Abdul Wajid Khan

The government is planning to start the commercial operation of Export-Import (EXIM) Bank of Pakistan by the end of December 2022 to boost international trade by providing credit, guarantee and insurance products to exporters and importers, WealthPK reports.

According to an official brief of the bank, it will be ready to commence business within four to six weeks after legislative and regulatory approval or legal compliance.

The brief says that the coordination is underway with various stakeholders including the Ministry of Finance, State Bank of Pakistan (SBP) and Securities and Exchange Commission of Pakistan (SECP) to complete legal, administrative and other necessary formalities for the implementation of the provisions of the EXIM Bank of Pakistan Bill, 2022.

As far as the progress on the regulatory approval is concerned, the SBP has sought clarification on key risks faced by the bank, mitigation techniques, policies and procedures of the departments, as well as infrastructure of the bank including information technology, physical infrastructure, branch network and updated product details.

The bank is in contact with the SBP to fulfil all requirements and get approval. After the completion of the process, the SBP will grant permission to the bank to commence business.

Work is also underway to get formal approval from the SECP as well. The transformation of EXIM Bank of Pakistan Limited is being made from a SECP limited liability company to a corporation as required under Section 5 of the bill.

The bill has already been passed by both houses of the parliament and its approval from the President of Pakistan is awaited to complete the legislative process.

According to the brief, the government has taken several initiatives for the promotion and development of international trade and export-oriented industries as well as import substitution in the national economic interest.

The government wants to establish the EXIM bank as the national export credit agency for the promotion, expansion and diversification of international trade. The bill focuses on the purpose of the bank related to the development of trade, export support and import substitution support to the economy.

According to the brief, the business strategy session of the EXIM bank was already held in its 30th board of directors’ meeting, which approved the business implementation strategy for it.

On average, about 70% of the insurance risk will be reinsured with international companies. The bank was declared a development finance institution on June 09, 2015, and incorporated with SECP under the Companies Ordinance, 1984 as a company limited by shares on June 2015.

In 2018, on the request of the government of Pakistan, the Asian Development Bank (ADB) approved a technical assistance grant of $500,000 to support the operationalisation of EXIM bank. One of the very important components of the technical assistance was to draft the EXIM Bank bill, giving necessary powers to the bank to deliver on its mandate by providing necessary financing and insurance products to the exports of the country and promoting foreign direct investment (FDI).

The authorised capital for the bank is Rs100 billion divided into 10 billion ordinary shares of Rs10 each. The government holds 100% of the bank’s share.

The initial paid-up capital of the bank will be Rs10 billion divided into one billion fully paid-up shares at par value, which will be wholly subscribed by the federal government. The government has allocated Rs4 billion in the current budget for the paid-up capital for the bank.

Analysts told WealthPK that it is need of the hour to make EXIM bank operational as soon as possible to compete in the international market and increase the country’s exports.

Credit : Independent News Pakistan-WealthPk