ISLAMABAD: The National Assembly was informed on Tuesday that the Surrey Palace had been sold to a billionaire from Qatar last month at a price six times higher than the original one. MP Bhandara, a minority MNA of the ruling PML, made this disclosure on a point of order, and surprisingly no member from the Pakistan People’s Party Parliamentarians rose to reject his statement. The opposition parties, particularly the Pakistan Muslim League-Nawaz and even the ruling Pakistan Muslim League have been castigating Benazir Bhutto and Asif Ali Zardari for swindling billions of rupees and purchasing the palace. However, this tirade by Bhandara after the much-discussed reconciliation between President Musharraf and Benazir Bhutto, surprised many in the House as well as in the Press Gallery. Bhandara said now there is no need for the PPP to worry as the National Reconciliation Ordinance had already been promulgated. He urged the former owner of the palace — indirectly asking Benazir Bhutto — to donate the hefty amount to the government to eradicate poverty that already was on the decline. Bhandara blamed “the democratic period” from 1988 to 1999 for rampant corruption that added to poverty. He pointed out that increased numbers of mobile phones, cars, and widespread use of electronic gadgets in the rural areas was a strong indication that poverty had been reduced during the past few years.
He pointed out that increased numbers of mobile phones, cars, and widespread use of electronic gadgets in the rural areas was a strong indication that poverty had been reduced during the past few years.
MP Bhandara must be smoking something illegal. It has nothing to with reduction in poverty, but easy lending from banks, & introduction of the credit system. Which means more people are in debt today then they were in 1990s.
MP Bhandara must be smoking something illegal. It has nothing to with reduction in poverty, but easy lending from banks, & introduction of the credit system. Which means more people are in debt today then they were in 1990s.
You mean one can borrow in Pakistan even if they cannot afford to pay back? You see, in UK it is very difficult to borrow more than what bank reasonably believe borrower can afford, as if Bank would lend to person that cannot afford to repay than bank won’t get their money back, and it would be useless to even sue that person because that person has no ability to return what they borrowed. Result would be that if bank does this a lot, they would go bankrupt.
Now you are trying to tell that Pakistani banks lend to people without seeing if they can afford to repay or not? I am sure that you are mistaken because this cannot happen anywhere. Banking is a business. Whenever bank lends, they make sure that those they are lending would be able to return the money they borrowed with interest, else Bank would never lend. Hence, even if people are buying on loan money, it means that people financial standing is getting sound and they can afford to buy things for what they are borrowing.
You mean one can borrow in Pakistan even if they cannot afford to pay back? You see, in UK it is very difficult to borrow more than what bank reasonably believe borrower can afford, as if Bank would lend to person that cannot afford to repay than bank won’t get their money back, and it would be useless to even sue that person because that person has no ability to return what they borrowed. Result would be that if bank does this a lot, they would go bankrupt.
Now you are trying to tell that Pakistani banks lend to people without seeing if they can afford to repay or not? I am sure that you are mistaken because this cannot happen anywhere. Banking is a business. Whenever bank lends, they make sure that those they are lending would be able to return the money they borrowed with interest, else Bank would never lend. Hence, even if people are buying on loan money, it means that people financial standing is getting sound and they can afford to buy things for what they are borrowing.
No the banking sector is much more matured in Pakistan now. You can not borrow without a reasonable capacity to repay. Infact Pakistani banking sector is the healthiest amongst any developing country. For example compared to China Pakistani banking sector is much more deciplined. For this the credit goes to present government. Political governments like NS (Yellow cab and rozgar scheme) and BB (political loans) misused the banking sector big time.
Another big achievement of present government was privitisation of banking sector. Although some people critisize the present government for selling these banks at throw away prices, but I think they did the right thing. Now political exploitation of banking sector is not possible in Pakistan....Privitisation helped in making this sector truly efficient....
that is true...a lot of stuff is bought on credit in pak these days!
