Fed cabinet rejects proposed IDBP’s restructuring

Federal Cabinet has rejected the proposed restructuring of the Industrial Development Bank of Pakistan (IDBP) into a company Industrial Development Bank Limited (IDBL) and after due deliberation and discussion, has decided to start the process of winding up the troubled bank.

During a meeting of Federal Cabinet chaired by the Prime Minister Syed Yousaf Raza Gilani on Friday, official sources informed that IDBP is facing Rs 28 billion losses due to sanctioning of huge loans against fake collaterals and less than the actual value of the loan—which would be recovered by selling of the IDBP’s assets across the country.

NBP Act to be amended

The State Bank of Pakistan (SBP) has planned to get the privatisation of state-owned National Bank of Pakistan completed after its corporatisation and major changes to the National Bank of Pakistan Act.

At present, 23.2 per cent shares in the bank are being traded on the three stock exchanges of the country. The federal government holds remaining shares in the bank.

The NBP, which is the only commercial bank of the country which enjoys sovereign guarantee of the government of Pakistan, was established in the 50s to finance the government’s commodity operations and handle accounts of state-controlled entities. In its latest financial sector review, the State Bank said it had been mandated to conduct the sale of another state-run bank, the Industrial Development Bank of Pakistan (IDBP).

SBP creates 4-tier administrative system

The State Bank of Pakistan on Thursday announced creation of new four-tier administrative system.

The new administrative system of the central bank will create financial markets and reserve management cluster under which there will be a banking finance group, which will focus on high priority credit sectors such as infrastructure financing, housing finance, Islamic banking, SME and microfinance.

Governor SBP for the last few months has been trying hard to start infrastructure financing in the country and in this regard it is expected that state-controlled Industrial Development Bank (IDBP), by turning it into new banking entity, will be sole financial institution for infrastructure financing in the country.