SBP's steps to boost IT sector lauded
A few days ago, a colleague, who works in a bank, told me of the following three questions that the State Bank of Pakistan had sent to his bank (and supposedly to other local banks).
What are the challenges faced by the IT sector in availing bank finance? What are the major reasons for the low uptake of financing to the IT sector? What recommendations do you have for increasing financing to the IT sector?
A quick word about the questions first. I think gathering feedback is a good step. The fact that the State Bank is listening is a positive sign. But surprisingly, it sent the questions to banks and not to IT professionals. The most frank and fair feedback would come from IT professionals.
I would also like to respond to the questions raised by the State Bank. But before I do that, I want to highlight some banking problems, other than financing, that those in IT routinely face.
Going to Mars is probably easier than sending money abroad.
The first problem is that it is not easy to open a bank account because one has to fulfil many arcane requirements. Also, sometimes bank employees are unfamiliar with job titles and contract types in the IT sector. And all this is hard to resolve in time-sensitive situations.
Let me share my interaction, as an IT professional, with a bank a while ago. To receive money from a company in the United States ? keep in mind, this was a little before the pandemic ? I wanted to open a local bank account. For that, the bank asked for an office address. I kept telling them I worked from home, and only after great struggle, did the bank employees reluctantly come to terms with the fact that I did, indeed, work from home. Banks should train employees about the dynamics of the IT sector for smoother initial interaction.
After receiving my first payment in US dollars, the bank said they would give me an interbank currency conversion rate (henceforth called conversion rate). In my case, this conversion rate was basically how many rupees I would get against a dollar.
The bank gave me a conversion rate which to my surprise was far lower than the one on the State Bank's website. I asked them if they could let me withdraw dollars to get a better return from the local currency market. The bank said it was not possible.