Pakistani Banks and Credit Companies

[Sugarcane]

well for business people prefer to issue cheques for large amount. If the dealer is living in different city... They TT money and dealer receives on the same day. People trust each other so millions of rupees worth of trade only on the phone call and you might be paying in one-off payment made after months of the first transaction.... depends upon trader to trader, nature of business or the relationships they have developed with each other...

but in most cases it's TT or Cheques for large amount and cash for small transactions

Man your knowledge is seriously outdated regarding Pakistan e-Banking/Online Transfer is mostly used these than TT, In case of cash Money Transfers like Western Union

 

[A1Kaid]

Yes we know Western Union is widely used in Pakistan every poor Pakistani knows about Western Union it's where they receive money from expats while they sit in Pakistan, sleep, eat, smoke, gossip, watch dramas, walk, drive, not work, be lazy, etc while the expat is busy and hard at work making money.

Every Pakistani knows western union.

 

[Sugarcane]

So I want to know how do many people pay for these large houses in Pakistan? The kotis in cantts you see in Pakistan that are 45 crore more or less, is it through loan? Then pay incremental payments? Must be hard to get such a loan for people considering most Pakistanis have no credit history than again if your buying a 45 crore koti in Lahore cantt I would expect you have good credit standing and can make at least 1/4 down payment.

You will be surprised that 90% of these deals are on cash. However in new residential areas, you can get book a house and pay in installments 3-5 years, so you first have to pay around 80% in installments to get the house. Very few people go for mortgage.

Yaar I don't think Citibank cares about Pakistan's market, as their isn't a large well established financially stable consumer base for their credit company. Credit card companies prefer a consumer base that has $$$

Pakistani Market have highest interest rates and every bank want to do business - otherwise why dozen of multinational banks are operating in Pakistan, however current law and order situation & energy crisis are the biggest hurdles and damaging business these days.

 

[A1Kaid]

http://www.defence.pk/forums/econom...anis-open-bank-accounts-pakistani-banks.html#


Read this thread.

 

[Sugarcane]

Yes we know Western Union is widely used in Pakistan every poor Pakistani knows about Western Union it's where they receive money from expats while they sit in Pakistan, sleep, eat, smoke, gossip, watch dramas, walk, drive, not work, be lazy, etc while the expat is busy and hard at work making money.

Every Pakistani knows western union.

Western Union and other Money Transfers are also being used for inter-country transfers mostly by people who don't have bank accounts

 

[A1Kaid]

You will be surprised that 90% of these deals are on cash. However in new residential areas, you can get book a house and pay in installments 3-5 years, so you first have to pay around 80% in installments to get the house. Very few people go for mortgage.



Pakistani Market have highest interest rates and every bank want to do business - otherwise why dozen of multinational banks are operating in Pakistan, however current law and order situation & energy crisis are the biggest hurdles and damaging business these days.

You will be surprised that 90% of these deals are on cash. However in new residential areas, you can get book a house and pay in installments 3-5 years, so you first have to pay around 80% in installments to get the house. Very few people go for mortgage.

That's crazy but that's what I was thinking a lot of wealthy people did, is transfer the funds from bank account to the real estate company. I think that is an inefficient way of doing things.

 

[Sugarcane]

That's crazy but that's what I was thinking a lot of wealthy people did, is transfer the funds from bank account to the real estate company. I think that is an inefficient way of doing things.

I didn't get your point?

 

[A1Kaid]

I didn't get your point?

What are you doing in Iran? Do you speak Farsi?

 

[Hyde]

Man your knowledge is seriously outdated regarding Pakistan e-Banking/Online Transfer is mostly used these than TT, In case of cash Money Transfers like Western Union

well let me confess that I have not travelled to Pakistan since past 4 years so the circumstances may have changed. But let me reassure you that i was merely talking about business transactions and not personal/general transactions. I was talking about millions of rupees and not small transactions that could be sent from online banking. At least my family in business-relationships still prefer to issue cheques over online transfers (small or large doesn't matter as the cheque books are used for recording transactions, for proof etc).

In UK we have an online transfer limit of 10,000 pounds per day. When I was buying a property, I had to transfer about 50,000 pounds to my solicitor's account in 5 days as I could not send such a large amount in one day. If I had given a cheque it would have been sufficient in one-off payment. So by that logic i am sure there would be certain limitations on online banking in Pakistan as well. My knowledge might be outdated but my last post was solely based on my personal experiences

 

[A1Kaid]

I didn't get your point?

My point is I think it's not efficient for potential home buyers to have to wait until they accumulate every rupee or dollar in order to purchase their new home, when they can get a home loan and then pay a mortgage. This also allows more people to own homes, because though people may not always have the cash in bank to pay for the home they at least may qualify for a home loan depending on their credit status and purchase their new home or whatever that way.

 

[Sugarcane]

well let me confess that I have not travelled to Pakistan since past 4 years so the circumstances may have changed. But let me reassure you that i was talking about millions of rupees and not small transactions that could be sent from online banking. At least my family in business-relationships still prefer to issue cheques over online transfers (small or large doesn't matter as the cheque books are used for recording transactions, for proof etc).

In UK we have an online transfer limit of 10,000 pounds per day. When I was buying a property, I had to transfer about 50,000 pounds to my solicitor's account in 5 days as I could not send such a large amount in one day. If I had given a cheque it would have been sufficient in one-off payment. So by that logic i am sure there would be certain limitations on online banking in Pakistan as well. My knowledge might be outdated but my last post was solely based on my personal experiences

I was talking about business transactions and not personal transactions.

