banks were not
getting sufficient information and therefore they were not advancing
enough loans.
Maldistribution of Loans
Banks were issuing loans to manufacturers and businessmen. They were
ignoring agriculture, mining, fisheries and transportation.
Access of People toward Loans
Banks were advancing loans only to large manufacturers who were
getting 63% of total loans but they were 222 in number. Each was getting
more then Rs. 1million.
Default Ratio
Since the loans were given to large manufacturers they were defaulting
due to their approaches.
These were few of the weaknesses in this sector and the government
efforts were not fruitful. So in 1974 banks were nationalized.
Nationalization of Banks
Nationalization of banks was considered necessary so that the nation as a
whole could benefit from the better channeling of resources. So the
government of Pakistan decided to nationalize all scheduled banks as
well as State Bank of Pakistan through the ordinance of Nationalized
1974. All this was done on Jan 1, 1974.
At the time of nationalization there were 30 scheduled banks in the
country. 15 were Pakistani while other were foreign banks. Pakistani
banks were having 2902 branches. 70 branches were in foreign countries.
There was 36 branches of foreign banks in the country. Only the branches
of Pakistani banks were nationalized. All the property rights were
transferred to the Federal Government.
Through a notification all smaller banks were amalgamation with bigger
banks and five units were formed.
1. National Bank of Pakistan
2. Habib Bank Limited
3. United Bank Limited
4. Muslim Commercial Banks
5. Allied Bank of Pakistan Limited
All this was completed in three phases
Objectives of Nationalization
The banks were nationalized for achieving the following objectives:
Un-equal Distribution of Loans
Since there was unequal distribution of loans 200 families were getting ¾
of total advances. To eliminate this unequal distribution banks were
nationalized.
Equal Sectoral Importance
Since banks were ignoring agriculture sector, even though the economy is
agriculture based and only 10% loans were given to this sector. This was
also the reason that our food needs were not fulfilling.
Unlawful use of Loans
The purpose for which loans were given it was not being used for that
purpose. On the bases of their approaches people were getting loans and
they were using it for hoarding or for other unlawful purposes.
Loan for Productive Purposes
Earlier banks were advancing loan for unproductive purposes. The
objective of this step was that loan will be advanced for productive
purposes.
Loans for Deserving People
Banks were advancing loans only to industrialist and businessmen. So the
deserving people had no approach to this loan. So this step was
necessary.
Wastage of National Resources
Banks were opening their branches in such areas where they had already
their branches and there was no need of any branch. So in this way they
were wasting national resources.
Heavy Expenditure on Promotion
It was necessary that such things must be stopped so that resources may
not be wasted on such undue promotion.
Unethical Ways for Deposits
Banks were using unethical ways for attracting independent institutions
and agencies for making deposits and they were providing them undue
benefits. This generates social evils in the country. So it was the
responsibility of government to stop such things.
Heavy Salaries of Employees
Banks officers were getting heavy salaries as compared to their education
and experience. It was a burden on the banks, and it was very difficult to
bear this burden for the banks.
Recruitment Criteria
Banks recruitment criteria were not very good, people were getting jobs
on the basis of their relations and the relatives of officers were being
recruited. They had not other wise ability of that job.
Black Money
People were depositing black money in the deposits and wee avoiding
income taxes also. It was necessary to stop such practices.
Benefits of Nationalization
Equal Distribution
Advances of banks are being equally distributed among all sectors of
economy.
Cheap Facilities
Now banks are providing cheaper facilities to the public because they are
not spending much on undue promotion.
Loan for Productive Purposes
Now loans are being used for only productive purposes.
Equal Policy for Loans
All the banks are following same policy for advances loans to small ad
large businessmen, manufacturers and farmers.
Reduction in Concentration of Wealth
Now banks are advancing loans for considering collective benefits, so
concentration of wealth has reduced.
Stoppage of Black Money
Now chances of depositing black money in banks have been eliminated.
So revenue of government in term of excise duty and income tax has
increased.
Confidence of Public
After nationalization confidence of public on this sector has increased. So
they are willing to make deposits without any fear.
Unethical Competence
Unethical competence among different banks has stopped, because
management is not supporting such competence.
Employees Recruitment Process
The recruitment process is clear now. People are getting employment on
merit, because bank service commission has been established for this
purpose.
Unlimited Loan
After nationalization people who had approaches earlier are not able to
get loan from many banks. So they are not able to create monopoly.
Facility of Agricultural Loan
Now government has the facility to use there banks. Earlier these banks
were not advancing loans for agricultural purposes. Now these banks are
advancing directed loans for agricultural purposes. The farmers are
getting loans on easy conditions.
Banking Facility in Rural Areas
Before nationalization banks were considering only financial benefits for
opening new branches so people in the rural areas were not getting
banking facility. Now banks are considering the needs of the rural areas
also. So many branches of banks had been opened in rural areas.
Disadvantage of Nationalization
Bad Performance of Employees
Now the performance of employees is not good, because they had no
interest in the success of the bank. Before nationalization they have unprotected job and were working hard.
Reduction in Deposits
Now the bank staff’s dealing are not good with the public as it was before
nationalization. So the bank deposits had decreased.
Government Regulations
Due to government regulations the performance of banks had been
affected because there rules are confusing.
Long Duration for Loan
Since the regulations are very confusing so the methods for getting loan
are very difficult. People have to go through many stages. So the people
have turned to finance companies and they lost their money.
Fraud
After nationalization the fraud rate has been increased because all the
burden has to be beared by normal customers.
Competition among Banks
After nationalization competition among banks has been avoided because
employees of the banks are public servant and they want only their
salaries.
