Nationalization and Privatization of Commercial Banks

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FINANCIAL
INSTITUTIONS
Arisha Naz 12022
Institute of Business Management
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TOPIC:
NATIONALIZATION AND
PRIVATIZATION OF
COMMERCIAL BANKS IN
PAKISTAN
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Classification of Banks
Various types according to the function
1.
2.
3.
4.
5.
6.
7.
8.
9.
Central
Commercial
Industrial
Agricultural
Exchange
Investment
Mortgage
Saving
Micro financing
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Classification on the basis of

ownership
Public
Private
Co-operative
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Classification on the basis of

domicile
Domestic
Foreign
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Classification on the basis of status

Scheduled
Non-scheduled
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List of Commercial Banks operating

in Pakistan:
- Allied Bank Limited
- Askari Bank
- Bank Alfalah
- Bank AL Habib
- Barclays Bank Pakistan
- Citibank Pakistan
- Faysal Bank
- First Women Bank
- Habib Bank Limited
- Habib Metropolitan Bank
- Habib Bank AG Zurich
- HSBC Pakistan
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- JS Bank
- KASB Bank Ltd
- MCB Bank Limited
- MyBank
- National bank of Pakistan
- NIB Bank Pakistan
- Royal Bank of Scotland Pakistan
- Standard Chartered Bank Pakistan
- Silkbank Limited
- Soneri Bank
- Summit Bank
- United Bank Limited
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nationalization
means transfer of any property or institution from the private
to the ownership of state.
process of bringing the assets of a company into the
ownership of the state
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TIDES
1971-1977 Z.A Bhutto
1988
10
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Nationalization of banks in Pakistan

In the early years of Pakistan, the banks were going well and
they played an important role in the economic development
of country. But afterwards it was felt that banks did not
provide funds towards the most needy sectors of economy.
Keeping in view this situation the banking business was
nationalized on 1st January 1974, under Bank
Nationalization Act, 1974.
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On 31st December 1973 there were 13 Pakistani scheduled

banks in Pakistan with 2906 branches in all over the country.
Govt. of Pakistan took control of all 13 commercial banks
and state bank of Pakistan under Bank Nationalization Act,
1974. Govt. merged the weaker banks with the banks which
had strong financial position to make 5 nationalized banks in
all.
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These banks are: I. National Bank of Pakistan (NBP) II.

Habib Bank Limited (HBL) III. Muslim Commercial Bank
(MCB) IV. United Bank Limited (UBL) V. Allied Bank Ltd.
(ABL)
13
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objectives
I. Credit for agriculture sector. II. Controlling unproductive
expenditure III. Ending control IV. Professional management
V. Credit for small entrepreneurs
14
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Advantages of nationalization of
banks
Fair distribution of credit Financing agriculture sector
Banking facilities for underdeveloped areas Control over
non-development expenditure Security of deposits
Development of banks Service motive Price stability
Mobilization of resources Use of profit
15
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Disadvantages of nationalization of
banks
Low efficiency of bank employees Poor service standard
Political interference Favoritism Rise in price
Unbalanced distribution of credit Increase in expenses
Poor recovery of loan Decrease in profit Low competition
16
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Privatization of Banks
Privatization of Banks Privatization is the process of involving
private sector in the ownership state owned enterprises. It is
defined as: Privatization is the denationalization of an
industry, transferring from public to private ownership
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tides
1989-93 nawaz sharif
1993-1999-PM BB
1999-2008 Shaukat aziz
18
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Privatization of Banks in Pakistan

The objectives which were expected by government have not
been achieved. Government of Pakistan decided to
privatize the bank sector. A privatization Commission was
set up on 22 January 1994. The commission has transferred
MCB, ABL, UBL, HBL but NBP was not privatized. Its Shares
have been sold to general public Through LSE
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Rules for establishing a new bank in private sector Public

limited sector Must be listed on SE of country 20% shares
must be offered to general public Minimum capital of two
billion Directors of bank will not be allowed to sanction
loans for themselves Bank will concentrate their branch
network in urban areas Bank will provide quick & efficient
services to customers
13. Bank will play an effective role in mobilization of
savings. Bank will provide services for rural areas
according to new concessions and incentives. Bank will
have to abide by the instructions of SBP.
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Objectives
Better standard of service Improvement in performance
Promote healthy competition Quick decisions
Development of capital market Increase in deposits
Security of loan
21
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Advantages of privatization of
banks
Improvement in performance Better standard of living
Decrease in expenses Increase in deposits Secured loans
Decrease in default loans Productive loans Quick
decisions Economic development Reasonable profit
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Disadvantages of privatization of
banks
Misuse of loans Unhealthy competition Neglecting small
industries Neglecting agriculture sector Lack of cooperation Concentration of wealth in few hands Protection
of black money Advances to relatives and employees
Favoritism Profit mitive
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THANK YOU
References:
wikipedia
Google
Shaukat aziz 2006
24

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2/1/15

Classification on the basis of

Classification on the basis of

Classification on the basis of status

List of Commercial Banks operating

Nationalization of banks in Pakistan

On 31st December 1973 there were 13 Pakistani scheduled

These banks are: I. National Bank of Pakistan (NBP) II.

Privatization of Banks in Pakistan

Rules for establishing a new bank in private sector Public

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