Equity injection: finance fails to release budgetary allocation for FWBL

Finance Ministry has not released Rs 500 million allocated in the budget for injection of equity in the First Women Bank Limited (FWBL) despite a number of requests by the Bank management. Sources said this was stated by the Bank in its interim financial information submitted to the Cabinet Committee on Privatisation (CCoP) for the first nine months ending on September 2016. The CCOP has approved inclusion of FWBL in the privatisation programme for early implementation.
The paid up capital (free of losses) of the Bank as at 30 September 2016 stood at Rs3.02 billion. An amount of Rs 500 million was allocated in the federal budget 2016-17 for injection of equity in the Bank, out of which no amount has been released yet.
The management of the Bank has been taking up the matter with the Ministry for release of funds on urgent basis. Extension granted to the Bank for meeting the minimum capital requirement expired on 30 June 2016 and government shareholding in the bank through Finance Ministry stands at 80.16 percent.
A summary put up to the CCOP by Privatisation Commission stated that FWBL was incorporated under the Companies Ordinance, 1984 in November 1989 and started operations in December 1989. The Bank currently operates a network of 42 branches and 1 booth spread across 24 cities nation-wide.
The federal government has injected Rs 2 billion in the bank as equity in recent years, increasing its shareholding to 80.16 percent, whereas the rest are held by MCB Bank Limited, Habib Bank Limited, Allied Bank Limited, National Bank of Pakistan and United Bank Limited.
Being a public sector bank, and in terms of the State Bank of Pakistan (SBP) prescribed Minimum Capital Requirement (MCR), the bank is required to maintain MCR of Rs 3 billion and Capital Adequacy Ratio (CAR) of 18% at all times.
As on September 30, 2016, the Bank's MCR (representing paid up capital net of accumulated losses) was Rs 3.020 billion.
The CCoP in its meeting held in October 2013 approved, in principle, the privatisation of 69 Public Sector Entities (PSEs), as part of its privatisation program, which, inter-alia, included FWBL. Additionally, SBP, vide its letter dated February 16, 2016, suggested that a concrete capital enhancement plan and appointment of competent and professional management (from private sector) alongside proper accountability mechanism for monitoring performance may be put in place in order to make FWBL a viable bank/financial institution.
Additionally, SBP endorsed the privatisation of FWBL and urged recapitalization of the Bank by bringing in strategic investor with understanding of banking business with focus on women development.
Privatisation Commission Board, in its meeting on January 17, 2017, recommended inclusion of FWBL in the 'Privatisation program for early implementation' which was submitted to the CCoP for its consideration and approval.