Articles of the year 2005

The Banker
Published on January 17th, 2005

Hooray. The Governor of the State Bank of Pakistan Dr.Ishrat Husain has been voted the State Bank Governor of the year for South Asia by Banker magazine. We were rightly proud. However in the same newspaper a columnist points out that "Pakistan got a black eye as the worst performer in South Asia. Even the quality of life in Bangla Desh is better than in Pakistan according to a UN report" There is something very wrong here. As a supporter of the Banks he is doing a fantastic job, but if he is to be judged as the formulator of Banking policies which benefit the Pakistani he has fallen far far short. Allen Greenspan –the Guru of the US reserve Bank. manipulates the interest rates to adjust basically two indices. Economic growth and -----Unemployment. In Pakistan, Growth is touted at a hefty 7% while the unemployment figure is not mentioned. It should be noted that 10,000 people are falling BELOW the poverty line daily. I wonder if the people who constitute the voters in Banker magazine are aware of this fact. But Bankers are noted for their indifference to the plight of the poor, hence the name hard hearted banker. The Stock Market is also being touted as the most dynamic in the region and the best performing in the world, in fact on one trading day the share turnover was 1.2 Billion shares. This is phenomenal, considering the Wall St turnover is an average of 900 million shares. When you see the number of companies listed and traded on Wall St, literally thousands, and the number traded daily in Karachi are basically only 12 shares give or take a couple--- something is drastically wrong. Or are we the public so stupid? The Ayub regime created the 22 families, here, we are looking at six new families who overshadow what's left of the 22.

This new breed of businessmen have one quality that is outstanding. They understand money, deal, trade, work and play with it. They are not of the Black market, smuggle, bend the rules, use the SRO, type. They are making it straight, and best of all nobody is being hurt. They have succeeded in putting together large fortunes which they will now channel into Industry. This will create jobs which is the need of the hour.

The Governor would do well to reconstitute his Prudential regulations, for in their present state they do not allow a Bank to lend money to a newcomer regardless of the Collateral offered. The rules for an individual borrower require the Cash flow of 3lacs / month and property worth 3 Crores to borrow 1 crore. How many newcomers can show 3 Lcs / month as nett salary. How many persons in Karachi can show a nett salary of 3 lacs? …… And so we will end up with a huge number of properties throughout the country unmortgaged, and budding entrepeneurs living in their parents mansions with their ambitions as mere dreams. This vast pool of talent must be tapped which at the moment is either underemployed or unemployed, either way it is a cause for trouble and social strife. They should be given the opportunity to enter the business mainstream and be given a helping hand , not that their life should be made more difficult than it already is. In other countries Venture Capital companies exist to offer just this opportunity. He will in any case have a hard time succeeding, for in business only 40 % success rate is very good. The other 60 % will have to try again, but new tycoons will have been created.