Apr 5 - 11, 2010

The banking sector is currently facing a decline in the demand for credit from different sectors owing to slowdown in the economic activities mainly on account of load shedding, inflationary pressure, high interest rate and poor law and order situation.

The banking sector, which has gained stability over the last couple of years through sustained growth in asset and customer-base, is now forced to divest their asset mix from loans towards investments.

On the other hand, State Bank of Pakistan has already asked all banks and Development Finance Institutions (DFls) that they should not retain a part of insurance premium received from customers for payment to the insurer. The banks and DFls may also not charge customers any amount in excess of their actual cost under various heads being paid to the service providers. Banks/ DFls should clearly disclose all charges recoverable from the customers at the time of entering into agreement with them and the same should also be duly incorporated in their schedule of charges.

The banking sector is also facing problem of Non-Performing Loans (NPLs) which have been gradually increasing over the last two years. On one side credit disbursement is on downward side while on the other hand NPLs are increasing. Banks, therefore, will have to keep a check on increasing NPLs, as its interest expense is expected to increase in the next half because of increase in cost of loans.

Different banks are extending various financial products and services in Pakistan. They offer consumer banking, commercial banking, and Islamic banking. Their commercial banking services include managing current and deposit accounts of corporate and individual clients, foreign currency accounts, financing to corporate, private, and public sectors, short term financing of foreign trade through letters of credit and negotiation of bills of exchange, and issuance of guarantees, bid bonds, and performance bonds. Other services also include acceptance and placement of funds in the inter-bank market, purchase and sale of foreign currencies, transfer of funds and remittances, purchase and sale of government securities, and gas bills collection. The consumer banking services comprise of auto and home financing.

According to the financial experts, the banks need to increase their equity base and investments in government securities and other sectors of the economy. The NPLs of the banks increased significantly.

Banking sector has been going through difficult phase for the last about one year, they maintained. Worsening economic conditions, tight monetary policy, declining profitability etc. have dampened banking sector's performance.


A telecom company has further invested $80 million into its offshoot company working in Pakistan. Another foreign-based telecom company has invested $300 million in the country. The investment is the largest contributions made by any telecommunication company in Pakistan in the current fiscal year.

The investments are going to be utilized for various ongoing and upcoming projects like network expansion and improved customer services.

According to Chief Strategy Officer and Vice President Corporate Affairs, Telenor Pakistan, Aamir Ibrahim, this continuous stream of investment from Telenor reinforces the company's long-term commitment to Pakistan and shows confidence in future growth in the telecom sector of the country. "The investment will contribute to the development of our infrastructure and expansion of our services."

Telenor Pakistan is the second largest mobile operator in Pakistan with a subscriber base of 22.6 million and market share of 23.7 per cent in the telecom sector. The company has an extensive distribution network with over 250 franchises and 175,000 retailers. In Nov 2008, Telenor Pakistan acquired Tameer Microfinance Bank and launched easypaisa-mobile banking services-in October 2009.

Since its inception in Pakistan in 2004, Telenor Pakistan has created 2,500 direct and over 25,000- indirect jobs and was recently rated Pakistan's "Most preferred Employer". Telenor Pakistan has contributed approximately Rs20 billion in various forms of direct and indirect taxes in 2009.