to the bank. as far as real estate is concerned, the banks cannot finance purchase of plots of land and only against housing. the direct lending for mortgage is miniscule but indirectly the banks can be put to risk because of inflated values of property held as collateral. the sbp insists that only the forced sale value and not the market value should be taken into consideration for valuing the collaterals. this will save the banks from downward movement in the market prices of the real estate. another risk mitigating measure taken by the sbp is to extend the coverage of all loans – corporate and consumer - in the credit information bureau. this real time on - line information service which is currently limited to the corporate borrowers will enable the banks to appraise the credit worthiness of prospective consumer loanees, determine their aggregate repayment capacity and verify the credit history before approving the loans. thus, a card holder who already has four to five credit cards and reached his borrowing limit will find it difficult to get a card from another bank. seventh, the human resource base of the banking system is being upgraded. emulating the example set by the sbp in recruitment of new employees through merit based competition, other banks have also started following the same system. i am, therefore, sanguine that the new breed of bankers will be infused with professional skills. we have formed a task force consisting of the hr managers of all the banks and mandated them to come up with industry wide standards for training, promotion, compensation and benefits, severance and continuing professional education. the banks have to move away from the old paradigm of seniority as the sole criterion for career advancement. in future the promotions should be based on upgradation of skills and demonstration of performance. in a knowledge - based economy and a service - oriented sector, it is absolutely imperative that investment in human skills is given utmost priority. eighth, five years ago the technological base of the banking industry was not even at a rudimentary stage. the sbp embarked upon a technology upgradation project which will be completed this year after five years ’ serious efforts. the banks have also followed the lead and from almost a scratch we have more than 800 atms and almost half of the branches nation - wide are connected on - line. by the end of 2005 it is expected that most branches will have on - line and internet banking facilities. the real time gross settlement system ( rtgs ) will allow inter - bank transfer of funds

##ance by regulators. ” the rosc - cg assessment further notes that “ the sbp has also been instrumental in improving corporate governance in the banking system, by requiring banks and dfis to adopt the code, and by assessing compliance with other relevant aspects of prudential regulation specifically applicable to banks / dfis. ” similarly the world bank ’ s 2007 report on doing business in south asia recognizes that “ pakistan provides relatively strong protections for minority shareholders against the misuse of corporate assets ”. it ranks 19th worldwide on protecting investors. outstanding corporate governance reform agenda while considerable progress has been achieved in enhancing corporate governance practices of banks, sbp is geared towards filling in the remaining gaps. in this regard, foremost is the need to develop a suitable cadre of professional directors who are knowledgeable of banks ’ affairs as well as independent of their management and majority shareholders. allied to this is the need to clarify and strengthen directors ’ fiduciary duties to act in the interests of the bank and all of its stakeholders. it is also essential for banks to provide sufficient time and information to directors to prepare for board meetings, structure board meetings so as to allow ample time for discussion and establish appropriate criteria for assessing and improving performance of directors, including independent directors. to raise awareness on these and related aspects, sbp is working towards issuing comprehensive corporate governance guidelines for banks. as earlier discussed, pakistan ’ s corporate and financial sectors present corporate governance issues peculiar to complex ownership and group structures. by conducting operations through a complex network of subsidiaries, controlling shareholders often acquire control of operations and / or cash flows disproportionate to their equity stake in individual companies. the key issues that arise as a result include : ( i ) inequitable treatment of stakeholders ; ( ii ) dominance of controlling shareholder - directors over board proceedings ; ( iii ) lack of independence of the board from the management ; and ( iv ) channeling of bank resources to the benefit of group concerns. in order to address such corporate governance issues, there is a need for group supervision by the regulators. as regard the banking supervision, sbp is working towards introduction of consolidated supervision whereby it will not be monitoring banks as a stand - alone entity but rather as part of the entire banking group. this will help to evaluate the strength of the entire group and to mitigate risks arising from group companies. a significant component of consolidated supervision will be review of group structures and detailed examination of related party transactions. i would also like to