Governor State Bank Search for yes man

Governor State Bank Search for yes man 

The resignation and early departure of Syed Saleem Raza Governor State Bank of Pakistan , is another example of PPP led government is not ready to bear independent institutions. President Asif Ali Zardari searching yes man for the post of governor of central bank.

After sad departure of Banazir Bhotto PPP lose the direction in every field but in the field of economic their failure is written in the bold letters. Since banging of Prime minister Yousaf Raza Gallani led government (PPPP) gave the less priority to the economy of the country. First he borrowed finance minister from PML (N) and Ishaq Dar took charge of financial team. In less than three years they brought 4 finance ministers. Shaukat Train before leaving his office informed government to find his replacement months before,. But PPP failed again to find any suitable person for this post they forced to higher Mushrraf’s ex minister Abdul Hafeez Shaikh as finance minister. Abdul Hafeez Shaikh who took oath as minister hours before his budget speech. This show the irresponsible attitude towards the most important area, economy, of the politics and country.


In the modern economic era the role of central bank is more important than the ministry finance. All the daily basis economic decisions are made by or with the consultation with central bank. The Central bank of any country have mandate to maintain the macroeconomic indicators. To do this job efficiently central banks have given constitutional support and independence. Even political governments are not able to interfere in their working. In their reports they showed true picture of the economy of the country. In many cases central banks criticize government polices to deal with economy. In Pakistan central bank become more independent in 1993 when Dr. Yaqoob took over as governor State Bank of Pakistan. Than Dr. Ishrat Hussain took charge for six year after him Dr. Shamshad Akther took control the central bank as Governor. All of these are development economists and had working experience in the world bank, IMF or in Asian Development Bank. Their capabilities made State Bank of Pakistan a strongest institution and regulator.



When political power shifted from Pervez Mushrraf to democratic forces the command of central bank was in the hands of Dr. Shamshad Akther. She remain governor SBP till Jan 2009. She has blood relation with Asif Ali Zardari from her mother side but close relationship does not work and her re appoint as Governor of central bank for the second term was decline by President. People in government said that Shamshad Akther was very strong and had criticize government economic polices, and decline many unlawful orders of government officials. Due to her aggressive criticism and refused obey unlawful demands she faced strong position and people in power tryied to dismissed her from the post. But due to constitutional protection this idea was dropped. To counter her Shaukat Train a banker appointed as finance advisor to Prime minister Yousaf Raza Gallini. Differences of Shamshad Akther and Shaukat Train was very clear. As banker Shaukat Train faced very hard time in front of Shamshad Akther.
Historically PPP dose not have very good relationship with central bankers. In 1971 when Pak indo war broke out and it was eminent that we would loose East Pakistan. Zulfikar Ali Bhutto, the founder chairman of PPP asked S. U. Durrani, Governor State Bank of Pakistan to shift assets for East Pakistan to Western part. S U Durrani refused to do so. When Dakha fall and ZA Bhutto took over as civilian Chief Marshal law administrator, one of his first step was to sacked SU Durrani from his post and send him Jail.

When Benazir Bhutto daughter of ZA Bhutto came in power she did the same with the central bank. On the appointment issue a rift was developed between government and IA Hanfi Governor Stat bank at that time. I A Hanfi forced to quit the office. A non deputy governor SBP Qasim Parekh given charge as acting governor SBP. People says that Asif Ali Zardari was behind that frit. When Banazir Bhutto government dismissed I A Hanfi restored on the job governor of state bank.

The appointment of Syed Saleem Raza as governor State Bank was controversial. According to SBP law he was over age and does not have any experience of the development economy. Due to his friend ship with Shaukat Train finance advisor at that time Saleem Raza was given the key post of economy. Saleem Raza had very strong roots in Pakistan ruling elites. His father Hashim Raza was the first commissioner of Karachi after independence of country. His younger brother Ali Raza is the president of National Bank of Pakistan since 2002. Critics say that Syed Saleem Raza was only a commercial banker. He had no experience to deal macro economy. This type of person is suites Shaukat Train that he a person who could fulfill his needs and Saleem Raza was the obvious choice as governor State Bank.
Shaukat Train and Saleem Raza give many consation to the banking industry and save them from hard laws drawn by Dr. Shamshad Akther and Dr. Ishrat Hussain. Saleem Raza took no action against the 13 banks who failed to raise their capital up to 6 billion till 30th December. And he also give relaxation the paid capital limit for future. Dr. Shamshad Akther set the minimum capital limit up to 23 billion till December 2013 . This increased in paid up capital that led the banks for the merger, due to that only few large banks could survive. Saleem Raza further relaxed banks capital limit and allow to raise their capital up to 10 billion rupees by 2013. He stop consumer protection department not to take stiff action against banks who are violating SBP laws. Saleem Raza allow banks to avail 40 percent force sales benefit. And banks do less provisioning against non performing loans and able to show profits in their books.
After the departure of Mr. Train and arrival of Abdul Hafeez Shaikh as finance minister, Saleem Raza become shelter less. He had to face hard time in National Assembly standing committees, and in the negotiation with IMF. People in power says that Saleem Raza refused obey some wishes of President AA Zardari. Refusal of Sindh Bank license and sale of Royal Bank of Scotland to Sindh Government are some wishes which Saleem Raza not able to fulfill.

From the above explanation and examples one could think that why central bank is so important for PPP and most of the time when they came in power they had some kind of rift with the central bank or its Governor. As I wrote earlier that central bank in any country controls its economy. Any payment in or out form the country go through the central bank. It is the watchdog of financial industry and take care every day matters of banks and DFI’s. Control of the central bank means economy and business of country is in your hands. Departure of Saleem Raza, the full time governor SBP post is empty and deputy governor SBP Yaseen Anwar is working as acting governor of central bank. According to the law only 3 months government is bound to appoint a full time governor. For this post ex governor SBP Dr. Shamshad Akther , Zubar Soomro an ex-city Banker with strong political back ground in sindh and Yasin Anwar current acting governor in the race to get appointment as Governor SBP.
After the experience of Saleem Raza now government especially President Asif Ali Zardari is looking for yes man as Governor SBP. Who can the fulfill all wishes of government. Give a good picture of economy and safe guard of the business interests of people in power.