KARACHI, Feb 15: The State Bank of Pakistan will consider, among other things, the net worth of a Development Finance Institution (DFI) while allowing it to open new branches, says a circular issued on Tuesday.

The circular (BPD no. 4) defines net worth as net equity free of actual and potential losses. It says that the central bank will also consider, while approving branch expansion plans of DFIs, the adequacy of their capital, record of earning capabilities, future earning prospects, managerial capabilities, liquidity position, credit disciplines, quality of customer services and the staff-management relationship.

The circular further says that DFIs are supposed to submit to the SBP, their annual branch expansion plans at least 30 days from the start of each calendar year. But as a special case, the DFIs desiring to open new branches in 2005 are allowed to submit their annual branch expansion plans within 30 days from the issuance of the circular.

The approval in principal of the annual branch expansion plan of a DFI shall lapse in case the DFI concerned fails to submit a formal application for opening of new branches at least 30 days before the expiry of that particular year. Similarly, branches allowed under their respective annual branch expansion plans shall also expire if a DFI fails to open new branches before December 31 of that year.

The circular says that the opening of new branches at the proposed places should not be in violation of any Town Planning Regulations. It further says that DFIs will be free to shift or close down their branches but they will have to intimate the central bank about it 15 days before the shifting or closing of a branch.