Unequal Distribution of Wealth
It was thought that after nationalization loans would be provided small
enterprises and the concentration of wealth would be eliminated. But it
could not happen, and the concentration of wealth has increased.
Political Influence
People are getting loans from there banks on political basis. Such people
are unaware of the business for which they obtained loans. These loans
were also misused, so these people also defaulted and banks had to bear
heavy losses.
Privatization in Pakistan
With the passage of time, the government of Pakistan realized that the
national economy was dominated by public sector, and production, trade
and finance was over-regulated. This resulted not only in chronic budget
deficit, leaving not much for physical and social infrastructure but also
led to developing such conditions which could not be changed without
disinvestment and privatization of the nationalized and public sector.
Privatization efforts began in 1988 and between 1988 to 1990, 14 loss
making units were divested. Furthermore, shares of profit making
manufacturing units were also sold for retiring public debt and reducing
debt servicing. The formal process of privatization picked up only after
the setting up of the “Privatization Commission” in 1991. the objectives
laid down for the commission included:
Improving the level of efficiency, encouraging competition and
creating a market based economy.
Attracting foreign investment, mobilizing private sector resources for
future investments and developing capital markets for mobilization of
domestic savings.
Reducing the size and scope of the public sector, and minimizing the
financial drains of public enterprises on the government.
Maximizing receipts from privatization to pay public debt and reduce
the fiscal deficit.
Units privatized: (1991-2000)
During 1991 to 2000, 103 units were privatized and government realized
Rs. 60.5 billion or $ 1.7 billion proceeds through this privatization. The
detail of number of units and their respective sale proceeds along with
sector are shown below in table 2-1.
Table 2-1:
Sector
No. of unit privatized
Amount
(Rs. Billion)
1.1
6.2
7.8
2
10.6
0.2
0.7
0.1
30.6
0.1
1.1
60.5
7
Automobiles
4
Banking
11
Cement
14
Chemicals
3
Energy
7
Engineering
19
Ghee
15
Roti plants
1
Telecommunication
2
Textiles
20
Others
Total
103
Source: privatization Commission
The total sale proceed of Rs. 60.5 billion include share of different
sectors i.e. energy, banking & finance, industry, telecommunication and
others. Following graph 2-1 show the overview of %age share in sale
proceeds of these sectors.
Graph 2-1
This total amount of Rs 60.5 billion of sale proceed is distributed to
federal government, for restructuring expenses, retuned is SOEs, for
privatization expenses and to other undistributed expenses. This is shown
below in Graph 2-2:
Graph
2-2
this graph indicate that out of total proceed, 80% was given to federal
government, 9.5% was released to meet restructuring cost, arising mainly
from golden handshakes, 5% was given back to companies on whose
behalf selling of shares was carried out and 1% is laying with the
commission and distributed. The commission itself utilize 4.5% of total
proceed to cover its expenses.
Banks pravitized
During 1988 to 2000, 5 banks are privatized by government which are
shown in table 2-2.
Table 2-2:
% of shares offered to private
Banks
people
51%
UBL
16.6%
MCB
5.10%
NPB
58%
NIT
49%
ABL
Source: privatization Commission
Banks which are expected to be privatized in future are shown in table 23.
Table 2-3:
% of shares offered to
Date of bidding
Banks
private people
51%
1st Oct. 2003
HBL
Source: privatization Commission
CHAPTER THREE
MAJOR PLAYERS
M
ajor players of the banking sector are categorized in the following heads:
Nationalized Scheduled Banks
De-Nationalized Scheduled Banks
Specialized Banks
Private Scheduled Banks
Foreign Banks
Investment Banks
Nationalized Scheduled Banks
Nationalized scheduled banks are those banks which are registered with
SBP and are public owned enterprises. The SBP give directions to these
banks and they are required to work according to this direction.
Furthermore, scheduled banks are permanent members of SBP. The
nationalized scheduled banks are shown in table 3-1 below.
Table 3-1
Nationalized Scheduled Banks
1. First Women Bank Ltd.
2. National Bank of Pakistan
3. Habib Bank Ltd.
4. United Bank Ltd.
Source: SBP & Finance Division
De-Nationalized Scheduled Banks
Table 3-2
De-Nationalized Scheduled Banks
1. Allied Bank of Pakistan Ltd.
2. Muslim Commercial Bank Ltd.
Source: SBP & Finance Division
Specialized Banks
These institutions are generally government-sponsored corporations, and
provide medium and long-term finance to various sectors. Most of these
institutions are players in the capital market in Pakistan which are shown
by the table 3-3 below.
Table 3-3
Specialized Banks
1. Agricultural Development Bank of Pakistan
2. Industrial Development Bank of Pakistan
3. Punjab Provincial Cooperative Bank
4. Federal Bank for Cooperatives
Source: SBP & Finance Division
Private Scheduled Banks
These are such banks which are registered with SBP but are private
owned enterprises. These are also required to work according to the
policies of SBP. The private banks currently working in Pakistan are
shown in table 3-4 below.
Table 3-4
Private Scheduled Banks
1. Askari Commercial Bank Ltd.
2. Bank Al-Habib Ltd.
3. Bolan Bank Ltd.
4. Faysal Bank Ltd.
5. Bank Al-Falah Ltd.
6. Metropolitan Bank Ltd.
7. Platinum Commercial Bank Ltd.
8. Prime Commercial Bank Ltd.
9. Prudential Commercial Bank Ltd.
10. PICIC Commercial Bank Ltd.
11. Soneri Bank Ltd.
12. Union Bank Ltd.
13. The Bank of Khyber
Source: SBP & Finance Division
Foreign Banks
Foreign banks other than Indian banks have been commonly known as
“Exchange Banks” due to the fact that prior to independence foreign
banks in the Indo-Pakistan Subcontinent were engaged primarily in
finance of foreign trade and exchange business.
