BoP contribution to province economy lesser than potential

KARACHI: The contribution of Bank of Punjab (BoP) to economy of province is lesser than its potential because of manoeuvring of the government and misuse of funds by political entities.

Shahid Hussain Siddiqui, a renowned economist and banker in a programme ‘Aap Aur Karobaar’ with Khalil Ahmed on Business Plus TV highlighted half year performance forecasting the bank will continue to show profitability in the remaining half of the same calendar year.

The profit of bank depicted by balance sheet is doubtful due to influence of the provincial government for past many years, which transferred Rs two billion to bank from the government’s and used for its purposes.

The bank profits was not generated but created in the balance sheet, which shows a rosy picture despite of the fact commercial bank was audited by management, its board of directors, independent auditors and central bank. However, the bank’s approach to lend advances is good compared with big banks actively involved in investing in government papers, he said.

The government advances have increased to Rs 25 billion in the half year to stand at Rs 195 billion, whereas it investment saw an increase of Rs 16 billion to stand at Rs 170 billion.

The provincial government is not investing blindly, but cautious, however, it is lending loans to its customers which is good omen and ideally to be replicated by commercial banks of different tiers.

The central bank should make it mandatory for banks including Bank of Punjab to increase its advances to 30 percent of its deposits to various sectors and customers mainly to establish commercial banking in the country for benefiting to economy.

In case of bad debts, the central bank should compensate 50 percent of the losses, which was earlier done by the banks in the past, he mentioned. Banking Industry having Rs 247 billion of deposits gives minimal of four percent profit to its depositors at present, but the profit was six percent in the past when Banking Industry’s deposit touched Rs on billion mark, Hussain recalled. The bank showed Rs 46 billion losses, which portrayed its quality of assets is not favourable with less chances of recovery of loans, he said.

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