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banking and financial sector inherited by Pakistan at Partition


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banking and financial sector inherited by Pakistan at Partition

  1. 1. Abdul Rehman Amin Kashif Sanaullah Abddullah Khadim Hussain Muaz Attique Ali Virk
  2. 2. Before partition  Pakistan had 631 offices of 45 scheduled banks.  19 branches of foreign banks. After Partition  Schedule banks declined to 195  Revenue budget of west Pakistan was 60% at the time of partition.  In 1948-49 revenues of west Pakistan were Rs. 172 Million  After the partition Muslims owned only two bank namely Habib bank limited. Australasia bank
  3. 3. Before independence, Reserve Bank of India was the central bank of sub- continent. On 30 December 1947 the British Government's commission distributed the Bank of India's reserves between Pakistan and India - 30 percent for Pakistan and 70 percent for India.
  4. 4. Muslims demanded that Pakistan Government should appoint deputy governor of Reserve bank. Provision should be made for the expansion of the currency required by Pakistan matters concerning Pakistan, the Bank should consult the Pakistan Government
  5. 5.  On May, 1948 Muhammad Ali Jinnah took steps to establish the State Bank of Pakistan.  Under act of 1948 state bank is empowered to give directions to scheduled banks.  Guarding the interests of depositors and ensure functioning of commercial banks  Under banking ordinance the state bank can inspect any bank  Can order changes in the management of a bank.
  6. 6. First duty of state bank was the replacement of pre partition currency. Return of Indian notes to the reserve bank and receive equivalent assets of Rs 515.7 million Second task of state bank was to assist the restoration of commercial banks. First officers training was launched in August 1948.
  7. 7. Defense expenditure increased sharply as relations with India decay. Over burdened railways and high fuel cost Income tax collections were half than expectation New taxes imposed in the budget of 1948- 49
  8. 8. East Bengal obtained 2/3rd of the population of undivided Bengal but enjoyed 1/3rd of revenues. The award of arbitral tribunal West Pakistan revenue budget was 60% of the undivided Punjab The financial position of Sindh was weak At the time of partition N.W.F.P was the poorest province
  9. 9. The imperial bank is now the state bank of India. Formed by the amalgamation of three banks. The bank continued to function in Pakistan for the reserve bank of India. 19 outlets after partition
  10. 10. National Bank of Pakistan which was established in 1949 to finance jute trade in East Pakistan. It started with six offices in the former East Pakistan
  11. 11. Karachi Stock exchange started in 1947 Exchange provided a market place for securities and equity issues of public. Had only 9 members at the time of partition. Securities market was non existent at the time of partition. State bank laid down the procedures of sales and purchase of government policies.
  12. 12. 250 companies operating before august 1947 Only 76 companies were operating after partition and only 8 were Pakistani companies. Superintendent of insurance, government of India administered the working of insurance companies. Deposits were reduced by 50% to encourage the companies to register.
  13. 13. Department operates life insurance for the government employees. After Partition the government assumed responsibility for 10000 policies at Rs. 9 million.
  14. 14. Served only as deposit institution. Account can be opened with minimum deposit of Rs. 2. The rate of interest varied from 1.5% to 3%.
  15. 15. The corporation was setup in June 1949. It assisted industrial concerns. It was established to assist refugee. The corporation advanced loans amounting to Rs. 16.9 million. Pakistan refugee rehabilitation finance corporation