Assignment: Banking

Zubair Ameer Khan ID# 113

FINANCIAL INSTITUTIONS IN PAKISTAN

In financial economics, a financial institution acts as an agent that provides financial services for its clients. Financial institutions generally fall under financial regulation from a government authority.

Types of Financial Institutions

Common types of financial institutions in Pakistan include Banks, Investment Companies, Insurance Companies, Leasing Companies, Venture Capital & Discount Houses, Housing Finance Companies, and Mutual Funds.

Bank
A bank is a commercial or state institution that provides financial services, including issuing money in various forms, receiving deposits of money, lending money, and processing transactions and the creating of credit. Major players of the banking sector are categorized in the following heads: Central Bank Nationalized Scheduled Banks De-Nationalized Scheduled Banks Specialized Banks Private Scheduled Banks Foreign Banks Investment Banks Micro Finance Banks Islamic Banks

Central Bank A central bank, reserve bank or monetary authority, is an entity responsible for the monetary policy of its country or of a group of member states, such as the State Bank in Pakistan. Its primary responsibility is to maintain the stability of the national currency and money supply, but more active duties include controlling subsidized-loan interest rates, and acting as a "bailout" lender of last resort to the banking sector during times of financial. Nationalized Scheduled Banks Nationalized scheduled banks are those banks which are registered with SBP and are public owned enterprises. The SBP give directions to these banks and they are required to work according to this direction. Furthermore, scheduled banks are permanent members of SBP. The nationalized scheduled banks are: National Bank of Pakistan Habib Bank Ltd. First Women Bank Ltd.

Assignment: Banking
De-Nationalized Scheduled Banks Allied Bank of Pakistan Ltd. Muslim Commercial Bank Ltd.

Zubair Ameer Khan ID# 113

Specialized Banks These institutions are generally government-sponsored corporations, and provide medium and long-term finance to various sectors. Most of these institutions are players in the capital market in Pakistan which are: Agricultural Development Bank of Pakistan Industrial Development Bank of Pakistan Punjab Provincial Cooperative Bank Federal Bank for Cooperatives

Private Scheduled Banks These are such banks which are registered with SBP but are private owned enterprises. These are also required to work according to the policies of SBP. Some private banks currently working in Pakistan are: Askari Commercial Bank Ltd Bank Alfalah Limited Bank Al-Habib Limited Bolan Bank Limited Faysal Bank Limited Meezan Bank Limited Foreign Banks Foreign banks other than Indian banks have been commonly known as Exchange Banks due to the fact that prior to independence foreign banks in the Indo-Pakistan Subcontinent were engaged primarily in finance of foreign trade and exchange business. Though the SBP does not encourage them to open branches in the interior yet they are fully authorized to discharge normal functions, including the acceptance of Pak Rupee and foreign-Currency deposits from the public. Foreign banks, though very selective and expensive, have introduced not only quite few new products and concepts in banking in Pakistan but they have been quite active in the financing of imports, exports, stock exchange securities and installment credit. Some Foreign Banks which are working in Pakistan are: ABN Amro Bank N.V Al-Baraka Islamic Bank B.S.C.(E.C.) American Express Bank Limited

Assignment: Banking
Bank of Cylon Citibank N.A. Deutsche Bank AG

Zubair Ameer Khan ID# 113

Investment Banks The investment banks assist business houses and the government bodies to raise money through the sale of stocks and bonds for usually long term purposes. These banks perform the usual functions of raising deposits of idle money from the public and finance the business houses and other bodies. Some investment banks which are currently working in Pakistan are:

Atlas Investment Bank Limited Asset Investment Bank Limited Al-Towfeeq Investment Bank Limited Cresent Investment Bank Limited Escorts Investment Bank Limited

Micro Finance Banks For the purpose of poverty reduction program, such kind of banks is working in the different countries with the contribution of UNO or World Bank. In Pakistan 7 Micro Finance Banks are providing services under the SBP prudential regulation.

The First Micro Finance Bank Limited Khushali Bank Karakuram Bank Network Micro Finance Bank Pak Oman Micro Finance Bank Rozgar Micro Finance Bank, Karachi Tameer Microfinance Bank Limited

Islamic Banks Islamic banking refers to a system of banking or banking activity that is consistent with Islamic law (Sharia) principles and guided by Islamic economics. In particular, Islamic law prohibits usury, the collection and payment of interest, also commonly called riba in Islamic discourse. Some Islamic banks operating in Pakistan are:

Dawood Islamic Bank Limited Dubai Islamic Bank Meezan Bank AlBaraka Islamic Bank BankIslami Pakistan Limited Emirates Global Islamic Bank

Assignment: Banking
Investment Companies

Zubair Ameer Khan ID# 113

Generally, an "investment company" is a company (corporation, business trust, partnership, or Limited Liability Company) that issues securities and is primarily engaged in the business of investing in securities. An investment company invests the money it receives from investors on a collective basis, and each investor shares in the profits and losses in proportion to the investors interest in the investment company. The performance of the investment company will be based on (but it wont be iden tical to) the performance of the securities and other assets that the investment company owns.

Atlas Investment Bank Limited Asset Investment Bank Limited Al-Towfeeq Investment Bank Limited Cresent Investment Bank Limited Escorts Investment Bank Limited First International Investment Bank Limited

Insurance Companies
Insurance companies may be classified as 1. Life insurance companies, which sell life insurance, annuities and pensions products. 2. Non-life or general insurance companies, which sell other types of insurance.
Pakistan Reinsurance Company Ltd. Postal Life Insurance State Life Insurance Corporation Ltd. Allianz EFU Health Insurance Company Ltd.

Leasing Companies
A lease or tenancy is the right to use or occupy personal property or real property given by a lessor to another person (usually called the lessee or tenant) for a fixed or indefinite period of time, whereby the lessee obtains exclusive possession of the property in return for paying the lessor a fixed or determinable consideration (payment). Some Leasing companies in Pakistan are:

Asian Leasing Corporation Ltd. Atlas BOT Lease Askari Leasing Company Ltd. Orient Leasing Atlas Lease Ltd.

Venture Capital & Discount Houses

The venture capital companies are allowed to extend equity support to enterprises desiring to undertake innovative projects, while discount houses deal with discounting and related services. By end-June 1990, there was only one discount house operating in the country, however, during 1990s a number of discount houses and venture capital companies were established.

Assignment: Banking

Zubair Ameer Khan ID# 113

First Credit & Discount Corporation (Pvt.) Ltd. Prodential Discount and Guarantee House Limited National Discounting Services Limited. Speedway Fondmetal (Pak) Ltd. Pakistan Venture Capital Limited.

Housing Finance Companies

Though restricted to housing sector these companies are very similar to DFIs. In 1990, there was only one such entity: House Building Finance Corporation (HFBC) in the public sector, which was categorized as a DFI. However, with the establishment of three new housing finance companies in the private sector during 1990s, separate rules for Housing Finance Companies were specified. International Housing Finance Limited. Asian Housing Finance Limited.(Formly LTV Housing Finance Limited) House Building Finance Corporation Citibank Housing Finance Co. Ltd. (Under Voluntary Winding Up Process)

Mutual Funds
An investment, which is comprised, of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market securities and similar assets. Mutual funds are operated by money managers, which invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. Here are some Mutual Fund Companies:

Prudential Stock Fund KASB Premier Fund Safeway Mutual Fund First Capital Mutual Fund Confidence Mutual Fund Dominion Stock Fund Al-Meezan Mutual Fund