January 16, 2003	Thursday	Ziqa'ad 12, 1423

KARACHI, Jan 15: National Bank is set to lease out, in bulk, televisions/mobile phones/computer monitors and other things to the employees of big state-run corporations like KESC and PTCL as well as private sector companies. But the condition is that the organizations willing to let their employees use this facility will have to use NBP accounts for paying salaries to their staff.

In addition to this they will also have to give assurance that the salaries of their employees will not be shifted elsewhere during the tenure of the lease. In return the NBP will give their employees the right to draw upto three months salary in advance.

This will help NBP earn money through leasing of electronic items on the one hand and expand its deposit base on the other. The scheme will be launched from next week.

“This is sort of expansion of our ghar ghar TV scheme launched in October last,” said a senior NBP official but he made it clear that the markup fixed at the time of launching will not remain unchanged — i.e. at 13 per cent. People say the 13 per cent markup is too high but the bank officials claim that given the nature of consumer financing this rate is not too bad — and is market-based.

“If you were to buy anything through credit cards you would have to pay 18-24 per cent interest,” said the official adding that many banks are charging an average of 16 per cent markup on personal loans as well.

He said between October-December 2002 the bank handled a big number of applications under ghar ghar TV scheme but pricing did not crop up as an issue. “There were some procedural irritants but certainly there was no problem with the markup rate as such.”

But people say a downward revision in the markup rate is just logical amidst the falling interest rates triggered by the 1.5 per cent cut in the SBP discount rate late last year followed by much larger cuts in T-bills rates. This ease off in the monetary policy made it possible for the banks to revise their own lending rates for corporates. So it does not make much sense for ordinary people when the bankers insist that consumer financing cannot be made cheaper — particularly at a time when the banks have little option but to venture into this area as traditional corporate lending is declining.

In October last NBP had launched ghar ghar TV scheme to lease out LG television sets and other electronic items on a limited scale to gauge public response. The bank officials claim that the response has been encouraging going by the number of applications received. But they admit that actual financing has remained very low — not more than Rs5 million “because of some irritants in the procedure.” The officials say the procedure has been simplified now and made consumer-friendly. “We are now targeting some big public and private sector companies including our own corporate clients for leasing out electronic goods on a wholesale basis,” said one NBP official.

He said the bank has targeted about a 100 such organizations adding “if all goes well we may end up financing upto Rs1 billion worth of goods by the year-end.” He said the bank is also targeting those 1.8 million of its small account holders who are employees of the federal and provincial governments and semi-government organizations and draw their salaries from NBP. “These are sort of captive clients and if we can persuade them to buy electronic goods through our scheme we will not have to bother about the repayment.”