Non banking Financial Institutions

Salman Akram Hailey College of commerce University of the Punjab.

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Industrial Development Bank of Pakistan

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Outline: Introduction

History

Objectives

Core Values

Functions

Deposit Schemes

SWOT analysis

Introduction:

Industrial Development Bank of Pakistan established in August, 1, 1961 is one of Pakistan's oldest development financing institution and was created with the primary objective of extending term finance for investment in the manufacturing sector of the economy. Over the years, however, the Bank has become an institution fostering the growth of Small and Medium Enterprises in the rural/less developed regions of the country.

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Extending term finance for investment in the manufacturing

sector of the economy.

Facilitates transfer of technologies from developed

countries to industrial enterprises in Pakistan.

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Vision/ core value:

To be recognized as the leading financial institution of Pakistan and dynamic international bank in the emerging markets, providing our customers with a premium set of innovative product and services, and granting superior value to our stakeholders, shareholders, customers and employees.

Paid-up-Capital:

Industrial Development Bank of Pakistan is wholly owned by Pakistani government entities with total paid up capital 500 Million, 57% of its shares held by the Federal Government, 36% by the State Bank of Pakistan and 7% by provincial governments and other public sector corporations.

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Sources of funds:

1) Borrowing from the Federal Government. 2) Borrowing from the state bank of Pakistan. 3) Re-discounting of bills. 4) Time deposits. 5) Issue and sale of bonds and debentures.

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Functions:

Development banking business

Commercial banking business

Merchant banking business

Collection of utility bills

Administration of the equity participation fund

Equity investment/trading

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Development banking business Provides guarantee, loans Provides medium and long term finances Commercial banking business Bills Deposits Foreign exchange accounts Guarantees Letter of Credit Remittances Short term advances

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Merchant banking business Bridge financing Leasing Underwriting of public issue of shares Collection of utility bills Gas bills at branches in Karachi Telephone bills at all branches Administers of the equity participation fund

Equity investment/trading

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Sort of financing Assistant:

IDBP has the unique distinction of financing the first ever projects for a diversified list of products Like;

o UHT milk packo three wheelerso radio/wireless receiving setso marble processingo Coal miningo PVC deep sea fishing etc.

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Deposit schemes:

IDBP is carrying out sustained efforts to devise customer-oriented banking services. Various deposit instruments suiting the diversified customers’ needs have been introduced by the Bank. The schemes offered take care of both short and long term requirements of the customers with varying investment funds and have been positioned in such a way that clients may enjoy the most competitive returns on their investments

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IDBP SPECIAL DEPOSIT CERTIFICATES

IDBP MAHANA AMADNI SCHEME

MAHANA MUNAFA CERTIFICATE (MMC)

TERM DEPOSIT RECEIPT (TDR)

BUSINES DEPOSIT ACCOUNT (BD A/c)

PROFIT AND LOSS SAVING BANK ACCOUNT (PLS A/c) CURRENT ACCOUNT

Following are the Schemes offered by the industrial development bank to its customers:

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Branch Network:The Head Office of Industrial Development Bank of Pakistan is situated at Karachi, Pakistan. The Bank currently operates with following 13 branches:

In Capital Territory; Islamabad and Rawalpindi branch.Sindh; Main branch Karachi, Hyderabad and Larkana branchPunjab; Faisalabad, Lahore and Multan branchKhyber Pakhtunkhwa; Abbottabad and Peshawar branchBaluchistan; Quetta branchGilgit/Baltistan; Gilgit branchIn Azad Kashmir; Mirpur Azad Kashmir branch

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SWOT analysis:

Goodwill & historical background. Professional and well trained staff. Largest customer base. 20% share in financial market. Large Balance sheet size. Decentralized authority.

Union and Conflicts Checking System Weak marketing policies. Nepotism & Favoritism. Infected portfolio still exists as bad debts. Centralized management in particular areas.

Strengths:

Weaknesses

For growth and expansion in cash management.

Faster market growth Restoration of investors’ confidence Large deposit base and funds flow

o Adverse & unstable government policies.o Political instability.o Advance technology.o Competition from other banks.

Opportunities:

Threats:

Role of IDBP in Economy:

The role of industrial development bank in economic development is to remove the deficiency of capital by stimulating savings and investment.

Mobilizes the small and scattered savings of the community, and makes them available for investment in productive enterprises.

No economic development of sizable magnitude is possible unless there is an adequate degree of capital formation

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ANY QUESTION

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