Though the SBP does not encourage them to open branches in the interior
yet they are fully authorized to discharge normal functions, including the
acceptance of Pak Rupee and foreign-Currency deposits from the public.
Foreign banks, though very selective and expensive, have introduced not
only quite few new products and concepts in banking in Pakistan but they
have been quite active in the financing of imports, exports, stock
exchange securities and installment credit. Foreign Banks which are
working in Pakistan are shown by the table 3-5:
Table 3-5
Foreign Banks
1. Hong Kong & Shanghai Banking Corp. Ltd.
2. Emirates Bank International Ltd.
3. Albaraka Islamic Bank Ltd.
4. International Finance Investment & Commercial Bank Ltd.
5. American Express Bank Ltd.
6. Bank of Tokyo Mitsubishi Ltd.
7. Credit Agricole Indosuez.
8. Oman International Bank.
9. ANZ Grindlays Bank Ltd.
10. Bank of Ceylon.
11. Citi Bank N.A.
12. Deutsche Bank A.G.
13. Doha Bank.
14. ABN Amro Bank N.V.
15. Habib Bank A.G.Zurich.
16. Mashreq Bank P.S.C.
17. Rupali Bank Ltd.
18. Societe Generale. The French Int. Bank Ltd.
19. Standard Charted Bank.
Source: SBP & Finance Division
Investment Banks
The investment banks assist business houses and the government bodies
to raise money through the sale of stocks and bonds for usually long term
purposes. These banks perform the usual functions of raising deposits of
idle money from the public and finance the business houses and other
bodies. The investment banks which are currently working in Pakistan are
shown by table 3-6.
Table 3-6:
Investment Banks
1. Crescent Investment Bank Ltd.
2. First International Investment Bank Ltd.
3. Atlas Investment Bank Ltd.
4. Security Investment Bank Ltd.
5. Fidelity Investment Bank Ltd.
6. Prudential Investment Bank Ltd.
7. Islamic Investment Bank Ltd.
8. Asset Investment Bank Ltd.
9. Al Lowfeek Investment Bank Ltd.
10. Al-Faysal Investment Bank Ltd.
11. Jahangir Investment Bank Ltd.
12. Frankhin Investment Bank Ltd.
13. Orix Investment Bank (Pak) Ltd.
14. Trust Investment Bank Ltd.
15. Escorts Investment Bank Ltd.
16. Al-Meezan Investment Bank Ltd.
Source: SBP & Finance Division
CHAPTER FOUR
CUSTOMERS OF BANKS
T
he opening of an account is the establishment of Banker-Customer
relationship. By opening of an account at a bank a person becomes a
“customers” of the bank.
Before describing the different types of customers it is necessary to know
that what the definition of Banker and Customer is.
Banker
Different Bankers have defined the different definition on Bankers but
according to the Sir John Pigat, defined in his book “Banking Laws” that.
Individual who opens an account.
Individual who pays the amount of Cheque of their customers.
Individual who receives the amount of Cheque of their customers
from other banks.
According to banking Act ordinance 1962.
“Banker is that person who gives loan to general public and receives
deposits from general public for investment purposes which must be
refundable by Cheque, draft and any other way”.
Customer
Account holder of customer is that person who has opens an account in
bank or the person who has opened a saving or term deposit and current
account in the bank.
Types of Customers
Individuals Customers
Joint Customers
Married Woman
Minor or Infant Customer
Lunatics or Mental Patient Customers
Partnership Firm
Joint Stock Company
Non-trading Concern
Trustees
Individual Customers
Only one person can operate this account or we can say that when a
single man or woman having age limit of 18 years, opens an account in
his/her name and has a right to operate, it is called Individual account.
The person can be a sole proprietor ship
A person should not be a drinker, drug user, mentally abnormal and
defaulter, because according to law they cannot make the contract.
Features of Individual Customers
There are different features of individuals customers including.
Adult
The person who is native of their country must be adult according to their
laws. According to Pakistani law, the person who has age of 18 years is
known as adult.
Mentally Abnormal
The customer must be mentally healthy because mental person has no
right to make an agreement and cannot be a customer of bank.
Defaulter
The person who is customer of the bank must not be a defaulter.
Deposit Money
A person, who wants to become the customer of the bank, it is necessary
for him to deposit the money in bank. Until a person would not deposit
the money in bank he cannot become the customer of bank.
Issuance of Cheque
The account holder has a right to issue a Cheque in the name of bank.
Types of Account
Individual customer has option to open saving a/c, term deposit a/c, profit
and loss sharing a/c and any other a/c which he wants.
Signature on form
Only one person is allowed to put a signature on a/c opening form.
Signature on card
One person is allowed to put a signature on specimen card.
Facility of loan
Individual a/c holder can take a loan and overdraft from bank.
Death
After the death of individual a/c holder, the deposited amount will be
handed over to legal holder of that person.
Stoppage of payment
If individual a/c holder become mad or defaulter than bank has a
authority to stop payment in this account.
Joint Customer
When two or more persons neither partners open an account on their
name is called Joint Account. When such an account is opened, it is
necessary that banker should obtain clear directions as to whether one or
more of them shall operate upon the account. However in the absence of
such directions the banker should allow the operations under the
signature of all the Joint a/c holders.
Features of Joint Account
Signature on Form
For the opening of a Joint account, all the account holders or partners put
signature on the account opening form.
