its about detail of your banks and their history

1. Contents
BANKING IN PAKISTAN:......................................................................................................2
Commercial Bank in 1947 .....................................................................................................2
Nationalization of banks: .......................................................................................................2
Result of nationalization: ...................................................................................................4
Causes of nationalization:..................................................................................................5
Privatization of banks: ...........................................................................................................5
Examples of private banks:................................................................................................6
PAKISTAN BANKING COUNCIL: ....................................................................................7
Importance of State Bank in Economic development: ..............................................................8
References................................................................................................................................14

2. BANKING IN PAKISTAN:
Commercial Bank in 1947
This was the first phase of developments of Pakistan’s commercial banking system. In
subcontinent, Reserve bank of India was central bank. The bank of India closed down most of
its offices in Pakistan, which had been working as the agent of Reserve Bank of India was not
willing to purchase even token amounts of the government of Pakistan. Securities and Indian
reserve bank’s issued notes were not marketable declared by India government. The Reserve
Bank of India was hardly of any help. It refused to help the govt. of Pakistan so salaries and
other obligations did not fulfill.After independence of Pakistan 1947,On December 1948
British government decide to divide the reserves of India central bank 30 percent reserves for
Pakistan and 70 percent reserves for India. After taking this reserve
 In May 1948“Muhammad Ali Jinnah” immediately establish“state bank of Pakistan”
 After one year in November 1949, national bank of Pakistan was established inDacca
(East Pakistan).
The main purpose was to act as an agent of state bank of Pakistan. Numbers of more banks
were established according to the need of a country with passageof time. (arzoo786, SCRIBD,
n.d.)
Nationalization of banks:
In Bhutto government nationalized the banking system. Thus through the Nationalization Bank
Act 1974, SBP and all commercial banks in Pakistan and carrying on business in or outside the
country were brought under the government ownership with effect from January 1974. The

3. ownership and management of all Pakistan banks stood transferred and rested in the federal
government. The chairman, director and chief executive of various banks were removed from
their offices other than those appointed by the federal government and the state bank. At the
time of Nationalization, there were following 14 Pakistani commercial banks with3323 offices
all over Pakistan and 74 offices in foreign countries:
1. National banks of Pakistan
2. Habib bank limited
3. Habib bank (overseas) limited
4. United bank limited
5. Muslim commercial bank limited
6. Commerce bank limited
7. Standard bank limited
8. Australia bank limited
9. Bank of Bahawalpur limited
10. Premium bank limited
11. Pak Bank limited
12. Sarhad bank limited
13. Lahore commercial limited
14. Punjab provincial co-operative bank limited
A Pakistani banking counsel was established for nationalized commercial banks to co-
ordinate their activities. The Pakistan banking council prepared scheme for the recognition of

4. banks. This scheme was notified in 1974, according to its mall banks combined with big banks
so these five banks or units were established:
1. National bank limited
2. Habib bank limited
3. United bank limited
4. Muslim commercial bank limited
5. Allied bank of Pakistan limited #
 In 30th June, 1974. The bank Bahawalpur was merged with the National Bank of
Pakistan. The premier Bank Limited merged with Muslim Commercial Bank limited
and Sarhad Bank Limited , Pak bank limited merged with Australia bank limited (Allied
Bank of Pakistan limited)
 In 31st Dec.1974, the commerce bank limited merged with the United Bank limited.
 In 30th June, 1975 when the standard bank limited was merged with Habib Bank
limited.
Result of nationalization:
Although there are doubts about the positive results of the nationalization but we can say that
 The banking facilities expanded in the rural areas.
 Bank deposits rose very substantially during a period
 Emphasized lending policies, national building projects, discouraged non- productive
and unhealthy activities like hoarding
 Increase in the number of foreign branches of Pakistani banks. (arzoo786, SCRIBD,
n.d.)

