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Chairman HBL Calls for Regional Clearing System to Facilitate Trade

While speaking at the 18th Annual Council Meeting of the Shanghai Cooperation Organization Interbank Association, Sultan Ali Allana, Chairman of HBL, said that "with changes in regional trade, logistics and food security, it is of utmost urgency to take concrete steps to put in place a regional clearing system, which can allow member countries to trade amongst themselves."

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Habib Bank  (HBL), the largest commercial bank in Pakistan, attended the 18th Council Meeting of the Shanghai Cooperation Organization Interbank Consortium (SCO-IBC) on August 23, 2022, in Tashkent, Uzbekistan. As the only commercial bank in this forum and Pakistan’s largest bank, HBL is positioned to play an integral role in the promotion of regional trade, investment and finance.

Read more: HBL attends the SCO-IBC moot

Addressing the annual meeting, HBL Chairman Sultan Ali Allana termed it “imperative to prioritize sustainable development goals.” The Chairman also disclosed that HBL has collaborated with China to develop green lending activities and a loan management framework as part of its Commitment to Environmental, Social and Governance (ESG).

Allana also underlined that HBL, as the first foreign bank under BRI-GIP (Green Investment Principles), has started the adoption of the China-EU Green Taxonomy. He said that the project, which will be finished this year, aims to “position HBL to access foreign investment, maybe including the ability to issue a green bond in China’s capital market.”

According to Allana, developing a regional clearing system to facilitate trade among SCO member nations is of “utmost urgency” in light of significant changes in regional trade, logistics and food security. “Perhaps we can use one or both of the regional currencies to facilitate trade between the member nations while working to create a regional currency over time,” he suggested.

Allana also talked about the importance of technology and Artificial Intelligence which can “greatly enhance outreach.” In addition, he urged a financial inclusion plan that would reach a broader population mix and provide access to the underprivileged.

The Chairman mentioned that HBL has taken “revolutionary” measures to increase its customer base through innovative digital solutions, drawing on China’s use of technology to bring millions out of poverty. “We have much to learn from China, which has been successful in bringing over 99 million people out of poverty over the last 40 years,” Allana said.

Read more: HBL Enriching Lives: Leading a purpose led transformation for itself & the nation

The HBL Chairman’s proposal for a regional clearing mechanism was well received by member nations, with media channels providing special coverage to his speech.

SCO-IBC currently has eight member banks, including HBL, and two partner banks. The meeting was also attended by the heads of the SCO member states, leading development institutions, members of the SCO Secretariat and SCO IBC partner banks.

It is pertinent to mention that HBL received the honor of becoming a partner bank of the SCO IBC on August 8, 2014, and in 2018, when the 14th annual council meeting of SCO-IBA was held in Beijing, it was granted the status of a member bank.

HBL has played a unique role in the region over the years, promoting trade, investment and finance between SCO member nations, especially in the China-Pakistan Economic Corridor (CPEC).

Read more: The SCO Summit and the future expectations

Since the commencement of CPEC in 2013, HBL has formed a specific China coverage team consisting of Chinese and Pakistani bankers in Karachi, Lahore and Islamabad to provide financial services exclusively to Chinese companies. The bank set up a branch in the Gwadar Free Zone (GFZ) in 2016 for Chinese investors and people who were constructing factories in the zone.

HBL has expanded into innovative and diverse financial services, owing to the high-quality development of the second phase of CPEC. In 2019, HBL, together with 27 other worldwide institutions, became one of the first to sign the Green Investment Principles (GIP) for the Belt and Road, encouraging green finance and investment in CPEC projects.

SCO-IBC

The SCO is an intergovernmental organization established in June 2001. Since its creation, SCO’s scope and bureaucracy have expanded, making it a multifaceted and multilateral institution. The SCO currently comprises eight member states (China, Uzbekistan, Kazakhstan, Kyrgyzstan, Russia, Pakistan, Tajikistan and India). Pakistan was formally admitted as a full member of SCO at the 17th Meeting of the Heads of State Council of SCO in Astana, Kazakhstan on June 9, 2017. Pakistan had been an observer in the SCO since 2005, prior to its admission. It was the first observer state to apply for full membership in 2010.

Pakistan’s admission to the SCO is a significant milestone in its foreign policy. Pakistan has historical and cultural linkages with the SCO and its members, as well as strong economic and strategic complementarities. The country’s interests and goals converge in various domains and issues.

The primary aim of the organization nevertheless remains to build mutual trust and foster multidimensional cooperation among its members, which is defined in SCO’s charter as: “strengthening mutual trust, good neighborliness and friendship among member states; developing effective cooperation in political affairs, economy, trade, science and technology, culture, education, energy, transport and environmental protection; and working together to maintain regional peace, security and stability.” Many significant developments have taken place since the existence of SCO.

With a combined population of over 3.3 billion, the SCO member states cover nearly half the human population. The SCO is the world’s largest regional organization in terms of geographic coverage and population. It has evolved into a legitimate forum for its members’ political and economic interaction without direct Western involvement. SCO creates a favorable environment for economic investments and interconnectivity projects that aim to improve trade and commerce and achieve a free flow of goods and capital.

The SCO Interbank Consortium (SCO-IBC) was established by the Council of Heads of Government on October 26, 2005, to provide funding and bank services for investment projects sponsored by the governments of the SCO member states. The SCO-IBC Council meets ad hoc upon the consensus of all the parties at least once per year. The Presidency of the Council is carried out on a rotational basis.

The primary tasks of the SCO-IBC are to organize funding for investment projects; enhance interaction with financial institutions of observer states and partners in the framework of SCO dialogue; cooperate with leading economic institutions operating in the SCO area (the SCO Business Council and the Eurasian Development Bank); exchange experience and cooperate in personnel training.

Note: A slightly different version of this article appears in the 2022 September Magazine.

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