Right of Transaction
All the partners can jointly make a transaction with bank or allow one
partner to make transaction with the bank. They give this authority to that
person in written and send a copy of this to the bank. If the person who
has authority to make a transaction with bank become defaulter or mad
then automatically this power is finished or eliminated.
Death of Customer or A/C Holder
It is decided that in case of the death of one of the combined customer,
how cash will be withdrawn from the bank. If it is not predecided then the
remaining customers possess the right to withdraw cash without any
condition.
Power and Right of Taking Loan
If joint customers give right to one person for making transaction then
they must also disclose whether this person has right to take loan or
overdraft from bank or not.
Responsibility of Loan
All the joint partners are liable to pay back the loan. If one customer dies
then responsibility for the payment of loan goes on the shoulder of other
partners. Bank has no authority or right to take back the loan from the
legal holder of the dead partner.
Share as Guarantee
If at the time of taking loan from bank, joint partners present those shares,
which are of joint property then at the time of transaction of these shares
in the name of bank all the joint customers are required to signature it,
who are owner of shares.
Payment of Cheque
If joint partners do not give authority to one partner for making
transaction with bank and also not tell that who will make a transaction
with bank then in this condition bank does not make payment until all the
partners signature are not on the Cheque.
Type of Account
Joint account holders can open Saving Account, Term Deposit, Profit and
Loss Sharing Account and Current Account in the bank and they are not
restricted to open the account.
Joint Account of Wife and Husband
If Pakistan the example of Joint account is the joint account of wife and
husband. It is decided at the time of opening the account that if the joint
account was opened with the intention of making a provision to the wife
in case of husband’s untimely death the widow receives the money and
vice versa. If it is not decided at the time of opening this account then
legal holders has right to withdraw money from bank.
Married Woman
Marriage does not disqualify a woman from becoming a customer of a
bank because a married woman is capable of holding and disposing any
property and also capable of rendering herself liable in respect of any
contract. She can open and operate a bank account with cash or Cheque
like any other account holder. In case of married woman requests for a
loan, adequate securities belonging to her should be taken into
consideration separate from her husband property. Bank when open the
account of married woman asks the name of her husband and her
occupation. According to French law, no woman can open the bank
account without the will of her husband.
Features of Married Woman
Signature on Form
There must be signature of married woman on account opening form.
There is no signature of her husband on form but name of her husband
and occupation is mentioned there.
Signature on Card
Married woman must signature on specimen signature card.
Type of Account
Married woman can open any type of account in the bank like Current,
Fixed Deposit, Saving and PLS Account.
Issuance of Cheque
Married woman has right to withdraw money from her account and issue
a Cheque on the name of bank. She must do a signature on Cheque like
she has done in the specimen signature card.
Facility of Loan
Married woman can take a loan or overdraft from bank. Bank must be
careful while granting the loan to married woman because if she is unable
to pay back loan then no legal step can be taken against that lady and no
one can caught her and can’t be put in prison, so that’s why bank should
grant to the loan to married woman at that time when she has a sufficient
property in her own name so that bank can recover their money.
Responsibility of Loan
If married woman has taken loan in the shape of overdraft then her
husband will not be responsible. If married woman has taken overdraft
from bank for house necessities, in this case husband can be responsible
for repayment of loan. But if her husband proves that he is providing
enough money to his wife for house necessities or he had forbidden his
wife to take overdraft from the bank then he can not be responsible for
the repayment of overdraft.
Death of Married Woman
If married woman died, then her husband will have a right to receive the
deposited money or her legal holders will receive that money.
Minor or Infant Customer
According to Pakistani law, a person is regarded as minor until he has
attained the age of 18 years. In Greek Britain the age limit is 21 years.
Banker in Pakistan has allowed the opening of minor’s a/c only with the
idea of inculcating in them the habits of saving. These a/c are opened in
the name of minor on the request of his guardian who signs the a/c
opening form himself and gives his own specimen signature for the
operation of the a/c. so minor can make a transaction with bank and can
issue a Cheque in the name of bank.
Features of Minor or Infant Customer
Signature on form
Minor customer will sign on a/c opening form by himself.
Type of A/C
Minor can open any type of a/c and no restriction on him.
Issuance of Cheque
Minor can withdraw money in his a/c at any time and issue a Cheque in
the name of bank.
Overdraft facility
Bank doesn’t provide the overdraft facility to minor because there is no
legal facility is available for the repayment of money.
Guardian Responsibility
If bank has opened a a/c in the name of minor guardian and that person
takes overdraft from bank than guardian will responsible for repayment
and bank has legal right to take the money from guardian.
Minor as a Agent
If infant or minor works as a agent of adult person than he has facility to
take overdraft from bank and responsibility of overdraft goes to that
person, who has appointed him agent.
Fraud
If minor makes fraud with bank and get money by showing that I am
adult than in this case bank has no authority to take back loan amount and
interest amount payment also.
Lunatics or Mental Patient Customers
Section 11 of the contract Act 1872, has debarred all persons of unsound
mind from contracting. Therefore, a banker should not open an account in
the name of person who is known to be a man of unsound mind. As soon
as the banker comes to know of the lunacy of his customers, he should
atop all debit operations on the account after confirming the information.
The entire credit balance of the customer a/c should be placed at the
disposal of the Manager in Lunacy appointed by a competent court of law
under the lunacy act 1912, who in the behalf of his owner makes a
transaction with the bank. When the customer regains his soundness of
mind and is discharged from lunatic asylum the bank should allow him to
operate the a/c after he produces a certificate of sanity from a court of
law.
