Sep 26 - Oct 2, 20

Flooding and uncertain security is continuously taking toll on Balochistan's economy, which is already in recession due to economic slowdown. The devastating floods for the second time in two years have aggravated the economic problems in the least developed province.

Livestock, the major sector of provincial economy, has taken a big hit following the recent flash floods. The floods would have lasting impact on the weak provincial economy pushing the province many years back.

Naseerabad and Jafferabad, the only two canal-irrigated agri districts in Balochistan, are the most-affected areas due to flooding. Presently, banks are direly needed to play their key role of channeling funds to the flood-hit areas of Balochistan for their rehabilitation and development. The credit disbursement to agriculture sector should be enhanced by the banks in the given situation.

The small farmers' access to loan facility should be ensured in order to tap fruit export potential of Balochistan- the country's fruit basket.

The government should extend rural credits to small farmers for horticulture development in the province. The lack of finance does not enable the cash-starved small farmers to harvest and market their fruit crop and they have to sell their orchards to pre-harvest contractors, who exploit them taking advantage of their weak financial position.

There is a need to redefining the role of banks in Balochistan. Unfortunately, the commercial banks in the most backward and least developed province merely played the role of collection booths and hence could not promote industrialization by advancing loans to entrepreneurs. Banking industry is facing diverse challenges for its smooth growth in the province.

Balochistan has been lacking the banking facilities. The banks flourish a saving culture among the people by introducing different saving schemes. The saving environment could not be created due to the lack of banking facilities in the province. The banks, nationalized and commercialized, did not play their key role in developing the local economy. There has also been a dearth of professional and skilled bankers in the province. Most of the bankers were unaware of the mechanism of banking system. There has been no concept of investment bank in Balochistan.

Banking system and its operation is not compatible with the requirements or up to the expectations of the people of Balochistan.

Few years back, many branches of banks were closed which caused difficulties for the people to deposit utility bills, draw salaries, and pension etc. The people still have to travel longer distance to get these facilities in the province.

The province faces the shortage of entrepreneurs. If there are some, they are unwilling to take risk. If the banks make the funds available, the dynamic entrepreneurs can come forward. The banks should provide loans to the potential investors, provide them the necessary knowledge and help them establishing and launching industrial or commercial units, and thus creating job opportunities and developing human resources in Balochistan.

Industry, agriculture, business, communication, and services have been the most neglected sectors in the province. In capacity of good and progressive financial institutions, the banks could not play their due role for the economic development of the province.

The commercial banks can perform significant functions like channelizing resources to different sectors of economy, mobilizing the savings, promoting investment, accelerating industrialization and helping the government by providing it source of earning.

In the past, the loans were not given to those who wanted to set up industrial units or launch some projects providing jobs and boosting economic activities in the province. On the other hand, shopkeepers and smugglers largely benefited from the bank loans. Most of the private banks were in control of commission mafia and getting kickbacks.

The province needs an effective banking system channelizing the resources to the neglected economic sectors. Banks can help exploit the potential opportunities of industrial development in fisheries, agriculture, handicrafts, and other sectors of local economy.

The efficient and professional bankers are needed to guide the potential investors and entrepreneurs, promote saving environment, and mobilize the small businessmen in the province. Above all, the education must be considered today as the highest return-investment for the development of Balochistan.

The law and order problem has been hampering the private commercial banks to play their role of key agents along with the entrepreneurs. Security remains a problem for the banks to carry out their operations in the prevailing law and order situation in the province. Balochistan is currently facing a mild insurgency. The law and order is continuously worsening. The security problem has affected each and every sector of the provincial economy. The government needs to take all steps to improve law and order for growth of banking sector including micro financing in the province.

The province lacks the genuine entrepreneurs and hence the private banks generally avoid giving loans for setting up small industries. Some private banks even banned loaning to the entrepreneurs in the province. Loaning side is not secure in Balochistan, as recovery of loans is the problematic area for the private banks due to the social, political, and other barriers in the province.

The private banks are mostly concentrated in the provincial capital, Quetta, which has the presence of many private banks like Standard Chartered, Al-Falah Bank, Al Habib Bank, KASB Bank, Faisal Bank, Prime Bank, Soneri Bank and Mezan Bank.

Private Banks are practicing customer-focused banking and providing modern banking facilities to their customers in Quetta. Most of their customers are flourmill owners, Ghee companies, shopkeepers, trading companies and from mining sector.

Balochistan with its challenging security environment needs a comprehensive micro-finance development strategy to alleviate poverty. A strategy should be devised to ensure the access of poor and low-income households to institutional financial services. The micro credit banking in private sector can play a vital role in accelerating economic growth, facilitating finances to the downtrodden sections for their socioeconomic uplift and eradicating poverty from Balochistan. Micro financing can prove a vital approach to alleviate poverty and combat joblessness in the province, as it would help build human capacity.