KARACHI: The State Bank on Friday awarded a licence for setting up Sindh Bank and making it functional within six months.

“The SBP has finally given the licence for establishment of Sindh Bank after the party fulfilled all requirements,” the State Bank’s chief spokesman Wasimuddin told Dawn.

It is hard to get licence for a new scheduled bank because the SBP has made the laws difficult to minimise the risk involved in the business. “The party has met all requirements, including Rs10 billion as the paid-up capital,’ the spokesman said.

The State Bank as also set tough conditions for the exiting banks and has been increasing the paid-up capital requirement each year, causing problems for small and medium-sized banks.

At least 10 banks have failed to meet the minimum capital requirement and the central bank has been giving them extensions after successive deadlines.

Mohammad Bilal Shaikh has been nominated the Chief Executive of Sindh Bank.

The board of directors comprises the chief secretary, additional chief secretary and finance secretary of Sindh and Javed Mahmood, Wazir Ali Khoja and Abdul Wahab from the private sector.

Banking analysts said the establishment of the bank with Rs10 billion paid-up capital showed a strong liquidity position of the provincial government. However, they said it appeared difficult to make the bank a successful venture in the wake of a global financial crisis which had affected the entire banking industry and at a time when more than 10 banks were already in trouble.

The Sindh government has announced that the bank will have branches across the country in the long run.