Bank stops the payment of those Cheques which has issued before the
lunacy.
If the bank has made the payment of Cheque before the lunacy of his
customer than in this case bank will not be responsible.
Partnership Firm
Section 4 of Partnership Act, 1932, “Partnership is the relationship b/w
the persons who have agreed to share the profit of the business carried on
by all or any of them acting for all.
Any partnership firm can open the a/c in bank. Therefore, a banker
should always open a firm’s account in the firm’s name not the partners
name and get the a/c opening form signed by all the partner who must
also state the nature of the firms business, the name and addresses of all
the partners and name of those who are authorized to operate on the a/c in
the name of firm.
Features of Partnership Firm
Signature on form
There must be signature of all the partners on a/c opening form.
Partnership contract
For the opening of partnership a/c firm should provide the copy of
partnership contract to bank.
Right for transaction
All the partners can jointly make the dealing with the bank but normally
they make a representative among them for making transaction with
bank. This authority is written in nature and also copy of this is provided
to bank. The authority should include powers to draw, indorse and accept
bills and mortgage and sell property belonging to the firm.
Responsibility of Loan
If firm takes a loan from bank than responsibility of repayment is on all
the partners.
Refusal of Payment
If bank receives the information from one or more than one partners that
the person who has authority to make transaction with bank is cancelled
than after this information bank refuses to pay the amount of Cheque
issued by that person.
Personal Transaction
The person who has authority to make transaction with the bank, if he has
also his personal a/c in same branch where there is firm a/c than must be
careful in dealing if that person deposits firm Cheque in his personal a/c
than bank should tell the other partners otherwise bank will be
responsible for losses,
Retirement of Partner
If one or more than one partner of partnership firm is retired than they are
not responsible for such transaction which has been made after their
retirement. If the banker doesn’t receive the notice of retirement than
these partners will be responsible for those transaction which has been
made after their retirement. So it is necessary that when partners are
going to be retired notice should be given to bank.
Death of Partner
The death of partner dissolves the firm. If the a/c has a credit balance the
operation on the a/c should not be stopped by the mutual understanding
of all the partners.
Joint Stock Company
Joint Stock Company performs its all monetary transaction through
banks. Company can open the current a/c in the bank and few persons are
selected for the running of this a/c. they have right to make the
transaction with the bank.
Features of Joint Stock Company
Resolution
Company provides the copy of resolution of directors to bank in which
few persons are authorized to operate upon a a/c and also their specified
authority. In this resolution they also mentioned the name of bank in
which they will open their a/c.
Copy of Certificates of company
Before an a/c of public limited company is opened, the banker must ask
the person to do so to submit the certificate copies of the following
documents.
Resolution of Board of Directors
Memorandum and Articles of Association
Certificate of Incorporation
Certificate of Commencement of Business
Balance Sheet
Bank keeps these things in their record, if bank has doubt about the
correctness of documents; they send their representative in the office of
registrar of companies and make confirmation.
Signature on form
For the opening of an a/c signatures of authorized persons must be there
who has authority to making transaction with bank.
Annual Report
It is the statement of the financial affairs of the company and the banker
can draw his own conclusion about the company from the study of the
latest balance sheet compared with previous ones.
Authorization of Transaction
Company provides the specimen signatures of those people who are
authorized to make transaction with bank. These signature of approved by
Managing Director of company.
Payment
Bank only makes a payment of those Cheques on which the signatures of
authorized persons are there.
Repayment Responsibility of loan
The authorized persons receives the loans/overdraft from bank,
responsibility of repay goes to company.
Non-Trading Concerns
Non-trading organization includes the clubs, societies and associations.
These are formed for the promotion of culture, science, education,
recreational activities and charitable purposes etc. some of these
institutions are registered under the society’s registration Act, 1866, and
are issued a certificate of registration. The affairs of these institutions are
administrated by a body known as governing body or Managing
Executive Committee. If these institution are not according to law than
they have no legal position. So banker must be careful while making the
overdraft payments because the members of these institutions have no
responsibility.
Features of Non-Trading Concern
Copy of Resolution
The resolutions of governing body/managing committee authorizing the
opening of the account with the bank. The resolution should name the
person authorized to operate upon the account clearly specifying the
powers of authorized person. The resolution is signed by chairman of
Committee and counter signed by the secretary of governing body.
Bye- Laws
Certificate copy of bye- laws or rules and regulation is provided to bank.
Signature on Form
The account opening form duly signed by the authorized person(s) who
would operate on the account.
Personal Account
An undertaking signed by all the authorized persons on behalf of the
institution expressly mentioning that as and when any change, take place
in the persons authorized to operate on the a/c, the balance will be
informed immediately.
Death
If the person died who is authori9zed to make transaction with the bank
than bank stops the payment from club a/c until it never receives the
resolution of managing committee in which new person is appointed for
making the transaction with bank.
Trustee account
Is the person who accepts the confidence of other person and take care of
property of other person. Bank should be reluctant to open the a/c of such
person. If he opens the a/c by his private identification than bank should
not put objection on that, but if he opens the a/c as a trustee than bank
should require the trust deed from that person, in which he is appointed as
trustee.
Features of Trustee Account
Trust Deed
Bank does not open the a/c of any trustee until it does not receive the
attested copy of Trust Deed.
Signature
Trustee signs in the a/c opening form and specimen signature card lonely.
Authorization of Transaction
If there are more than one trustee for looks after of property than it is
better to mention the bank that which will make the transaction with
bank.
Death of Trustee
If there is more than one trustee and one of them dies, than bank should
not suppose that other trustee have right to make transaction with bank.
