Most management pundits say there was little justification for nationalizing the banks and life insurance companies but that was done in the seventies and attempts were made to give the party workers or the favorites key posts or employment without regard to merit and political supporters got loans on dubious grounds most of which are said to be in default. Some bankers have been nabbed but some are still absconding because of their role in approving shady loan applications and doubtful financial transactions in connivance with the politicians in power.  Many politicians who had acquired loans under fictitious names and fraudulent means are still Scot-free as charges of fraud against them cannot be proved.
 

Now under the advice of International Aid Agencies the banks would go back to the private sector. The plans for selling State Life or floating its shares in open market have been in pipeline for the last 10 years. State Life still continues to capture about 90 % of total industry premium for life insurance and its assets and vast network of buildings and offices could be valued to over RS. 100 Billion. Opponents of denationalization say that if nationalization has been successful in India why do we need to sell State Life or float its shares in stock exchange. Some opine that mutualization is a better proposition.

After his promotion from the post of Additional Secretary (Finance) as Federal Secretary Late Qamaruddin Siddiqui was posted as Chairman of State Life in 1986. He used to say that he found State Life to be quite a clean organization almost free from corruption and loot. That is why its assets are rapidly growing. Credit for organizing State Life on sound footing goes to people like H. U. Beg, D. M. Qureshi,  S. A. Walajahi, Samiul Hasan, Patrick Sequeira, Late Nasim A. Jafri, M. A. M. Siddiqui, Late Nisarun Nabi, Late Nazier Jajvi and many other Executives from within the life insurance industry. However, State Life’s assets would have amounted to much larger amount had State Life been given free hand in investments and employment policies. But there has always been interference by the ministers like ban on purchasing real estate in areas like Karachi and pressure for appointing their supporters. People like Samiul Hasan, Late Nazir Jajvi and M. A. M. Siddiqui resisted such pressure and faced transfer to dead end jobs or even termination as director of State Life but later they were honorably reinstated by the new regime. 

The expense ratio of State Life has been exceeding the mandatory limit of 15% right from the beginning as the Government had decided not to terminate redundant staff. Due to political pressures brought about by Field and Staff Unions the salary and commissions rose to much higher level than the erstwhile companies. Despite that State Life continued to pay handsome reversionary bonuses to the policyholders. Much higher increase in Bonuses would have been possible had State Life followed the same policies as Life Insurance Corporation of India. But State Life failed to maintain quality in recruitment and training of Field workers to the same extent as they did in India. In India the mandatory renewal expense ratio limit was reduced from 15% to 12.50 per cent but in Pakistan it had been touching 28% or so.    

State Life bosses often make false claims of providing jobs to several thousand people every year. The fact remains that about 90% agents recruited on commission leave the profession by selling a few policies and the average commission earning of Sales Representatives remains much below the subsistence level. The total number of policies in force as compared to 1995 has gone down but the premiums and average premium policy has sharply increased thanks to inflation. 

There was much furor in 1997 over purchases of property by State Life in different cities of Pakistan at the expense about a billion rupees. Media reports alleged gross irregularities on the part of senior executives and after lot of investigating the then Commerce Minister had to admit publicly that the value of the properties purchased by State Life during last three years was then had gone up to much more than the purchase price paid and it was hinted that at worst the brokerage may have been shared.

The World Bank does not rely on the ability of the Government either here or anywhere else to run commercial organizations. 

Last regime in the name of Right Sizing the banks fired many experienced and qualified bankers and hired on fabulous salaries so called experts having political links who have made banking expensive and inefficient. 

Cheque Book is costly 
In the good old days Pakistani banks neither charged any service fee for issuing chequebooks, nor they penalized the poor account holders for maintaining the balance below a prescribed level.  Now exorbitant charges are levied for issuing chequebook. 

After nationalization their service has deteriorated from bad to worse. The previous regime inducted so-called professionals at exorbitant salaries and perquisites almost hundred times higher than a Ph.D. Lecturer in the University. 

Exorbitant Service Fee 
RS. 50/- or so per month service charge is levied if the account balance is less than RS. 5000/- or so, which is higher than the monthly pension of most of the victims. It is reliably learnt that after many hue and cries the State Bank is asking the bank to be lenient with pensioner. What is more surprising is that some banks started charging it even on dormant accounts and none of the account holders were sent any sort of notice! 

Lethargic Clearance of cheques 
In this age of electronic exchange of info the clearance of cheque is done at snails pace. Ordinarily it may take two to three days and much longer period - many days if the cheque pertains to out station. 

Most of the highly paid experts sitting there in the palatial offices do not seem to be interested in utilizing Internet Or Intranet or secure servers to modernize banking. 

No Need to Send Debit / Credit Advices or Monthly Statements! 
Most of the banks in public sector have abandoned the practice of sending debit or credit advice or even monthly statement and saving million of rupees in postage etc.. 

Now that outstation cheques take about a week or two, some traders try to send money by bank draft or Pay order. It must be Shylock’s spirit that advised that on such bank drafts heavy withholding tax should be collected. The bank drafts are now rarely used and travelers' cheques are becoming popular. 

Some foreign banks who have a very high limit for maintaining minimum balance are now planning to start charging fees for issuing credit/debit advices, monthly statement etc. 

Credit Cards 
In the pre-nationalization period the leading Pakistani banks had credit/debit cards. They were accepted at hotels and various other establishments and the charges were quite low. 

After nationalization vigorous efforts were not launched to promote credit card culture in our country.   But when the foreign credit card companies came, credit card became popular despite heavy charges. And Pakistani banks continued their outdated and over cautious approach and soon started to rely on foreign credit cards instead of developing their own network. 

Over 50% pa compound Interest on Credit Card balances! 
These political protégés (so called experts) have adopted practices more   cruel than the Shy lock and Muhajans. Believe it or not, one bank charges 3.50% per month interest in the name of service fee on credit card balances - almost 2 to 3 times higher than USA where in many States legal restriction exist so that bank may not charge more than 12% or so per annum. But why State Bank is keeping mum is anybody's guess! 

Poor Conditions for Utility Bills Collection 
The plight of people who flock to pay the Utility Bills to the branches of authorized banks has many times been mentioned in press but half hearted efforts have not made any difference. The people are made to stand in a queue out side the bank premises in scorching heat and dust and wasting their time. The suggestions for opening extra windows for the peak load period of about 3 days in a month or having drop boxes for payment by cheques go on deaf ears. 

The role of the Finance Ministry and State Bank has been disappointing in protecting the interests of the account holders specially the senior citizens. They seem to have totally forgotten what the father of the Nation had said in his inaugural address in the Opening ceremony of the State Bank of Pakistan.