A memorandum of understanding (MoU) was signed between Rupali Bank and Arif Habib Securities Limited in the first week of this month in Dhaka.

Abdul Hamid Miah, managing director of Rupali Bank, and Arif Habib, chairman of Arif Habib Securities Limited, signed the deal on behalf of their sides.

Rupali Bank has already filed an application with the State Bank of Pakistan, the central bank, to set up the joint venture, sources said.

Bangladesh finance ministry has asked Rupali Bank to submit documents to vet the proposal before sending it for cabinet approval.

Earlier, International Finance Investment and Commerce Bank Limited (IFIC), a local private bank, has established a similar joint venture bank in Pakistan in collaboration with National Development Leasing Corporation (NDLC), a leading leasing company in Pakistan.

According to sources, the two Bangladeshi banks operating in Pakistan -- Rupali Bank and IFIC Bank -- are going to start such ventures in the wake of a circular issued by the Pakistani central bank in 2000, which directed all commercial banks to raise their capital to one billion rupees by December 2002.

Rupali Bank, however, had been checking its options to comply with the circular of the State Bank of Pakistan. It also sought time from Pakistan central bank and received extension.

Rupali Bank invited tender seeking Pakistani partners for selling the branch or setting up a joint venture. Five Pakistani financial institutions responded to the tender.

Out of the five, Rupali Bank board nominated Arif Habib Securities Limited as its partner which offered 305 million rupees.

Now, Rupali Bank Karachi branch has over five crore rupees as transferable profit and the amount of net asset stands at Tk 11 crore, sources said.

Rupali Bank Karachi branch started its operation in 1976 with 3.40 crore rupees as capital. Sources said the branch recorded profits in 23 years out of its 28 years of operation.