Write a note on 1. Stock Exchange 2. IDBP 3. PICIC 4. NIT 5. ICP 6. EPF 7. NDFC 8. BEL 9. Insurance companies 10. Combined companies 11. HBFS 12. SBFC
In Pakistan capital market mainly consists upon the following institution :
1. STOCK EXCHANGE :-
It is a market for existing securities which are issued by the public authorities. Stock exchange provides a place to the buyers and sellers of the shares and securities. Stock exchange indicates about the good or bad health of the economy. If the share prices are rising it means country is running on the path of development and prosperity. If the share prices are falling, it is sign of downfall of the economy. At present there are two stock exchanges in Pakistan. The Karachi stock exchange was registered in 1949 and Lahore stock exchange in 1971.
2. PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION (PICIC) :-
The Pak industrial credit and investment corporation was established in 1957 with the help of Govt. of Pakistan and world bank. The private domestic investors hold 65% shares and the remain 35% has been taken by foreign investors from Japan, U.K, West Germany and France. A board consists upon the 20 members. Five members are foreign share holders. The Pakistan industrial credit and investment corporation provides the financial assistance to the new industries. Before advancing loan it examines the profitability and its importance to the economy. The objective of the Picic is to support the private industrial sector, in form of local and foreign currencies. It also provides technical skill to the industrialists. Corporation also arranges direct loans from abroad.
3. NATIONAL DEVELOPMENT FINANCE CORPORATION (NDFC) :-
Its main objective is to promote industrial expansion and economic growth in the country. It provides technical and financial assistance to the new and other projects. Railway, Airlines, Shipping, Ports, Steel Mills and Textile is financed by the NDFC.
Any one firm or individual can purchase the NDFC certificates. It provides large term and small term loans. NDFC offers higher rate schemes in the country with the maximum safety and security. NDFCs financial resources comprise of capital and reserves deposits in local and foreign currencies. World bank, Asian development bank and Islamic development bank also provide finance to this institution. The board of directors compromises of six directors including chairman, all are appointed by the Federal Government.
4. NATIONAL INVESTMENT TRUST (NIT) :-
The NIT was set up in 1963.. It is a joint stock company with paid up capital of 1.2 million. The NIT was converted into interest free organization in 1979. It was established to mobilize the savings to meet the growing needs in the country. It announces the rate of profit on the unit after every quarter. Now its branches are availabale in the big cities of the country. The national bank of Pakistan acts as a trustee of NIT. It also undertakes sales and purchase of units along with other commercial banks. Zakat is charged at the rate of 2.5% on the purchasing value of the NIT units.
5. INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN (IDBP) :-
It is another important source which supply the funds for industrial development. It provides medium term and long term credit facilities. The loan are granted for the establishment of new industrial units and for the replacement needs of old units. The major objective of this bank is the spread the benefits of industrialization in all the classes of the people. It issues the loans on behalf of the Govt. and provides finance in the form of equity. It also encourages the establishment of industries in the less developed areas of the country. It pays due regard to the export oriented industries and those industries which are based on domestic raw materials.
6. INVESTMENT CORPORATION OF PAKISTAN (ICP) :-
It was set up in 1966. Its major objective was to develop the capital market in the country. It has to provided the sound base for investment in Pakistan. The authorized capital of the ICP is 200 million Rs. It has opened the branches in important cities to increase the share holders in the country. This corporation has also started the scheme of profit and loss sharing in 1980. The ICP mutual funds are operated on interest free return. It mobilizes the savings of public inside and outside the country.The fund amounting to Rs. 280 million has been fully subscribed. One board of directors supervises it which has eleven members including chairman. These are appointed by the federal Government.
7. EQUITY PARTICIPATION FUND (EPF) :-
It was established in 1970. Its major objective was to improve the growth of small and medium size of the private sector. It had to give priority to the less developed areas of the East and West Pakistan. After the Dacaa fall in 1973 it was reorganized. The authorized capital of the Fund is Rs. 200 million, which is contributed by the federal and provincial Govt. State bank and institutional investors. Any how its main objective is to provide equity support to the less developed areas to improve their economic condition.
8. BANKERS EQUITY LIMITED :-
It has started functioning in 1980. Its object is to improve the private sector investment and capital market. It also works on the basis of interest free loans upto 1984 it approved financial aid for 25 projects.
9. INSURANCE COMPANIES :-
In Pakistan there are three insurance companies which are playing very effective role for the capital market. State life insurance corporation was set up in 1972 and its position is the strongest then the other while Pakistan insurance corporation and national insurance corporation services also can not be ignored in this regard.
10. COMBINED COMPANIES :-
Pak Saudia company, Pak Kuwait and Pak Japan companies are also playing important role to improve the industrial and agricultural sector in the country. These are providing finance to the different sectors and improving the capital market in the country.
11. HOUSE BUILDING FINANCE CORPORATION (HBFC) :-
This institution was established in 1952 to advance the loans for the purchase of land and construction of houses. In December, 1978 the interest was eliminate from the operation of house building finance corporation. There is a board of eight directors which manages the affairs of the corporation. The house builder can get finance from the corporation once in life upto Rs. 1 lakh. Maximum repayment period is 15 years. No doubt this corporation is very useful in creating the new assets in the country. Besides the share capital of Rs. 12.5 million it borrows from state bank, debentures and Govt.
12. SMALL BUSINESS FINANCE CORPORATION (SBFC) :-
It was set up 1972. Its main aim is to provide financial aid to the small businessman, to increase the rate of production and employment in the country. Those people who have some technical know how but they are financially poor, they can get the finance from this corporation. Its head office is at Islamabad. Cottage and small scale industry is financed by this corporation. The corporation has also Islamized its corporation in 1980 by eliminating the interest.