5. Causes of nationalization:
 Distribute equal amount of wealth b/w peoples of country
 To remove unhealthy competition among banks it was thought they created financial
and economic problems
Privatization of banks:
The Privatization process in Pakistan (sometimes referred to as Denationalization programme
or simply the Privatization in Pakistan)was a policy measure programme in the economic
period of Pakistan. It was first conceived and implemented by the then-people-elected Prime
Minister Nawaz Sharif and the Pakistan Muslim League, in an attempt to enable the
nationalized industries towards market economy, immediately after the economic collapse of
the Soviet Union in 1989–90. The program was envisaged and vesioned to improve the GDP
growth of the national economy of Pakistan, and reversal of the nationalization programme in
1970s— an inverse of the privatization programme.
In the period of the 1970s, all major private industries and utilities were put under the
government ownership in an intensified programme, called the nationalization programme that
led the economic disaster in Pakistan. Since then, the demand for denationalization gained
currency towards the ending of the government of Pakistan Peoples Party in 1977, although a
commission was set up by General Zia-ul-Haq government but no denationalization
programme began until 1990.
The privatization programme was launched on 22 January 1991 by Prime minister Nawaz
Sharif in a vision to promote free-market economic principles, private-ownership and the
mainstream goal to attract foreign investment in the country. But, as a result a good deal of the
national wealth fell into the hands of a relatively small group of so-called business oligarchs
(tycoons), and the wealth gap increased dramatically in the 1990s that halted the programme

6. by Benazir Bhutto.Revisions were made in 1999, and finally launched the much more
intensified privatization programme under the watchful presiding leadership of Prime minister
Shaukat Aziz in 2004.Finally, the programme was ended effectively at the end of 2007 when
~80%–90% of the industries were put under the management of private ownership of
enterprises by Prime minister Shaukat Aziz
Examples of private banks:
1. Askari Bank
2. Allied Bank Limited
3. MCB Bank Limited
4. Bank Alfalah
5. Bank Al Habib
6. Faysal Bank
7. HBL Pakistan
8. Habib Metropolitan Bank
9. JS Bank
10. NIB Bank
11. Samba Bank Limited
12. Silkbank Limited
13. Standard Chartered Pakistan
14. Soneri Bank
15. Summit Bank
16. United Bank Limited
(wikipedia, n.d.)

7. PAKISTAN BANKING COUNCIL:
Pakistan Banks' Association (PBA) represents the Pakistan Banking Industry. Established in
1953, its main objective is to coordinate the efforts of the banking industry, and to share a
common vision of progress and development with its members.
PBA Membership is institutionalized and is available only to the Banks operating in Pakistan.
Currently there are 44 members, categorized into 6 groups (one of these groups is under
formation). Its governing body is an Executive Committee (EC) comprising of 14 members,
represented by the Chief Executives of the respective member institutions. PBA’s Principal
Executive is the Chairman of the Executive Committee, elected periodically from within the
EC. Presently, PBA has 11 functional Sub Committees, each chaired by a member of the
Executive Committee. Remaining members of the Sub Committees are relevant Executives of
member banks. Find more about PBA and it’s governance in the PBA Profile Section.
Particulars of members such as their corporate and management profiles, branch networks and
financial statements are available in the PBA Members Section.
Over the years the role of PBA has broadened considerably. It is now referred to by the State
Bank of Pakistan in formulation of regulations for the banking industry, and has been entrusted
with the function of regulating and monitoring certain services provided to the banking industry
by outside service providers. These service providers include ‘Professional Valuers’, who are

8. evaluators allowed to appraise the values of assets collateralized to banks, and Security
Agencies offering security services to the Banking Industry. For details visit the PBA Panels
Section.
(pakistan banks association, n.d.)
Importance of State Bank in Economic development:
State bank of Pakistan plays an important role in the process of economic development, which
is clear from the following points:
1) Issue of Notes
State bank of Pakistan has monopoly in issuing currency notes. 5, 10, 50, 100 rupee notes are
issued by the bank on 12 July 1976. Note of 500 rupee was issued on 1st April 1986 and 1000
rupee note was issued on 18th July 1987. At present note of Rs.5000 is also issued by the state
bank of Pakistan. The state bank has three offices of issue, situated at Karachi, Lahore and
Peshawar.
2) Banker to the Government
It is the bank of federal as well as provincial government. Its functions for the Govt. are:
· Bank issued new notes on the behalf of government
· Bank also accepts the government cheques and drafts
· State bank responsible for transferring government funds at international level
· Bank arranges the public debts of federal and provincial government
· Bank receives no commission form the government
· It holds federal and provincial government securities

9. · State bank is liable for the payment of salaries and pension to government employees
3) Banker’s Bank
State bank of Pakistan is the bank of all commercial banks working in Pakistan. SBP started to
spend $ 24.00 million in October 2002, with the assistance of World Bank for data
warehousing, networking, application of software and other banking solutions.
· State bank provides loans to commercial banks at the time of need
· Commercial banks re-discount their bills of exchange from state bank
· State bank can sell, purchase and hold debentures of any banking company or of any
other financing corporation
4) Clearing House
State bank of Pakistan acts as the clearing-house for the commercial banks working within the
country.
· It shows the financial position of various banks
· Clearing-house helps commercial banks to settle inter-bank transactions
· It reduces the excessive use of cash
· It controls the harmful competition among banks
5) Advisor to Government
State bank of Pakistan works as an advisor to federal and provincial government.
· It guides the government in financial and economic matters
· State bank assists the government in various credit schemes

