LAHORE, Sept 15: The government has transferred the management of all public sector banks, save National Bank of Pakistan (NBP), to private sector under its banking sector reform programme started in the year 2000.

Speaking at a seminar organized by the Management Association of Pakistan (MAP) on Wednesday, State Bank Governor Dr Ishrat Husain said the "under reform programme road-map, which will complete in March next year, the government had even sold 23 per cent shares of the NBP to the general public".

"At the time of the start of the reforms, the financial sector was hugely dominated by the state-owned banks. But as a result of privatization all the banks are now owned by private sector. Only National Bank of Pakistan is in government control but its 23 per cent shares are held by the general public," he said.

He said the programme was initiated to "ensure that privately-owned banks should act in a very independent atmosphere but under a very vigilant regulatory regime". The reforms had helped break the linkage between the financial institutions and political interests by ensuring that only honest and competent senior bankers hold top slots in the banks "so that they could not be influenced by any quarter", the governor said.

The central bank had cancelled the licences of some banks to send a message to others that they should act responsibly, he stated. He, however, said there was lack of willingness to implement some laws in letter and spirit.

Dr Ishrat said the central bank had also "formulated criteria for the appointment of directors of the banks to enable them have talented and able people who could make prudent decisions".

But, he added, "there were very few individuals in the country who fit the criteria for directors". He said the donors and international agencies had termed the country's financial sector as one of the healthiest and soundest sector in Asia.

He said the central bank had told banks to have well-defined policies for writing off loans. He said some 80,000 individuals and industries had availed the loans settlement facility under the SBP circular BPD-29.

He said some 66 per cent of Rs220bn non-performing loans had now been accounted for and the asset quality of the banks has improved significantly. The commercial banks had made profit to the tune of Rs40 billion during 2003-04, he said.