Sind Bank and Public Money

President Asif Ali Zardari here on Sunday December 26, 2010 inaugurated the Sindh Bank branch in Naudero. Government of Sindh initial investment Rs. 10 billion in the Sindh Bank.
The purpose to establishment of Sindh Bank is very promising but the analyst of banking industry said that this project could add a new chapter in the financial scams of political history of Pakistan. In recent past proved that governments whether it is federal or provincial they failed to run financial institutes. Bank of Punjab and Bank of Khyber are the currently examples of poor administration. Last 2 governors of central bank are forced to leave their posts not to issuing license for the Sindh bank.


Bilal Shakh Sindh bank President told me that this bank initially one branch each of the Sindh Bank in the 23 districts of the province whereas two branches each would be set up at the
divisional headquarters. As many as 19 branches of the Sindh Bank will be established in other parts of the country. According to him Sindh Bank create about 1000 jobs including woman form the sindh province. Sindh Bank main focus including the agricultural , consumer loans, microfinance and seasonal advance for the crops.


In recent past we saw the rise and fall of Punjab bank. The president of the bank and some the culprit is behind the bar and Supreme Court is hearing the case. The president Hamshah Khan joined hands with Punjab based politicians and gave loans which very clearly showed that they will not return due to which the bank faced financial crunch. Punjab bank balance sheet reflect bank bleeding very badly. Banks non-performing loans raised up to Rs.42.7 billion on Dec 31, 2008, from Rs.3.3 billion a year ago. Market masters fear that NPL‘s could rise further if bank issue current accounts. But Stat bank support allow BOP management not to public its accounts, it means that banks still not good condition. To save BOP Government of Punjab provide its guarantee to stat Bank for the pumping Rs.10 billion in the bank, but it is not able to save itself and BOP still bleeding. Chief Minister Punjab Shahbaz Sharif will have to pump more tax payer money to salvage sinking BOP.
Like Punjab bank The Bank of Khyber in trouble waters. Khyber Pakhtunkhwa government set up bank with the tax payer money. But the Bank of Khyber (BoK) is facing the worst financial crunch of its history – thanks to ‘bad governance and poor management practices. Bank started bleeding at the end of MMA government and this could not stop after the take over of ANP-PPP coalition government in Khyber-Pakhtunkhwa. Current provincial government present a summery in Economic Coordination Committee (ECC) has sought immediate release of Rs3 billion loan on the similar grounds the Stat Bank of Pakistan bail out Bank of Punjab.
Poor management of these two banks rises many questions regarding the role of Stat Bank of Pakistan. It remains silence when these provincial financial institutes are falling. These financial scams damage central banks authority as regulator. Some private bankers said that due to political reason central bank reluctant to move against government financial institutes. And let them bleed with poor governance. And not able to make government funded banks to follow its rules and regulation. And let them bleed with poor governance.
After unearth the poor management of provincial banks central bank resist to issuance the license to Sindh Bank. After the take over Sindh government by PPPP and Syed Qaim Ali Shah become Chief minister of province. An application was moved to establish Sindh Bank by PPP-MQM led collation government. After the bead experience in BOP and BoK Stat Bank not in favor to issue another banking license to a provincial government. In the punishment of this refusal Shamshad Akther ex governor stat Bank not got extension for an other term and Sayed Saleem Raza forced to resigned form the post of governor Stat Bank.
Abdlu Hafeez Shakh minister of finance told many times when he was privatization minister that government has no business to do the business. As minister finance he privatize many financial institutes’ which are very badly manage and tax payers paying the cost of these banks. In recent past HBL, UBL, ABL, MCB and other government run banks book heavy losses. On political grounds these banks give public money with out any due diligence. Banks forced to write off hundred of billions rupees loans because they are not able to recover. Government have to rescue these banks on the cost of public development. Poor financial condition forced government to sell these national assets on through away price. After the privatization of banking industry flourished very fast and it is a pillar of country.

A bank in the owner ship of provincial government was an old demand of the business community of Karachi. Leaders of business community persuaded previous Chief Minister Arbab Ghulam Rahim for Sindh Bank. But Arbab Ghulam Rahim not interested to set up provincial bank. His opinion that government must not enter any business which it could not able to run. But on the continues pressure ex Chief Minister agreed to set up a micro finance bank. Business community refused the idea of micro finance bank. After a renewed business man Zubar Moti Wala become advisor of Chief minister. He accelerated the setting up of the Sindh Bank. In the current year budget Sindh Governmetn allocate Rs. 2 billion as the paid up capital of Sindh Bank. And on the demand of central bank they add up Rs.8 billion more for the bank.
In the light of previous experiences of poor management financial institutes by the governments. And in the current era problems of BoK and BOP rises many question about the performance of the Sindh Bank. And in future we could hear news about scams in Sindh Bank on political grounds.

Sindh Bank starts its operations and in few weeks we see branches across the province its seems very difficult for the management to run the bank without any political interference. This bank has no cover of provincial assembly and established with an executive order. This provides executive authority the powers to mold banks business any where he wants with out any approval of assembly. Provincial government accounts and tax payment transfer to Sindh Bank. Financial down turn of bank could create problems for province. .
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