Brother, even to take credit you have to deserve that credit. That means, you have to be financially sound (have good income) to get credit. In past only rich and influential use to get credit. Today if poor working class can get credit, it is good for them, and one should not get upset about that :).
Now you are trying to tell that Pakistani banks lend to people without seeing if they can afford to repay or not? I am sure that you are mistaken because this cannot happen anywhere. Banking is a business. Whenever bank lends, they make sure that those they are lending would be able to return the money they borrowed with interest, else Bank would never lend. Hence, even if people are buying on loan money, it means that people financial standing is getting sound and they can afford to buy things for what they are borrowing.
I'm not an economic expert, but let me say this. Comparing UK to Pakistan is way for off. UK has good regulatory system, unlike Pakistan. When a bank gives you money they usully check your credit scores to see what kind of risk they're taking. That kind of system doesn't exist in Pakistan.
Also, taking into account inflation rate which has been between 6 and 9 percent for last 8 or 9 years...how could people afford things which they could before? BTW, Pakistan will face banking crisis in near future b/c of bad loans, much like the Asian countries and Argentina faced in late 1990s, unless something is done about it soon.
I'm not an economic expert, but let me say this. Comparing UK to Pakistan is way for off. UK has good regulatory system, unlike Pakistan. When a bank gives you money they usully check your credit scores to see what kind of risk they're taking. That kind of system doesn't exist in Pakistan.
Also, taking into account inflation rate which has been between 6 and 9 percent for last 8 or 9 years...how could people afford things which they could before? BTW, Pakistan will face banking crisis in near future b/c of bad loans, much like the Asian countries and Argentina faced in late 1990s, unless something is done about it soon.
Shamraz don't compare Pakistan's banking sector with UK, but compare it with any developing country or even middle income country and you will see our banking system is way ahead....
This is one sector of the economy where we have really made a lot of progress specially after privitization and we should be really proud of that...
Political use of banking sector is today not possible in Pakistan and for this achievement atleast we should give credit to the present government....
I'm not an economic expert, but let me say this. Comparing UK to Pakistan is way for off. UK has good regulatory system, unlike Pakistan. When a bank gives you money they usully check your credit scores to see what kind of risk they're taking. That kind of system doesn't exist in Pakistan.
Also, taking into account inflation rate which has been between 6 and 9 percent for last 8 or 9 years...how could people afford things which they could before? BTW, Pakistan will face banking crisis in near future b/c of bad loans, much like the Asian countries and Argentina faced in late 1990s, unless something is done about it soon.
Well, you do not see at inflation in isolation. You have to see how wages have done. You can check how wages have done from increase in Tax. Tax increases much lower than wage increase, as allowances also increases, plus there are many people that earn lower than what income is needed to become illegible for tax.
In Pakistan direct tax has increased more than 3 times (110 billion rupees in 1999 to today 333 billion rupees in 2007) and so did overall federal tax collection that was 308 billion rupees in 1999 is over 846 billion rupees in 2007 (even though import duty got decreased substantially during last 8 years). Actually this year it would be over 1000 billion rupees. Sales tax that shows how people are spending increased from 72 billion rupees in 1999 to 309 billion rupees in 2007 (around 3.5 times)..
Pakistan minimum wages have gone up from around Rs 1200 – Rs 1300 a month in 1999 to Rs 4600 a month today (increase of over 350 percent).
But overall, prices have increased by less than 60 percent in last 8 years. So, obviously people’s purchasing power has increased substantially even if one takes into account price increase.
Shamraz don't compare Pakistan's banking sector with UK, but compare it with any developing country or even middle income country and you will see our banking system is way ahead....
This is one sector of the economy where we have really made a lot of progress specially after privitization and we should be really proud of that...
Political use of banking sector is today non possible in Pakistan and for this achievement atleast we should give credit to the present government....
