| 18 August 2004 | Wednesday | 01 Rajab 1425 |
Presenting the 'softer face'
Banning blood banks
According to data released by the State Bank of Pakistan (SBP), during the quarter ending June 2004 the volume of bad loans held by the banks and DFIs not only remained largely unchanged from what it was during the previous quarter but net of provisioning as well as net of total loans have declined.
At the same time, cash recoveries went up. Non-Performing Loans (NPLs) or bad loans are those that remain unpaid for more than 90 days. Every Bank and DFI is allowed a limit of bad loans by the SBP.
Crossing that limit is considered financially unhealthy for the bank. The SBP data show that the bad loans or NPLs stood at Rs220 billion at the end of June compared with Rs219.7 billion at the end of the previous quarter.
NPLs net of provisioning fell to Rs71.3 billion from Rs72.9 billion during that period. At the end of June all banks and DFIs reported Rs7.11 billion cash recovery - up from Rs5.89 billion at the end of March 2004. Then NPLs as a percentage of net loans fell to 5.4 per cent from 6.3 per cent in the previous quarter.
So, if the relevant SBP data are showing the correct picture of the performance of the banking sector in the last quarter, it may well be indicative of a break from the bank's traditional inefficiency and lax administration.
Indeed, at a time when both the rate of interest and that of return on deposit are lower than the rate of inflation, the banks and the DFIs need to create adequate fiscal space to be able not to let the depositors suffer heavy losses which they are doing now, without in any way losing their (banks') own profit margins.
If the depositors continued to be offered a rate of return of less than two per cent while the rate of inflation has gone beyond eight per cent, the depositors will have no alternative but to take their savings to some other profitable ventures. If the deposits dry up then the banks will have nothing to advance.
On the other hand, if the banks are charging at least about three per cent less than the rate of inflation on their advances, then they are hardly in a position to do anything about their depositors without first pushing up their interest rates beyond the inflation rate.
But this would stop in its tracks the accelerated investment activity which is being witnessed these days. So, the only way the banks can sustain the present rate of return on advances and make it profitable for the depositors to keep their savings in the banks is by saving on the heavy cost of maintaining such a high volume of bad loans on their books.
Meanwhile, the SBP could consider reducing the NPL provisioning limits of banks to a reasonable level so that the signs of improvement in efficiency in the banking operations are sustained.
Presenting the 'softer face'
President Musharraf has appealed to Pakistanis to project their country's and society's "soft face" and to present a modern and progressive version of Islam to the rest of the world.
It is important that the outside world is reassured that Pakistan is not a country whose inhabitants favour a Taliban version of Islam or where foreigners are unwelcome. By and large, this means that we should be proud of our faith and our beliefs but, at the same time, be tolerant of people who might have a worldview or faith different from our own.
This also means that we should not seek to force our values or religious beliefs on others and do not indulge in a game of 'my faith/culture/religion is better than yours'.
We should avoid labelling people whose religious beliefs we disagree with as 'kafirs' or speaking derisively about their views. This is important not only to correct our image abroad, but for our domestic tranquillity, stability and progress.
The problem is that there seems to be a disconnect between what the president is saying (and this isn't the first that he has spoken out in favour of moderation and a progressive outlook) and what his own government does on many benchmark social issues, especially those affecting women and the minorities.
Members of parliament, including some from the government side, have managed to stall for the time being a government proposal to modify the Hudood laws to make it easier for the state to intervene on the side of a female victim in case her family is inclined to forgive the accused.
They have done this despite the well-documented fact that every year hundreds of women are killed on the pretext of tainting family honour after which, in many cases, the murderers (usually close relatives of the victim) do not even have to face trial because the relatives of the victim deem it fit to 'forgive' them.
Then, in one province, the administration's meagre official resources are used to draw up a province-wide plan to cajole the faithful to pray, as if the faithful do not already know what their faith demands of them.
The police are also used to round up teenagers frequenting Internet cafes, an indication that the province's government believes that the greatest technological marvel of our times is in fact the devil's handmaiden and leads young minds astray.
In another province, a senior bureaucrat in charge of the administration of the provincial capital seems to have no pressing civic issue to deal with than to check 'vulgarity', which he intends to do by ordering the installation of cameras inside the city's theatre halls. The president's plea is good and timely, but will he and his government take the lead in taking actions that lend Pakistan a "soft face"?
Banning blood banks
The Sindh government's decision to close down unregistered blood banks in the province is somewhat arbitrary. While there can be no two opinions on the need to shut down units found guilty of flouting the provisions of safe blood legislation, taking such drastic action against all blood banks operating without licence has serious implications for patients in urgent need of transfusion.
It would, perhaps, be more realistic to issue final notices to blood banks that have not so far registered with the Sindh Blood Transfusion Authority, making it incumbent on them to do so by a given deadline. In the event of non-compliance, the health authorities should go ahead and take steps to discontinue their services.
Given that blood-borne diseases like Hepatitis 'B' and 'C' and AIDS are on the rise in the country, one hopes that the government's resolve to act on the issue is not short-lived, and that the health department continues to keep stringent checks on the province's blood banks.
This is important because without regular inspection of blood products, even those units that have registered with the relevant authority could lapse into unethical practices and provide unscreened, contaminated blood to patients.
Perhaps, the health department could also consider subsidizing the cost of high quality screening kits and of other facilities needed for blood storage in order to ensure maximum safety of the blood products.
The public, too, should be made aware of the risk associated with transfusions of unscreened blood, and the importance of voluntary donation should be stressed upon to discourage professional donors. Many of the latter comprise drug addicts whose use of shared needles renders their blood particularly risky for transfusion.