PPT on Commercial Banks History, and their merging and foundation

1. Presented By:-
Muhmmad
Shujaat
Naveed Ibrar
Abbasi
Usman
Mahmood

2.  A bank is a financial institution licensed to receive deposits and make
loans.
 Banks may also provide financial services, such as wealth
management, currency exchange and safe deposit boxes.
 There are two types of banks: commercial/retail banks and
investment banks.
 In most countries, banks are regulated by the national government
or central bank.

3.  “A Bank is a financial institution which accepts money from the public
for the purpose of lending or investment repayable on demand or
otherwise withdraw able by cheques, drafts or order or otherwise.”

4.  Commercial Banks are companies which transact the business of
banking in Pakistan
 Operates Under Banking Companies Ordinance 1962 section 5(b)
 A commercial bank is an financial institution which serves as a
mechanism for transmission of money and as a financial intermediary.
 Provide services to Individuals, Small Businesses, and large
organizations at their perspective levels

5.  Borrowing, raising or taking of money,
 Lending or advancing of money
 Deal in Securities which are transferable or negotiable or not
 Buying, Sealing, Collecting and dealing in bills of exchange,
Promissory Notes, Drafts, Finance Certificates, Cheques etc.
 Buying and selling of foreign exchange include foreign banks notes
 Underwriting and dealing in stock, funds, shares, Bonds,

6.  Providing of finance
 Acting agents for Government or Corporate or any local
authority
 Acting as “Modarba Company”(Ordinance 1980)
 Contracting for public and private loans
 Purchase or acquisition of patents, trade marks, designs,
copy rights, or any property

7.  National Banks of Pakistan
 Habib Bank Limited
 Habib Bank(overseas) Limited
 United Bank Limited
 Muslim Commercial Bank Limited
 Commerce Bank Limited
 Standard Bank Limited
 Australasia Bank Limited
 Bank of Bahawalpur Limited
 Premier Bank Limited

8.  Pak Bank Limited
 Sarhad Bank Limited
 Lahore Commercial Bank Limited
 Punjab Provisional Co-operative Bank Limited
Note:-
At time of independence bank services were badly affected so
these upper mention banks were formed in Dec,31 1973.

9.  All commercial banks were nationalized in Jan 1,1974
 Fifteen privately owned banks were consolidated into four
nationalized commercial banks namely Habib Bank Ltd.,
United bank Ltd.; Muslim commercial bank Ltd.; Allied bank
Ltd
 Rapid branch expansion was under-taken to improve the
coverage of banking services
 The politically motivated heavy lending aggravated the risk
and earning scenario of the commercial banks

10.  According to Act 1974 there were following main objectives:
 To enable the government to use the capital concentrated in
the hands of a few rich bankers for the rapid economic
development and for social welfare projects
 To distribute equitably bank credit to different classes,
sectors and regions
 To co-ordinate the banking policy in various areas of
feasible joint activity without eliminating healthy competition
among banks

11.  Were reorganized under Section 15 Act 1974
 Smaller Banks with Bigger ones for forming the five units in
three phases
 National Bank of Pakistan
 Habib Bank Limited
 United Bank Limited
 Muslim Commercial Bank Limited
 Allied Bank of Pakistan Limited

12. Phase1
 Completed o 30th june 1974 when Bank of Bahawalpur was
merged with NBP, HBL Overseas with HBL, PBL with
MCBL, SBL & PBL with ABL which renamed as Allied Bank
Limited
Phase 2
 Was Completed on 31st Dec,1974 when CBL was merged
with UBL
Phase 3
 Completed on 30th june, 1975 when SBL was merged with
HBL

13.  Started its operations on Dec 02, 1989 under WBL ordinance 1989
which was incorporated Companies Ordinance 1984
 Authorized Capital was RS.100 million
 57.75% shares were held by Public Sector comprising of HBL, UBL,
NBP also Ministry of Women Development
 42.25% shares were held by MCB and ABPL
 In December 2013 bank raised RS.17 Billion in deposits and
advanced more than RS.6 Billion
 Developed a network of 41 online branches all over the Pakistan
 Managed by Women bankers only
 Privatized in 1997
 Charted to meet special needs of women

14.  Section 9 of the Banks(Nationalization) Act, 1974 provided for the
setting up of the PBC for Nationalized commercial Banks
 Section 9 (Sub-section4) ordinance 1991 has defined the main
functions of the PBC in 14 broad categories
 Professionals were convinced that council failed to meet the objective
it was entrusted to achieve
 Council was dissolved in Feb 1997
 Council functions were transferred to State Bank of Pakistan
 Salient Features are under:-
 All assets, properties and rights of PBC also liabilities have been
overtaken by State Bank of Pakistan

15.  Employees of the council who were from other public sector financial
institution were sent back to their parent institution
 Those who were employees of the council become SBP employees
 Every contract or instrument of PBC shall continue if SBP is a party
now
 Any legal proceedings or applications which are pending may be
continued or stopped by SBP
 Each nationalized bank shall be managed by a Board of Directors or
President which may not be less than five or more than seven
 Chairman , The President and other members Shall be appointed by
Federal Government

16.  It has enabled the banks to lay full emphasis on their lending policies
on priority sectors while discouraging the unproductive and unhealthy
activities
 Financing to priority sectors increased by more than 200%
 Targets for agriculture finance were exceed for many times so SBP
introduced Small Loans Scheme in 1972
 Banks recorded big increase in first 10 ten years
 Banks needed badly foreign exchange to Pakistan in billions on US
dollars and other strong currencies
 Downfall started continuously and profitability also goes down

17.  National Economy was dominated by public sector and production,
trade and finance was over regulated
 It led to budget deficit and was changed by disinvestments and
privatizations
 Role of public sector industrial and commercial activities are reduced
social sector activities are increased
 In 1990 entrepreneurs were selected as investors
 MCBL, UBL, HBL were privatized
 ABL was sold to employees under concept of Employees Stock
Option Plan in Pakistan (ESOP)
 Number of commercial banks, modarba and leasing companies,
discount houses come actively operative since 1990

18.  Time of independence seven exchange banks were operating in
Pakistan
 Some of banks merged with Pakistani counterparts
 These banks have been traditionally financing the foreign trade
 Also financing the internal trade as well
 The exchange banks perform general banking functions such as
accepting deposits, advancing loans, agency services, credit
remittance facility, locker facility, stock invest facility, card facility, etc.
 The exchange banks play the role of canalizing agents for foreign
currency credits for major projects.

19.  Registered under the co-operative societies Act, 1912 and
section 7
 It can accepts deposits of money on current account
 Object was to encourage thrift, self-help, and cooperation
among agriculturists etc
 Rural credit fund established to advance medium term
loans and to convert short term loans into medium loans
whenever it is necessary
 They work for to bring about better living, better business,
and better methods of production etc

20.  Established in November 1976
 Initial Share capital of 20 crore RS
 After suffering heavily it merger with ZTBL since 2006
 They operate under Banking Laws of Pakistan
 Established due to unsatisfactory results of co-operative banks results
 The Bank shall be the principal financing institution for meeting the credit
needs of Provincial Cooperative Banks and multi-unit cooperative societies
 For the purpose of securing its loans and advances, accept pledge,
mortgage, assignment of any kind of movable or immovable properly or
documents of title or guarantee of the Federal Government or a Provincial
government and such other securities
 http://nasirlawsite.com/laws/efbc.htm
 http://pakistancode.gov.pk/english/UY2FqaJw1-apaUY2Fqa-bpuUZWRx-sg-
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