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Privatisation and banking.

Privatisation, internationalisation and deregulation of economies of countries are current themes which have wide coverage in today's world. Out of five nationalized commercial banks, Muslim Commercial Bank was the first to be privatised on April 8, 1991. Allied Bank of Pakistan (ABL) was handed over to workers on September 10, 1991 as part of privatisation policy of the Government of Pakistan. On January 1, 1974 it was nationalized and taken over by the Government of Pakistan. After remaining in Government control till September 9, 1991, it was handed over to workers under the world renowned ESOP scheme.

Privatisation, internationalisation and deregulation of economies of countries are current themes which have wide coverage in today's world. Pakistan has joined this race with sincerity and dedication. Out of five nationalized commercial banks, Muslim Commercial Bank was the first to be privatised on April 8, 1991. Allied Bank of Pakistan (ABL) was handed over to workers on September 10, 1991 as part of privatisation policy of the Government of Pakistan. ABL is celebrating its first golden jubilee. It has the unique feature of being the first Muslim Bank set up in 1942 in Lahore. Its journey has been very interesting. On January 1, 1974 it was nationalized and taken over by the Government of Pakistan. After remaining in Government control till September 9, 1991, it was handed over to workers under the world renowned ESOP scheme.

Achievements

ABL has achieved greater heights and it has released several figures which speak for themselves. From the available statistics it is obvious that rapid increase has been registered in key areas such as deposits, advances, and pretax profit. Business has grown in areas such as industry, home remittances and imports and exports. Foreign currency deposits have also registered sizeable increase. The number of customers as clients is also increasing. One year period is too short to firm up an opinion. However, the trends are positive.

Innovative Initiatives

It would be interesting to review innovative initiatives taken by ABL for achieving the above measure of success.

1. Given the freedom to operate, the leadership of ABL got energised and positive traits of leadership have been translated to its advantage.

2. ESOP concept has been introduced and has been instrumental as a motivational force for employees.

3. Synergy has been used as an effective and driving force for growing success.

4. Concrete steps have been taken to internationalise ABL with steps to open branches in UK, to explore the possibilities for opening branches in Far East, USA and Oceania.

5. Linkages have been established with Central Asian States i.e. Tajikistan and Uzbekistan.

6. Decentralisation has been given a genuine chance to serve the system.

7. Despite fall in inward remittances of Pakistan, ABL has assisted in greater receipt of inward remittances mainly due to efficient and home delivery service.

8. Computerization and efficient communication has been operationalised.

9. Customer has been respected as a "King" for service.

10. Attention is being made to small business and clear intentions are growing to serve the unorganised sector.

Key Challenges

We, in Pakistan, have gone a long way to grow and develop our banking infrastructure and its services. However, there should be no room for complacency. We still have to achieve bigger heights and add golden chapters to our banking history. Key challenges to our linkages sector are as under:

1. Socio-Economic Challenges: Pakistan is in search of a socio-economic order which should suit its needs and be based on Islamic Principles of justice, equality and brotherhood. In this respect excerpts from the speech of Father of Nation, Quaid-e-Azam Mohammad Ali Jinnah, which he delivered on July 1, 1948 on the auspicious occasion of the inauguration of the State Bank of Pakistan are quoted below:

"The economic system of the West created almost insolvable problems for humanity and to many of us. It appears that only a miracle can save it from disaster that is now facing the world. It has failed to do justice between man and man and to eradicate friction from the international field. On the contrary, it was largely responsible for the two world wars in the last half century. The western world, in spite of its advantage of mechanisation and industrial efficiency, is today in a worse mess than ever before in the history. The adoption of western economic theory and practice will not help us. In achieving our goal of creation a happy and contended people we must work our destiny in our way and present to the world an economic system based on true balance and concept of equality of "Manhood and social Justice".

2. Coverage: Despite the existing banking infrastructure, a vast sector of our country is still non-monetised. The challenge to monetise needs to be met, This will facilitate documentation and bring conspicuous discipline in our society.

3. Rural Area: Banking in rural area is generally for a limited number of hours. A special breed of innovative bankers need to be stationed in rural areas to demonstrate viberance and variety of services in rural areas and accelerate the pace of rural development. Grameen Bank of Bangladesh can serve as a beacon of light for us in Pakistan.

4. Socio-Economic Challenges: Banks have rendered enough traditional and text book services. The need now is to address the socio-economic challenges and translate these into solutions.

5. Credit Facility to Unorganised Sector: Unorganised sector is fairly large in our country. Hardly any five year plan in Pakistan addressed this issue. The down trodden, the impoverished and the low income groups continue to be ignored. Though large in number, vested interest enjoys the luxury of their neglect. This sector makes considerable contribution to our economy. Their role in self employment is laudable. Their enriched effort for increase in gross domestic product (GDP) deserves appreciation. In recession their role of absorbing shock is remarkable.

Banks should allocate identifiably substantial amount, create sound organizational framework, distribute credit, ensure recovery and show demonstrated results of wide spread prosperity and economic growth.

6. Employment Generation: For the last several years, there is a ban on the employment in Government, public sector and autonomous bodies. This shows in tangible terms the result of our planning. It is quite clear that we are planning for not generating employment in our country. How long shall we continue in this dimension?

Employment opportunities need to be created to ensure participion of talented youth. Our banks have made humble start for self employment. We could learn from the rich contribution of canara Bank of India in the exemplary efforts of self employment. Banks should respond to this challenge.

7. New Products: Product improvements, adaptations and innovations are three dimension of marketing efforts. The current list of products being offered as service is too short. Banks need to improve the existing services, adapt the newly developed ones abroad and introduce creative and innovative products. For this, R & D be institutionalized. Financial commitments be ensured. Pyramid approach to organisational structure be operationalised.

8. Evaluation: There is a need to innovate an instrument for evaluation of the performance of banks. The already announced Charter for Banks (1987) and Key Performance Indicators (KPI) can serve as guide to develop the instrument for evaluating the performance. Qualitative and quantitative indicator be used. Some effort be made to quantity the intangibles.

9. Management Information System (MIS): At present MIS is in operation in all banks but the hope is to have a comprehensive MIS. Practical steps need to be taken to implement this aspect so that appreciation of the situation is known in a proper perspective and decision making continues to improve for achieving three Es namely Economy, Effectiveness and Efficiency.

10. Works Simplificatio: Moginson's Model of Work simplification consisting of Five Step Pattern need to be operationalised. These steps include:

1. Pick up an important problem

2. Break it down in detail

3. Question each detail

4. Development of a better way.

5. Install it.

Banking services can be significantly improved if the above conceptual model is operationalised to the advantage of customers.

Conclusion

Small is beautiful. This aptly fits with ABL. Struggle to beautify and extend the benefits to customers and economy is on and the hope is that ABL's contribution will stand out outstandingly in terms of service. It is hoped that the vision of the Prime Minister of Pakistan, Mian Mohammad Nawaz Sharif, will crystalise in reality. While handing over ABL to employees he said: "One day ABL shall be number one bank of Pakistan".
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Title Annotation:Pakistan
Author:Saeed, Khawaja Amjad
Publication:Economic Review
Date:Mar 1, 1993
Words:1419
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