Utilization of fund
No trustee is allowed to transfer the trust fund in his personal a/c.
Payment
If there are more than one trustee and these all are a/c holders than bill
will not pay until the Cheque is not undertaking signed by all trustees.
CHAPTER FIVE
MAJOR PRODUCTS/SCHEMES
T
he peoples who opens the a/c in the bank they have their different needs
and requirements of a/c according to their income. So one account is not
best for all the peoples. That’s why banking institutions provides the
different sort of a/c and schemes according to the people needs.
General products of Banks
Profit and Loss Sharing A/C
Profit or loss sharing Saving A/C
Profit or loss sharing term deposit A/C
Rozana Munafa Business A/C
Current A/C
Foreign Currency Deposit
Rupee Traveler’s Cheque
Credit Card
Profit & Loss Sharing Account
The different revolutionary steps which has been taken by government
for the running of economic system of country on the basis of
islamization, the introduction of profit and loss sharing a/c is one of them.
This system was introduced in 1 January 1981. people deposited the huge
amount of money in bank in profit and loss sharing a/c because this
system was best according their desires and Islamic point of view. We
can judge the popularity of this scheme in this manner that without the
surety of success ness of this system and payment of interest, people
deposited Rs.3 billion in profit and loss sharing a/c.
Commercial Banks invested this money in the rice export corporation,
cotton export corporation, House building Finance Corporation and in
those industries where there are no or few chances of losses.
Banks paid the profit of Rs. 13 crore of the total amounts of Rs.3 billion
in first six months. The success of this system is evidence of this thing
that people of Pakistan is ready for every kind of scarification.
The commercial banks are providing the two types of a/c facility in profit
and loss sharing a/c.
Profit and loss sharing saving a/c
Profit or loss sharing term deposit a/c
Profit and loss sharing saving a/c
PLS saving a/c can be open by the amount of Rs.1000 in any commercial
bank of Pakistan. No person is allowed to open more than one a/c with
the same name. Bank has authority to utilize these deposits in any kind of
business, customer has no authority to interfere or investigate.
Features
Minimum opening amount
This account can be open in any commercial bank by the amount of
Rs.1000.
Maximum amount of withdrawal
In this account Rs.15000 can be withdrawal during a week. If party wants
to withdraw more than this amount than they have to given the 7 days
prior notice. But now different commercial banks have no restriction of
notice.
Use of Cheque
Cheque is used for the withdrawal of money from bank.
Quantity of Cheque
In this a/c, only 2 Cheque can be issued within a week, but stipulation is
that the total amount of these Cheques must not be exceeding Rs.15000.
Interest payment
On this account, instead of interest person receives the profit after the 6
months.
Profit and loss sharing term deposit a/c
The deposits that can be withdrawn after a specified period of time are
referred to as fixed or term deposits. The period for which these deposits
are kept by the bank ordinarily varies from three months to five years in
accordance with the agreement made between the customers and banker.
Interest is paid to depositors on all fixed or term deposits and rate of
interest varies with the duration for which the amount is kept with the
banker. The depositors are issued a receipt usually an instrument marked
‘not negotiable’.
If after the specified period, customer does not withdraw his money from
bank. Bank does not pay the profit on that amount after time. The
minimum time period for deposit in this account is 6 months.
Rozana Munafa Business Account
Rozana Munafa business a/c is profit and loss sharing a/c for sole
proprietor ship and Joint Stock Company.
Features
Facility of money withdrawal
This account is like a current account in which there is no limit of deposit
and withdrawal of money.
Calculation of profit
The profit of this account is calculated by the remaining balance of
account on daily basis.
Minimum percentage of balance
Bank has already decided the monthly minimum percentage of balance
for calculation of profit.
Extra charges
Bank does not charge extra charges for rendering the services in this
account.
Current Account
The amount are payable to the customers whenever they are demanded.
These deposits are treated as current liability by the banks. Bankers in
Pakistan do not allow any profit on these deposits and customers are
required to maintain the minimum balance.
Features
Minimum balance limit
There is a minimum balance required for the opening of this account. In
Pakistan this limit differs from bank to bank.
Payment of interest
The amount of current account can not be invested by the bank and the
bank can not give this amount as a loan and no interest payment is made
for customers.
Need for guarantee
For the opening of current account there is requirement of guarantee of
that person who has already bank account in that particular branch in
which person is going for opening an account.
Usage of Cheque
Cheque book is issued to the customers because in current account there
is no limit of withdrawal of Cheque.
Use of pass book
In current account customers make the transaction with bank often, so
bank issue a pass book to customers. It’s filled by the banker because it is
the copy of general ledger of bank.
Foreign Currency A/C
Foreign currency a/c can be opened in any commercial or listed bank in
Pakistan. Government of Pakistan has introduced many important
reforms in foreign exchange control in country in February 1990, in
which one of them reforms relates to foreign currency a/c which can be
opened in US Dollar, Pound Sterling, Deutsche Marks and Japanese Yens
in any of the authorized branches of commercial banks throughout the
country.
An individual firm and company whether Pakistani or Foreigner and
whether resident or non-resident in Pakistan can open the current, saving
bank, special notice and term deposits a/c in any of the above mentioned
foreign currencies.
This a/c can be opened and maintained singly or in the joint name and
Rupee loan facility is available against the balance held in such a/c.
Government of Pakistan has exempted this foreign currency a/c from
payment of taxes and deduction of zakat on the deposits and return
occurred on them.
The foreign currency a/c can be opened for 7 days to 3 years in shape of
term deposits. If foreign currency a/c is in the shape of saving a/c than
interest rate is calculated in minimum balances each month and which’s
payment is made after six months in same currency in which a/c is
opened.
