Neha Sood
The branches of SBI and Bank of India that existed in Pakistan till 1965 will not be revived owing to the hike in MCR (Minimum Capital requirement). This is the amount to be kept by the foreign banks if they are to operate in Pakistan.
Though the air is thick with the speculations that the decision is due to the very fresh and on-going tensions between the two nations; the managements have denied any such reason behind the move.
The two banks approached Pakistan’s central bank, i.e. State bank of Pakistan in September regarding the approval to re-open the branches in Karachi and Lahore. This was done as part of exchange programmes according to which the Pakistan’s banks ‘United Bank of Pakistan’ and ‘Habib Bank’ were to approach RBI for similar permissions. However, the Pakistani Banks have not yet started with it.
The minimum paid-up capital for foreign banks to operate in Pakistan has been increased to Rs.1400 crores.
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