There is no doubt businesses prefer cheques for better book-keeping and somehow to satisfy auditors there is no as such restriction from banking side, however online transfer is are increasing. And in Pakistan you can set your own limits, Same is the case in UK. You are working with default set limit, you can ask your bank to increase your limit.

However for personal transactions if sender/receiver have bank accounts than most probably it will be via online banking or ATM.

 

[Sugarcane]

My point is I think it's not efficient for potential home buyers to have to wait until they accumulate every rupee or dollar in order to purchase their new home, when they can get a home loan and then pay a mortgage. This also allows more people to own homes, because though people may not always have the cash in bank to pay for the home they at least may qualify for a home loan depending on their credit status and purchase their new home or whatever that way.

Mortgage/Home loans in Pakistan are not same is US, Here you have to prove that you have enough property/cash to get loan (quite funny, why i have to go for loan if i already have property ) and you have to bank/mortgage company will finance maximum 80% of actual price, plus interest rates are very high. So - mortgage is not a good option in Pakistan

What are you doing in Iran? Do you speak Farsi?

Consultancy, Not fluently

 

[A1Kaid]

Mortgage/Home loans in Pakistan are not same is US, Here you have to prove that you have enough property/cash to get loan (quite funny, why i have to go for loan if i already have property ) and you have to bank/mortgage company will finance maximum 80% of actual price, plus interest rates are very high. So - mortgage is not a good option in Pakistan



Consultancy, Not fluently

Here you also have to prove and meet the requirements for a home loan, like credit, your own current property value, annual income, etc.

why i have to go for loan if i already have property

In case you wish to purchase new property that is far more expensive than your current property. So when you sell your current property if its 10 crore, and the new property you want is 40 crore, you can get a home loan for 30 crore (or as much as the Bank/mortgage company is willing to offer) so you can settle in your new home if you don't have 30 crore in cash in bank, which most people aren't going to have. This way you can still purchase the new home.

As for interest rates in Pakistan, why do you think they are very high? I think it may be because credit card companies know many average Pakistanis are not good at managing credit and can't be trusted one, so in order to protect their company they tack on high-interest rates to make sure people pay their bills on time.

When you say "very high interest rates" how high are the interest rates for credit cards in Pakistan for the average customer? (I know that is a pretty broad question but still).



PS

How old do you have to be in Pakistan to open up a credit card account? What is the typical starting credit limit let says for a University student there if they apply?

 

[Sugarcane]

Here you also have to prove and meet the requirements for a home loan, like credit, your own current property value, annual income, etc.

In case you wish to purchase new property that is far more expensive than your current property. So when you sell your current property if its 10 crore, and the new property you want is 40 crore, you can get a home loan for 30 crore (or as much as the Bank/mortgage company is willing to offer) so you can settle in your new home if you don't have 30 crore in cash in bank, which most people aren't going to have. This way you can still purchase the new home.

I know that but requirement are more tough than western countries in case of house loans, plus loan sanction time is long and in most of cases for normal person it's not feasible because seller will not wait and bank will not give you loan unless bank has evaluated the property your going to buy.

As for interest rates in Pakistan, why do you think they are very high? I think it may be because credit card companies know many average Pakistanis are not good at managing credit and can't be trusted one, so in order to protect their company they tack on high-interest rates to make sure people pay their bills on time.

When you say "very high interest rates" how high are the interest rates for credit cards in Pakistan for the average customer? (I know that is a pretty broad question but still).

How old do you have to be in Pakistan to open up a credit card account? What is the typical starting credit limit let says for a University student there if they apply?

It's not just based on credit companies, CBR dictate base rate on that rate credit companies add based on risk and time involved, in early 2000s interest rate was very low, so people transferred their money in to properties and properties prices multiplied by 3 within few years than CBR increased the base rate to ease the banks and encourage people to put money in banks. I think these days Personal Loans net rate is more than 30% and mortgage is more than 13%

PS

How old do you have to be in Pakistan to open up a credit card account? What is the typical starting credit limit let says for a University student there if they apply?

There is no loan for kids in Pakistan If any of your relative have credit card than he/she can get supplementary card for you, but responsibility of paying back credit will be the main CC's owner

 

[A1Kaid]

I know that but requirement are more tough than western countries in case of house loans, plus loan sanction time is long and in most of cases for normal person it's not feasible because seller will not wait and bank will not give you loan unless bank has evaluated the property your going to buy.



It's not just based on credit companies, CBR dictate base rate on that rate credit companies add based on risk and time involved, in early 2000s interest rate was very low, so people transferred their money in to properties and properties prices multiplied by 3 within few years than CBR increased the base rate to ease the banks and encourage people to put money in banks. I think these days Personal Loans net rate is more than 30% and mortgage is more than 13%



There is no loan for kids in Pakistan If any of your relative have credit card than he/she can get supplementary card for you, but responsibility of paying back credit will be the main CC's owner

There is no loan for kids in Pakistan

University students in Pakistan are considered "kids" in Pakistan? Wow, here if you are 18 or older you are legally an adult and most University students are 18 or older, therefore eligible for a CC (at least by age).

Also, we are not talking about a "loan", do you not know the difference between a credit card and a loan? There is a technical difference.

Though you still did not answer the question, how old do you have to be in order to be eligible for a CC in Pakistan?

PS Don't think I am asking on my own behalf, as I have no interest in applying for a Pakistani CC, when I have my own American CCs. I am asking because I'm interested in knowing.