10. · It informs the government about the monetary and fiscal situations of economy
· State bank helps the government in making investments
6) Lender of Last Resort
The state bake of Pakistan also acts as the lender of the last resort for the commercial banks.
When commercial banks are in crisis and have shortage of cash, then state bank comes to their
help. State bank may help the commercial banks by rediscounting their bills of exchange and
by advancing loans against securities.
7) Controller of Credit
A national credit consultative council was setup in 1972 for the purpose of monitoring and
controlling credit. Credit and investment are the most important economic and fiscal variable.
State bank helps to arrange the credit and investment facilities. State bank has adopted
following tools to control credit:
· Open market operation
· Bank rate policy
· Changes in reserves ratio
· Changes in margin requirements
· Change in liquidity ratio
· Moral persuasion and publicity
8) Economic Growth
State bank of Pakistan played a very significant role in the growth of the banking infrastructure.
It gives special importance towards the development of capital market in the country. It also
provides assistance to the government in development planning and poverty reduction

11. programmes. All this results in economic growth and development. Real GDP growth rate is
2.4 % during FY 2010-11.
9) Growth of Credit Institutions
State bank develops the atmosphere for the development of credit institutions. Such credit
institutions are very useful for meeting medium and long-term credit needs of various economic
sectors. These institutions are included HBFC, ICP, NDFC, EPF, NIT, IDBP & ZTBL etc.
10) Growth of Money Market
Money market is not at its best level in Pakistan. Due to illiteracy banking situations are not
favourable. State banks give much importance in the growth and development of money
market. Economic development is impossible without the growth of money market. Growth
rate of banking sector is 17.0%.
11) Value of Rupee
State bank of Pakistan is responsible for the maintenance of the external value of rupee. State
bank is the controller of exchange rate in the country. Till September 1971, Pakistani rupee
remained linked to UK Pound and it was de-linked from pound and linked to US Dollar.
12) Special Funds for Development
The major aim of state bank is not to earn profit. But its effective working gives him huge
amount of profit. These profits are allocated towards establishment of various funds for
economic progress and prosperity. It established Rural Credit Fund in 1961 and Export Credit
Fund in 1972.
13) Debts Management

12. Our scarce resources and government polices are not able to run the mega projects which
needed heavy amount of resources. Due to shortage of resources government has to depend
upon other rich nations. All these arrangement are the responsibility of the state bank on the
behalf of government.
14) Foreign Exchange Reserves
State bank of Pakistan is also the custodian of gold, silver and foreign exchange reserves. It
regulates foreign exchange reserve in accordance with foreign exchange Act 1947. Pakistan
has shortage in foreign exchange reserves. Its volume of foreign exchange reserves is only
$12.34 billion in 2007-08. In July 2007, foreign exchange reserves were $15.646 billion out of
which state bank of Pakistan has $ 4.3213 billion. At present foreign exchange reserves of
Pakistan are $ 17.1 billion.
15) Exchange Centre
State bank issued licenses to different commercial banks to hold foreign exchange. Such license
holders can also deal in foreign exchange at authorized rates. These exchange centres are very
helpful in mobilizing the resources.
16) International Relations
State bank of Pakistan maintains relations with different international financial institutions
such as IMF, WBG, etc. It negotiates different contracts with these institutions on the behalf
of government.
17) Economic Information
State bank collects the information all over the country and world throughout the year. It also
annually published its report, which is an extremely important document. This exact

13. information is very helpful in making economic planning which is necessary for the economic
development.
Conclusions:
All above points are showing that state bank of Pakistan has an important position in our
economic and financial infrastructure. Without an effective role of state bank, economic
development is impossible.
(khan, 2012)

14. References
arzoo786. (n.d.). scribd.
arzoo786. (n.d.). SCRIBD. Retrieved from
https://www.scribd.com/document/46877984/History-of-Banking-in-Pakistan.
khan, a. (2012, april 24). Economic and Education. Retrieved from
http://ahsankhaneco.blogspot.com/2012/04/role-of-state-bank-in-economic.html.
pakistan banks association. (n.d.). Retrieved from http://pakistanbanks.org/.
wikipedia. (n.d.). Retrieved from https://en.wikipedia.org/wiki/Privatisation_in_Pakistan.