The State Bank of Pakistan (SBP) has been barred from clearing Indian companies for investment in Pakistan without the prior approval of the federal government, reliable sources in finance ministry told Business Recorder here on Thursday. "Indian companies are not allowed to make investment for the present and the State Bank of Pakistan should seek the government approval before granting any such permission," sources quoted the Economic Co-ordination Committee (ECC) of the cabinet as giving directions to the central bank.
The issue came under discussion when the Economic Coordination Committee was informed that under the powers delegated to it, the SBP granted seven cases for equity-based investment aboard during the third quarter of the current fiscal, involving total remittances of $2.837 million. Economic Coordination Committee, however allowed M/s TRG Pakistan Limited for equity-based investment abroad of $28 million.
The company''''s business model was to acquire call centres and other business outsourcing companies in high cost locations like the United States of America (USA) and the United Kingdom (UK) and improving their profitability by transferring a proportion of their labour intensive operations to Pakistan.
TRG Pakistan intended to acquire US companies through TRG international. The company would raise financing through a 6:10 rights issue ($23 million), equity injection of $3 million and equity purchase of $2 million by the International Finance Corporation (IFC).
The sources said that the Economic Coordination Committee was of the view that investment by International Finance Corporation was a healthy indication for future prospects, adding that initial scrutiny of proposal by the State Bank of Pakistan found it to be consistent with the prescribed criteria set for equity-based investment.
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