State Bank of Pakistan SBP has reportedly allowed Bank of China Ltd to start banking business in Pakistan.
This is the second Chinese bank to enter in Pakistan, earlier SBP issued a banking license of a Chinese bank in May 2017. The Bank of China Limited has completed the regulatory requirements of SBP that were necessary to commence banking business in Pakistan, said in a press release on Monday.
The Bank of China ltd is a subsidiary of China Central Huijin, the investment arm of the government of China. In other words, Bank of China is a state-owned bank in China, it is the 4th largest bank in the world in terms of Tier-1 capital and the 5th largest bank in the world in terms of total assets.
The bank is listed on Shanghai Stock Exchange and Hong Kong Stock Exchange, the bank has footprints in 50 countries globally.
According to SBP, the Bank of China Ltd will strengthen the bilateral relationship between China and Pakistan. It will also boost the confidence of international investors in the country’s banking sector and stable economic outlook.
The Bank of China will provide specialized banking services in Pakistan in order to fuel financial needs of CPEC related projects using its global banking experience and strong technology platform.
How Chinese Banks Could Affect the Country’s Economy
There is no doubt that Chinese Banks will provide better financial services to the companies that are involved in CPEC projects, it might also help the local sector to boost its business and development projects but the real question is; where the money will come from and where it will go in simple layman’s words.
The money will initially come from Chinese Banks, which will be multiplied when it is invested in the country and then it will go back to China. Pakistan should regulate Chinese banks properly if they wish to leverage from this opportunity effectively, weak policies would not benefit the country, in the long run, heavy corporate taxes, strong legislation, and regulations would do the job, otherwise, Chinese banks would take the cream and what’s left over is skimmed milk.