950806

Commercial banks not

geared to manage loan

issue, project finance

NISAR AHMAD SHEIKH

ISLAMABAD: Chairman Pakistan Banking Council, Mohammad Ahsan has pointed out the deterioration that took place in the banks loan portfolio and more specifically in the project finance because the commercial banks were not geared to take on this responsibility and were asked by the government to provide long term capital asset financing in the greater national interest.

He was presenting the address of welcome to the Governor State Bank of Pakistan, Dr Muhammad Yaqub at the concluding ceremony of World Bank sponsored programme on project appraisal and monitoring at the National Institute of Banking and Finance here on Sunday evening.

He said, the heat of the government decision could not be felt unless huge accumulation of non-performing loan portfolio appeared on the record causing serious dilution in the banks profitability and liquidity upto the extent that their survival was in jeopardy. At a very later stage, he added, it was realised that necessary capability does not exist in the commercial banks and therefore something should be done on war footing to improve their analytical and credit management capability.

He said that when the IDA and other credit lines from international lending agencies were made available to Pakistani financial institution, PBC assumed the role of apex institution and provided necessary technical assistance to banks and DFIs. With whatever resources available to PBC, it tried to avoid costly mistakes and at least to obstruct further deteriorating in the banks loan portfolio. Technical assistance available along with IDA and other credits was effectively used by the PBC to train bankers and to prepare them for taking on greater responsibilities. The process so initiated is progressing well and has entered into a new era with the completion of the prestigious National Institute of Banking and Finance.

He said that bankers are required to be updated, groomed, developed and brought to the international standard so that they could compete with the emerging innovative and aggressive private sector banks as well as international bankers. This awareness is now gaining momentum and therefore PBC deemed it appropriate to establish a training institute with international standards. It is a matter of gratification that the World Bank, after inspecting facilities available at NIBAF, has agreed to pass on the responsibility to NIBAF to deliver courses on project finance during the current calendar year. They are continuously reviwing NIBAF's performance and are willing to consider greater cooperation with this well managed institute.

Paying tributes to Dr Yaqub, the PBC chairman said, "We fully appreciate your vision and untiring efforts to bring most desired discipline in the financial sector and also to contribute effectively towards the growing economy of Pakistan. Your efforts in this direction are highly laudable and we are willing to extend all possible assistance in this regard. NIBAF and PBC look forward to your guidance and effective participation in their endeavour to bring qualitative change in the banking scene."

Earlier, the NIBAF Secretary, Muhammad Riaz Khokhar in his address spoke about the establishment of the NIBAF and said that NIBAF is a private company, limited under guarantee and incorporated under the Companies Ordinance, 1984 and is intended to be the apex academic institute of financial services industry in Pakistan with a firm commitment for growth and development of human resources of the financial sector in Pakistan as well as other financial and non-financial institutions of the region.

Riaz Khokhar said that the institute spread over 2.5 acres of land acquired from CDA through the UBL, has been built with the financial assistance of the five member banks under the aegies of PBC. The chairman PBC is the chairman of the board of directors and other directors include a member from PBC and presidents of five nationalised/privatised commercial banks.

The building consists of 3-storey hostel block housing 124 single bed rooms with all modern amenities, administrative block, 4 class rooms, 4 syndicate rooms, and auditorium. There is a Computer Lab with 25 PCs linked up with LAN system, a mock up branch and a library which will contain large number of books on banking and finance.

Talking about the aims and objects of the institute, Riaz Khokhar said the institute is to offer a veriety of training programmes in diversified multi-disciplinary fields of banking and finance. The institute designs courses and programmes to meet the specific needs of financial institutions in the areas of international trade, corporate financing, human resources development as well as commercial banking. Plans are under way to make the institute a viable project by establishing chairs in the name of banks DFIs and NBFIs and creation of endowment fund.

About the activities of the institute, he said, these included the organisation of basic banking courses for newly recruited officers, designing seminars, conferences, symposia, workshops on issues of contemporary interest to banks and publish papers read in these fora, conducting training programmes in collaboration with privat/public sector training institutions/professional organisation, conducting courses which may be made pre-requisite for promotion from officer Grade-1 through various stages upto senior executive vice-president, promoting and conducting reasearch on all aspects of FSI (financial services industries) operations, providing consultancy and other advisory services to banks, DFIs, NBFIs, government and other institutions on issues relating to banking, offering banks and NBFIs middle management fast track programmes for those executive who have quality and potential for higher responsibilities and seeking assistance of donor agencies for conducting seminars/conferences in collaboration with them for banks employees as well as nominees of aid giving agencies from abroad or by their respective governments/institutions as well as offering specialised courses for top management of banks and NBFIs.

Riaz Khokhar said that besides functional training it is also envisaged that NIBAF will conduct bachelors' and master's degree programmes in affiliation with a well reputed Pakistani or foreign business school/university. It is hoped that in due course NIBAF will be a centre of excellence in this region in the field of banking, education and research.