Islamabad: After successful negotiations by the Ministry of Commerce, Chinese authorities have eased the regulations for Pakistan’s financial sector which will make it easier for Habib Bank Limited (HBL) to establish a branch in China.
HBL will be the first South Asian commercial bank to open a division in China. It will be located in China’s northwest city of Urumqi.
“The bank has received formal approval from the Chinese authorities and will open its branch by the end of this year,” announced Commerce Minister Khurram Dastgir, accompanied by the president and CEO of HBL, at a press conference on Monday.
The minister said after successful negotiations with the Chinese authorities under the Trade and Investment Agreement 2009, they relaxed their criteria for Pakistan’s banking sector by curtailing the currency reserves limit from $20 billion to $15 billion.
Additionally, the authorities waived the condition of operating successfully for three years and restricted the use of Chinese currency to only one year.
The banking channels will be opened under the Trade and Investment Agreement signed by the two countries. Under the agreement, both sides have agreed to provide concessions to each other in 11 sectors including the banking sector.
Dastgir was optimistic that the step would enhance trade facilitation between the two countries and they would now be able to open letters of credit with HBL instead of a foreign bank.
“This initiative will also help Pakistan’s banking channel to reach the Central Asian countries bordering Urumqi.”
Replying to a question, the minister said availability of Pakistan banking channels in China would also be helpful in overcoming the challenges of over and under-invoicing in bilateral trade as most of the businessmen conducted trade through cash.
HBL President Sultan Ali Allana said HBL’s initial plan was to cover the China-Pakistan Economic Corridor trade route and it would then expand its branches to other cities of China.
He said they had got approval from the Chinese authorities and the first branch would be opened in Urumqi before the end of current year.
“HBL has a long-term strategic plan in China and will broaden its channels in other cities in future with appropriate investment,” said Allana.
The commerce minister appreciated the HBL’s initiative to avail itself of the concession under the bilateral trade agreement. Following HBL’s example, he said, other commercial banks would take steps to take advantage of the relaxation in rules offered by the Chinese authorities.
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