ISLAMABAD – In a major breakthrough in the export of banking services to China, Habib Bank Limited (HBL) will open its branch in Urumqi by August 14 this year.
“The establishment of a banking channel in China will greatly facilitate the flow of capital for the mega projects that the government is undertaking with the Chinese support,” said Commerce Minister Khurram Dastgir Khan on Monday.
Addressing a press conference along with HBL Chairman Sultan Ali Illana and President/CEO, HBL Nauman Dar, he said that opening of Pakistan’s bank branch in China would give momentum to the China-Pakistan Economic Corridor (CPEC) projects besides facilitating the businessmen of both the countries.
He also told the newsmen that the Ministry of Commerce had negotiated with China to relax the stringent requirements for the entry of foreign banks into the Chinese market, as opening up of bank branches in China was very difficult.
The minister stated that as a result of successful trade diplomacy of his ministry, the minimum asset requirement for a Pakistani bank was reduced by $5 billion, which resulted in a Pakistani bank qualifying for entry into the Chinese market.
Giving further details, he said that asset requirement for setting up a bank branch in China had come down to $15 billion from $20 billion for all Pakistani banks.
“This is a landmark event, which will pave the way for other Pakistani banks to follow suit and fully utilise the concessions offered by the Chinese side,” Dastgir hoped.
He also said that opening of Pakistani banks in China would prove to be the first step towards financial and capital connectivity with the Central Asian states, where Pakistan is vigorously pursuing road, trade and transit connectivity.
Terming the decision of opening HBL branch in Uramqi as timely, the minister said that Urumqi was a growing commercial and trade center and the regional hub of China’s Belt and Road Initiative in Central Asia.
“The Pakistani banks can also open their businesses in RMB (Chinese currency) after the completion of one year of their business in China, which was previously three years and business could only be done in dollars,” Dastgir said, and added, “The condition for being profitable for two consecutive years prior to the submission of application has also been removed.
Replying to a question, the minister said that Pakistan had not granted any special concessions to the Chinese banking sector, as Pakistan’s banking regulations were liberal.
However, he assured the Chinese that their applications would be processed fast.
Dastgir hoped that the opening of the Pakistan’s bank branch in China would also help in the documentation of trade, and would resolve the issue of under-invoicing and over invoicing.
“Presently, the inward remittance /LC are routed through foreign banks.
Once the Pakistani banks are opened in China, the financial transaction would be routed through our own banks,” he added.
He said it was expected that a substantial amount of money would move through our banks, which would not only augment the country’s reserves, but would help in the expansion of economy.
“The Chinese investment for the economic corridor will be channelized through the Pakistani banks.
It is expected that the current account deficit is expected to lower following this initiative,” the minister elaborated.
Replying to a question, HBL chairman said that the bank planed to enhance its presence all along the CPEC and further into the financial hubs of China.
“HBL would expand its network in China initially on the trade rout of CPEC,” he said, and added, “We would go wherever there are Pakistan’s strategic interests in China.