If foreign currency a/c is in shape of term deposit than interest rate is
calculated by the instructions given by the State Bank of Pakistan, while
opening the a/c and interest rate remains same through out period.
Rupee Traveler’s Cheque
For the first time it is introduced in 1993, as a safe way to pay for high
valued purchases. The product has become extremely popular and is used
by consumers in all walks of life. Banks enjoyed a largest target market
share. It has different advantages like
Safest way to carry cash.
Can be used safely and conveniently to make all kinds of payments.
Promptly and easily encashed at any designated branches of banks.
It is preferred over cash for business and other transaction and is
readily accepted wherever exchanged.
This traveler’s Cheque has no expiry date.
If RTC’S are theft or stolen or lost, than there is surety of refund of
money.
These RTC are available in denominations like Rs.1000, Rs.5000,
Rs.10000, Rs.50000 and Rs.100000.
Credit Card
Credit card issuing is an important activity that the most successful and
modern banks are doing and generating profit from it. These cards have
two categories
Gold card
Silver card
Features
The banks have introduced the enhanced features of photograph on
the card limiting fraud in case of card loss.
These cards welcomed over 3000 outlets in Pakistan and two millionservice establishments around the world like hotels, resorts, airlines,
travel agencies, pumps, departmental stores and restaurants etc.
These cards have cash advance facility is available in Pakistan and
world wide.
Credit card is allowed to withdraw cash from any of the authorized
branches of their respective banks.
The expiry card would be renewed it the account holder wants and
deducts certain specific charges as renewal fees.
If the card is lost or misplaced, the card having same validity as the
lost card would be sent to the individual concerned as soon as written
intimation is received from him.
CHAPTER SIX
INDUSTRY ANALYSIS
Without analysis, nobody can determine whether the respective industry
is going on right track or moving toward wrong direction. So, analysis of
various factors is very important, if anybody want to the performance of
any industry. This chapter of our report evaluates some critical factors in
banking industry and helps reader to identify the various trends in
banking. In order to analyze the banking industry of Pakistan, we have
evaluated trends of following important factors which includes:
National Saving Trends
Deposit Trends
Weighted Average Rate of Return on Deposits Trends
GDP Analysis and Trends
Trends of Advances of all Banks
Currency Circulation Trends
National Saving Trend
Generally people save money when they have extra money after
satisfying their basic needs. In order to identify the national saving trends,
we have selected data for 10 years starting from 1991 to 2000 which is
shown in table 6-1.
Table 6-1:
NATIONAL SAVINGS
YEAR
AMOUNT
(Rs. million)
162572
168681
178933.7
215969.7
255513.6
303893.5
372330
458946.5
623584
714749.9
751204.9
% change
1991
-1992
4%
1993
6%
1994
17%
1995
15%
1996
16%
1997
18%
1998
19%
1999
26%
2000
13%
2001
5%
Source: SBP (Statistic Department)
In this table total amount of national saving comes from three major
saving heads i.e. Accounts (national saving centers, post offices, saving
accounts, khas deposits accounts, mahana Amdani accounts, special
saving accounts etc.), certificates (National Saving centers, post offices,
banks, defense saving certificates, national deposit certificates, khas
deposit certificates, premium saving certificates, special saving
certificates, regular income certificates etc) and prize bonds valued from
Rs. 5 to Rs. 40000. Table shows that saving is continuously increasing
from year to year. Graph 6-1 show critical trend analysis of national
saving in Pakistan.
Graph 6-1:
Cum
(%
-4%
10%
27%
42%
50%
76%
95%
121
134
139
This graph indicate that national saving is continuously increasing from
year by year i.e. from year 1991 to year 1992 there is 4% increase in
saving level and from 1992 to year 1993, 6% increase in saving and son
on. As graph show that there is continuous increase from year 1991 to
1998 but from year 1998 to year 2000, saving rate is not increasing with
the same proportion as last years. That means the saving trend in people
is decreasing in these respective years (1998=2000). So, we can say, if
this trend continue then saving of people may decrease in future.
Deposits Trends
In general, people deposits their money into banks for safety purposes
and want to earn some profit on this deposited money. Deposits of banks
indicate their performance level or reputation. That means, if bank has
more deposits then it can further invest this money and earn profit. Table
6-2 shows the total deposits for 10 years. Total amount of deposits consist
on schedule banks demand deposits, schedule banks time deposits,
resident foreign currency deposits and other deposits with SBP.
Table 6-2:
Deposits (Rs. Million)
Resident
Schedule Schedule
Other
Foreign
Total
d Bank
d Bank
Deposit
Year
Currenc
Deposi
Demand Time
s With
y
ts
Deposits Deposits
SBP*
Deposits
1993
156509
206294
61274
4449
428526
%
C
chang v
e
c
--
-
1994
1995
1996
1997
1998
1999
168554
202505
207108
192275
200997
349115
252497
296521
344713
386801
447432
516586
92134
105073
145958
222882
278556
120917
5506
5055
6791
7135
6412
6212
2000
375397
549124
112475
7959
2001
374987
610138
154154
11292
518691
609154
704570
809093
933397
992830
104495
5
105057
1
Source: SBP (Statistic Department)
This table indicate that amount of total deposits is increasing from year to
year. In order to evaluate deposits trends, please see graph 6-2 given
below.
Graph 6-2:
This graph show that deposits rate is increasing from year to year. For
example, there is 17% increase in deposits from 1993 to 1994 and so on.