Yaar I was saying that people can afford things b/c or easy access to credit, and not b/c of reduction in poverty as claimed MP Bhandara. Also, banking system might be good, but fact is there is no way to check to see financial worthiness of an individual b4 banks can issue credit.
Yaar I was saying that people can afford things b/c or easy access to credit, and not b/c of reduction in poverty as claimed MP Bhandara. Also, banking system might be good, but fact is there is no way to check to see financial worthiness of an individual b4 banks can issue credit.
Why? Is it difficult to check what a person is earning plus what existing loans they have? As for those that do not have any income or have low income or could not provide evidence of their income, I do not think that any bank would give such person loan, especially to buy consumable goods.
Yaar I was saying that people can afford things b/c or easy access to credit, and not b/c of reduction in poverty as claimed MP Bhandara. Also, banking system might be good, but fact is there is no way to check to see financial worthiness of an individual b4 banks can issue credit.
True National database of private individuals on credit worthiness is not avilable as in UK or USA....But inspite of this consumer loans are increasing at a very healthy rate in Pakistan and without much default...
Just imagine the automoblie industry..... More than 70% of the new cars sold today in Pakistan are directly leased by the banks....The whole automobile industry in Pakistan will collapse if there wasn't an effcient system of lending in this sector...
An area where we are lagging behind say compared to UK is housing sector. If we inject credit in this sector in real sense you can not imagine we can surpass the economic growth rate of China....However due to bad foreclosure laws in this sector real finance is not going in to this vital sector of consumer lending....
Well, you do not see at inflation in isolation. You have to see how wages have done. You can check how wages have done from increase in Tax. Tax increases much lower than wage increase, as allowances also increases, plus there are many people that earn lower than what income is needed to become illegible for tax.
In Pakistan direct tax has increased more than 3 times (110 billion rupees in 1999 to today 333 billion rupees in 2007) and so did overall federal tax collection that was 308 billion rupees in 1999 is over 846 billion rupees in 2007 (even though import duty got decreased substantially during last 8 years). Actually this year it would be over 1000 billion rupees. Sales tax that shows how people are spending increased from 72 billion rupees in 1999 to 309 billion rupees in 2007 (around 3.5 times)..
Pakistan minimum wages have gone up from around Rs 1200 – Rs 1300 a month in 1999 to Rs 4600 a month today (increase of over 350 percent).
But overall, prices have increased by less than 60 percent in last 8 years. So, obviously people’s purchasing power has increased substantially even if one takes into account price increase.
Ok Sa1eem lets talk in real terms. Lets take your number of Rs4600 per month (minimum wage). Thats less than $100 dollar per month. Let say Joe Average wants to buy a fridge. Cheap one here in the US will cost you around 500 dollars. Now keeping in mind that Joe Average has kids and wife to feed...so how long and how much will he have save before he can afford to buy a refrigerator? I will ref. you back to what Mr. Bhandara said.
Also, explain to me how many people can afford to buy a car by paying cash out of the pocket? The point I'm trying to make is that its true that people are indeed buying these things, and not b/c they're tons cash thanks to economic boom, which debatable, but b/c of easy access to credit which mean more people in debt today thn in the past.
[quote]
He pointed out that increased numbers of mobile phones, cars, and widespread use of electronic gadgets in the rural areas was a strong indication that poverty had been reduced during the past few years.
[/quote]
True National database of private individuals on credit worthiness is not avilable as in UK or USA....But inspite of this consumer loans are increasing at a very healthy rate in Pakistan and without much default...
Just imagine the automoblie industry..... More than 70% of the new cars sold today in Pakistan are directly leased by the banks....The whole automobile industry in Pakistan will collapse if there wasn't an effcient system of lending in this sector...
That is precisely that point I was trying to make. I do not know, nor do I pretend to know about understanding of the banking system. However, I do know that people are buying lots of stuff on credit in Pakistan, and in absent of strong regulatory system banking system will be in trouble b/c of bad loans.
