October 9, 2002	Wednesday	Sha’aban 2, 1423

KARACHI, Oct 8: Commerce Minister Abdul Razak Dawood on Tuesday clarified that he did not favour consumer financing for imported goods, saying that current consumer financing scheme is focussing primarily on the locally manufactured products.

He said he was of the opinion that one should not insist on consumer financing for only such consumer goods every component of which is locally made.

His clarification coincided with press reports saying that the secretary of the Ministry of Commerce has written a letter to the SBP governor on the same issue. The letter points to the fact that the SBP circular issued on consumer financing does not specify that consumer financing should be made by the banks only for the locally manufactured goods as the basic purpose of this scheme was to promote local industry.

The commerce minister presided over the launching ceremony of Habib Bank consumer financing scheme that enables its customers to buy motorcycles and refrigerators and other home appliances through leasing. MoUs were also signed between HBL and representatives of four companies/distributors whose products would be leased out to the eligible HBL customers. The MoUs were signed with (i) Samsung Electronics (ii) Dawlance Home Appliances (iii) Dawood Yamaha Ltd and (iv) Samsung Home Appliances.

The minister while explaining the rationale of the consumer finance scheme remarked: “I am just a little sad that (the scheme) is coming at the tail end of this government. But better late than never.” He said the scheme would have a long lasting positive impact on the economy even if there are some short term problems in its execution. “I am a long term player not a short-term player,” he boasted while fielding a question from amongst the mediamen present there. When Dawn asked him if this was an indication that he was seeking and is sure of getting a role in the new government he sighed and said: “Well your guess is as good as mine.” Word taking rounds in corporate and financial markets is that Finance Minister Shaukat Aziz; Commerce Minister Abdul Razak Dawood and SBP Governor Dr Ishrat Husain may continue to play a role in economic management under the new government that takes over after October 10 elections.

HBL President Zakir Mahmood said under the scheme, consumer financing of Rs10,000 to Rs500,000 would be available for 12 months; 24 months and 36 months. He said that 12-month financing would be made at the lowest rate and 36-month financing at the highest, but declined to disclose the mark-up rates saying the details of the scheme would be announced later on. He said that in case of consumer finance obtained for the purchase of Yamaha motorcycles, the title of ownership would remain with HBL but in case of other consumer durables like refrigerators it would be with the individuals.

Mr Zakir told the press that his bank has set an ambitious target of Rs6 billion for consumer financing within next three years.

Habib Bank is the second state-run bank after National Bank that has so far come up with a consumer financing scheme. HBL President Zakir Mahmood believes his bank could execute this scheme without running the risk of bulk default was seen in the infamous yellow cab scheme of the then prime minister Nawaz Sharif in which banks lost billions of rupees.

“The yellow cab scheme was not launched on commercial consideration. But we have launched our consumer financing scheme purely on commercial consideration,” he said in response to a question, adding the government had not dictated its terms on the banks in designing this scheme.

“The State Bank allowed us to do consumer financing and every bank has a right to design a scheme on its own. There is no interference. No pressure.”

He said HBL was aware of the fact that consumer financing was a risky business and the ratio of losses may be quite high, but he claimed that the bank would closely monitor the execution of the scheme to mitigate the risks.