So we can say if this trend continues then the banks may get more
deposits in future.
weighted average “ror” on Deposits-all scheduled banks
Table 6-3 show average rate of return on deposits of all scheduled banks.
These rate of return are only for specific deposits which include Demand
deposits, saving deposits and time deposits. Further more, ROR for time
deposits is only for accounts having maturity period 5 years or more.
17%
15%
14%
13%
13%
6%
1
3
4
5
7
7
5%
8
9%
9
Table 6-3: (% per Annum)
Demand Deposits Saving Deposits
Time Depositsa
Years
7.00
7.43
14.96
1996
6.02
7.32
14.80
1997
6.29
7.36
13.8
1998
5.47
6.25
11.21
1999
4.92
5.56
10.03
2000
Source: SBP (Statistic Department)
This table indicates that ROR on all three kinds of deposits is decreasing.
Following graphs indicate trend of ROR in more comprehensive manners
for all three type of deposits.
As indicated by graph 6-3, the ROR on demand deposits is decreasing. If
this trend continue then banks will pay minimum ROR to customers in
future.
Graph 6-3:
Graph 6-4 also indicate decreasing trend and if same trend continue the
banks will pay limited rate of return on saving deposits to customers.
Graph 6-4:
There is also decreasing trend of ROR on time deposits. That means bank
continuously decreasing ROR on time/fixed deposits.
Graph 6-5:
GDP analysis & trends
GDP of the country is continuously increasing over the years. Table 6-4
shows the three basic heads of GDP, which are agriculture, industry,
and services. Banking and insurance is part of service sector.
Table 6-4:
Total Share of Total Share of
Total Share of
Total GDP Agriculture in Industrial sector
service sector
(FC) (Rs.
GDP (Rs.
in GDP (Rs.
Year
in GDP (Rs.
Million)
Million)
Million)
Million)
Contribu
Banking
Insuranc
Service
(Rs. Mil
2480884
677531
590504
1212849
1997-98
2735943
739569
649475
1346899
1998-99
2951680
776219
672207
1503254
1999-00
797455
735494
3191813
1658864
2000-01
Source: SBP (Statistic Department)
Graph 6-6 shows the share of banking and insurance which is very
limited in the overall GDP. And we can also see from the graph the
banking and insurance share is continuously increasing.
Graph 6-6:
Table 6-5 shows the %age share of agriculture, industry and service
sector in GDP. As we see the contribution of service sector in GDP is
more than the other two sectors which is shown in graph 6-7 below as
well.
Table 6-5:
% Share of
% Share of
% Share of
Agriculture Sector Industrial Sector Service Sector In
Years
in GDP
in GDP
GDP
27.3%
23.8%
48.9%
1997-98
27.0%
23.7%
49.2%
1998-99
26.3%
22.8%
50.93%
1999-00
24.9%
23.0%
51.97%
2000-01
Source: SBP (Statistic Department)
Graph 6-7:
77297
88230
98532
107519
as earlier described, banking and insurance is a part of service sector and
it is very necessary to identify its contribution in GDP in service sector.
Table 6-6 show total contribution of service sector in overall GDP along
with contribution of banking and insurance.
Table 6-6:
% share of Service
Contribution of Banking and
Years
Sector in GDP
Insurance in Service sector
48.9%
6.4%
1997-98
49.2%
6.6%
1998-99
50.93%
6.6%
1999-00
51.97%
6.5%
2000-01
The above graphs indicate the percentage share of banking and insurance
in the service sector. Which is continuously little bit increasing form year
to year.
ADVANCES OF ALL BANKS
Table 6-7 show advances of all scheduled banks for five years which is
increasing year to year. Furthermore the graph 6-8 shows the trend over
five years.
Table 6-7:
ADVANCES OF ALL BANKSb
YEAR
AMOUNT (Million Rs.)
1996
1997
1998
1999
2000
Source: SBP (Statistic Department)
Graph 6-8:
548257.7
622607.1
680234.5
720924.4
862557.5
CURRENCY IN CIRCULATION
Table 6-8 shows the currency circulation in the country which is found by
subtracting currency held by SBP and currency held by the scheduled
banks from currency issued for each year.
Table 6-8: (Rs. Million)
Currency held by
Currency held by
Years Currency Issued
SBP
Scheduled Banks
178933
768
11301
1993
199070
624
13738
1994
232589
647
16363
1995
253908
470
19328
1996
262589
627
17821
1997
293263
1572
18769
1998
308542
1955
18870
1999
376997
1851
19468
2000
396548
1905
19198
2001
Source: SBP (Statistic Department)
Graph 6-9:
Curre
Circul
166864
184708
215579
234110
244141
272922
287716
355677
375445
Currency circulation is continuously increasing; it means that the
inflation is increasing in the country, because the SBP is issuing more
currency every year.
Biblography
1. Practice and Law of Banking in Pakistan By Asrar H. Siddiqi 6th
Edition 1998.
2. Issues in Pakistan’s Economy By S. Akbar Zaidi 2nd Edition 2000
Published By Oxford University Press.
3. Nizam-e-Bankari By Khadim Hussain Published By Naveed Publisher.
4. Statistic Bulletin Sept. 2001 (Statistics Department of SBP).
5. Monthly Economic Letter Vol. 28 – No. 3 & 4 March – April 2001
Published by the Economic Research Wing, NBP.
6. Monthly Economic Bulletin vol.28, No. 11-12, Nov-Dec, 2001
published By Economic and Business Research Wing, NBP.
a All the rates are of “five years TD” and over.
b These advances are of all schedule banks which are given on different
size of account starting from Rs. 1,000 to Rs. 10,000,000 and over.