TOPICS:1) PRIVATIOZATION OF BANKS. 2)NATIONALIZATION OF BANKS

PRIVATIZATION OF BANKS:

Privatization is the process of involving the private sector in the ownership of state owned enterprises.

In the words of chris cook: privatization means selling of

nationalized industries of the public sector or private business & individuals.

PROCESS OF PRIVATIZATION OF BANKS

Bank nationalization Act 1974 was amended in 1990 which empower the government of Pakistan to privatize the nationalized banks.

Bank nationalization Acct 1974 was future amended on 20th january1991 to empower the state bank of Pakistan to issue license for the opening of new banks in private sector.

ESTABLISHMENT OF NEW BANKS:

The bank nationalization act 1974 amended on 20 January 1991.empowered the state bank of pakistan to issue the licenses for the establishment of new commercial banks in private sectors .

RULES FOR ESTABLISHING NEW BANK IN PRIVATE SECTOR

The proposed bank must be a public ltd company .

Bank must be listed on stock exchange of the country.

At least 20% of shares must be offered to general public.

Bank must have a minimum capital of two billion.

The directors of the bank will not be allowed loans for themselves

Bank will play an effective role in mobilization of savings.

Bank will have to abide by the instructions of the State Bank of Pakistan.

Bank will concentrate their branch network in urban areas.

Bank will provide quick & efficient services to the customers.

RULES OF PRIVATE SECTOR

OBJECTIVES OF PRIVATIZATION OF BANKS

:

Better standard of services Promote healthy competition Improvement in performance Quick decisions Development of capital market Increase in deposits Security of loans Releasing political pressure

ADVANTAGES : Improvement in performance Better standard of services Decrease in expenses Increase in deposits Secured loans Decrease in defaulted loans Reasonable profit Productive loans Quick decisions Economic development

DISADVANTAGES:

Neglecting small industries Neglecting agriculture sector Lack of co-operation Misuse of loans Profit motive Malpractices Unhealthy competition Control of big capitalist Protection of black money Concentration of wealth in few hands

NATIONALIZATION OF BANKS:

In early years of history of Pakistan the banks were going well …

But it was felt that the banks do not provide the funds towards the mostly needed sector of economic.

keeping this situation the banking business in Pakistan was nationalized on 1st January 1974,under bank nationalization act 1974.

i. National bank of Pakistan(NBP)ii. Habib bank limited(HBL)iii. United bank limited(UBL)iv. Muslim commercial bank(MCB)v. Allied bank limited(ABL)

CATEGORIES

OBJECTIVES OF NATIONALIZATION OF

BANKS

Credit for agriculture sector Controlling unproductive

expenditures Professional management Credit for small enterprises

REASONS:

Control of big capitalists Neglecting small industries Neglecting agriculture sector Lack of co-operation Misuse of loans Malpractices Unhealthy competition Protection of black money Profit motives Overseas branches

ADVANTAGES: Fair distribution of credit Financing agriculture sector Facility for underdeveloped areas Control non-development

expenditure Control of malpractices Security of depositors Security of advances Price stability Uniform policy

DISADVANTAGES: Low efficiency of bank employees Poor service standard Political interference Favoritism Rise in price Unhealthy distribution of credit Increase in expenses Poor recovery of loan Decrease in profit Low competition

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