By – Yousaf Alamgirian

The present government has shown its muscles by taking measures like sending the deputation employees back to their respective organizations, announcing the privatization of institutions like PIA, OGDCL and SNGPL, etc. The government overemphasized its existence by changing the PEMRA chairman and State Bank governor. According to media, the Governor SBP was worried because of the illness of his son. So he found no way but to resign. Immediately after he put up his resignation, the deputy governor of SBP, Mr Ashraf Wathra, was appointed as the Acting Governor. But in this case the senior most Deputy Governor, Kazi Abdul Muktadar, was superseded, or he might have refused to be designated as Acting Governor.

One of the basic tasks of the State Bank includes regulation and supervision of the financial system to make sure its reliability and constancy. At the same time it is responsible to safeguard the interests of the depositors. The speedy progression in the information technology, together with the rising complexities of contemporary banking operations, has made the supervisory role more complex and demanding. The SBP is liable to keep the exchange rate of rupee at a suitable level and prevent it from major fluctuations in order to preserve competitiveness of country’s exports and support constancy in the foreign exchange market.

The State Bank of Pakistan, despite delivering its customary role of regulating money and credit, has played an active role towards achieving the macro-economic goals. This resolve fairly highlights the State Bank’s developmental role.

The Bank is an autonomous body; it is responsible for maintaining the financial situation of the state. It can even ask the government to limit its borrowing from the Central Bank. “Under financial sector reforms, the State Bank of Pakistan was granted autonomy in February 1994. On 21st January, 1997, this autonomy was further strengthened by issuing three Amendment Ordinances (which were approved by the Parliament in May, 1997) namely, State Bank of Pakistan Act, 1956, Banking Companies Ordinance, 1962 and Banks Nationalization Act, 1974. The changes in the State Bank Act gave full and exclusive authority to the State Bank to regulate the banking sector, to conduct an independent monetary policy and to set limit on government borrowings from the State Bank of Pakistan. The amendments in Banks Nationalization Act abolished the Pakistan Banking Council (an institution established to look after the affairs of NCBs) and institutionalized the process of appointment of the Chief Executives and Boards of the nationalized commercial banks (NCBs) and development finance institutions (DFIs), with the State Bank having a role in their appointment and removal. The amendments also increased the autonomy and accountability of the Chief Executives and the Boards of Directors of banks and DFIs”. Hence the nation respects the autonomous status of the central bank of the state because it is the saviour of the financial boundaries of the country.

According to the rules and regulations, the SBP is headed by a Governor who is assisted by two Deputy Governors but all of a sudden Mr Saeed Ahmad was appointed as the third Deputy Governor of the bank. This untoward move however was a bit cautious, raised an eyebrow and indicated to the intentions of the government to bringing a change in the SBP. After a few days the Governor resigned because of his son’s illness.

Many people were in the run for this slot. One Mr Aurangzeb was considered to be the hot favourite in this regard. But the honour went to Mr. Ashraf Wathra who has been appointed as Governor SBP. This decision has however shown wisdom on part of the government that, instead of bringing in a new face, the already experienced and a competent SBP official has been given a chance to deliver. It seems the government, and especially the Finance Minister, were happy with him for taking measures that took the dollar down to Rs 98, and then maintained the same. Mr. Wathra being the experienced banker and economics expert has taken gigantic measures which have added to the credibility of SBP. Although it is an autonomous organization and the government has nothing to do with its affairs, yet a reasonable contiguity is necessary between the bank and the government to run the affairs of the state. The appointment of Governor however shows the government’s seriousness to bringing a fair and everlasting economic stability in the country. Mr Wathra, equipped with about a 35 years experience in serving various national and international institutions and dealing with the commercial and investing banking, will be there to strengthen the SBP.

Running the institution through technocrats will bring fruitful results. It will improve the infrastructure of the organization and will enhance overall abilities of the institutions. Yet there are many institutions working without their CEOs. People do expect however that their appointments will also be made on merit and professional strength.

The SBP has no doubt taken a number of concrete measures in promoting the banking sector and formulating people-centric policies, but the same have not been projected in the media. The way the SBP should have created awareness in order to project its tasks is not seen. A proactive role is required to be shown on certain issues and misconceptions. The SBP has to be presented as an institution delivering its role in meeting the challenges of banking industry. It must cater for certain measures by evolving a strategy to strengthen country’s economy as this sector is considered to be a backbone of a state.

Subsequently the State Bank of Pakistan has to take business-oriented measures and financial initiatives in order to gain consumer trust by creating financial awareness through the print and electronic media. Appropriate campaigns are required to be run in order to save the people from financial frauds and save them from going bankrupt.

Yousaf Alamgirian is Rawalpindi based freelance columnist.