Banking Sector of Pakistan

1. Banking Sector of Pakistan
Lecture # 06:
20.02.2017
Dr. Akhlas Ahmed

2. Banking in Pakistan:

3. The Reserve Bank of India
was the central bank on
14th
Aug, 1947

4. On 30th
Dec, 1948
British Govt.'s commission
distributed the Reserve Bank
of India's reserves between
India 70% and Pakistan 30 %
(750 M Gold)

5. On 14 Aug, 1947
losses incurred in the
transition to independence,
small amount taken from
Pakistan's share (a total of 230
million).

6. In May, 1948
Muhammad Ali Jinnah
took steps to establish the
State Bank of Pakistan
immediately.

7. In June, 1948
Muhammad Ali Jinnah
implemented the establishment
of State Bank of Pakistan

8. The State Bank of Pakistan
commenced operation on
1st
July, 1948 as first formal
Central Bank.

9. The Headquarter of first
financial institution announced
in the capital City Karachi.

10. At that time…
only 7% of the population uses
banks, has tremendous potential.

11. On Jan 1st
, 1974…
Banks in Pakistan Nationalized
by Zulfqar Ali Bhutto.

12. State Bank of Pakistan Act, 1956
with subsequent amendments
forms the basis of its
operations today.

13. State Bank of Pakistan Act, 1956
with subsequent amendments
forms the basis of its
operations today.

14. Now, the headquarter is
located in the financial city
of Pakistan, Karachi with
branch offices in 15 cities
across Pakistan, including
the capital city, Islamabad
and the four provincial
capitals.

15. Under the State Bank of
Pakistan Order 1948, the
state bank of Pakistan was
charged with the duty to
"regulate the issue of
bank notes and keeping of
reserves with a view to
securing monetary stability in
Pakistan

16. The state Bank of Pakistan to
operate the currency and credit
system of the country to its
advantage.

17. A large section of the state bank's
duties were widened when the
State Bank of Pakistan Act
1956 was introduced.

18. It required the state bank to
"regulate the monetary and
credit system of Pakistan and
to foster its growth in the best
national interest with a view to
securing monetary stability
and fuller utilization of the
country’s productive
resources".

19. In February 1994…
the State Bank was given full
autonomy, during the financial
sector reforms.

20. On January 21, 1997,
this autonomy was further
strengthened when the
government issued three
Amendment Ordinances
(which were approved by the
Parliament in May 1997).

21. Those included were…
State Bank of Pakistan Act, 1956,
Banking Companies Ordinance, 1962 &
Banks Nationalization Act, 1974.

22. These changes gave full and
exclusive authority to the State
Bank to regulate the banking
sector.
To conduct an independent
monetary policy and to set limit
on government borrowings from
the State Bank of Pakistan.

23. The amendments to the Banks
Nationalization Act brought the end
of the Pakistan Banking Council (an
institution established to look after
the affairs of NCBs) and allowed the
jobs of the council to be appointed to
the Chief Executives, Boards of the
Nationalized Commercial Banks
(NCBs) and Development Finance
Institutions (DFIs).

24. The amendments also increased
the autonomy and accountability
of the chief executives, the
Boards of Directors of banks and
DFIs.

25. The State Bank of Pakistan also
performs both the traditional and
developmental functions to
achieve macroeconomic goals.

26. The traditional functions of central bank classified
into two groups:
1. The primary functions including issue of notes,
regulation and supervision of the financial system,
bankers’ bank, lender of the last resort, banker to
Government, and conduct of monetary policy.
2. The secondary functions including the agency
functions like management of public debt,
management of foreign exchange, etc., and other
functions like advising the government on policy
matters and maintaining close relationships with
international financial institutions.

27. The non-traditional or
promotional functions,
performed by the State Bank
include…
Development of financial
framework, institutionalization
of savings and investment,
provision of training facilities to
bankers, and provision of credit
to priority sectors.

28. The State Bank also has been
playing an active part in the
process of islamization of the
banking system.

29. The Bank is active in promoting
financial inclusion policy and is a
leading member of the
Alliance for Financial Inclusion.
It is also one of the original 17
regulatory institutions to make specific
national commitments to financial
inclusion under the Maya Declaration
[5] during the 2011
Global Policy Forum held in Mexico.

30. Regulation of liquidity

31. The State Bank of Pakistan has also
been entrusted with the responsibility
to carry out monetary and credit
policy in accordance with Government
targets for growth and inflation with
the recommendations of the Monetary
and Fiscal Policies Co-ordination
Board without trying to effect the
macroeconomic policy objectives.

32. List of banks in Pakistan

33. Public Sector Banks
National Bank of Pakistan
The Bank of Punjab
Sindh Bank
Bank of Khyber
First Women Bank
Withra Bank

34. Specialized banks
Industrial Development Bank
SME Bank
The Punjab Provincial Cooperative
Zarai Taraqiati Bank Limited

35. Private Banks
Askari Bank
Allied Bank Limited
MCB Bank Limited
Bank Alfalah
Bank AL Habib
Faysal Bank
HBL
Habib Metropolitan Bank
JS Bank
NIB Bank
Samba Bank Limited
Silk bank Limited
Soneri Bank
Summit Bank
United Bank Limited

36. Islamic banks:
These are the names of Islamic banks having
accreditation license from the state bank of Pakistan.
Dubai Islamic Bank
Al-Baraka Bank*formerly Burj Bank Limited [formerly
Dawood Islamic Bank Limited]
Bank Alfalah Islamic
Meezan Bank Limited
Bank Islami Pakistan Limited
Standard Chartered Bank
Askari Bank Ltd
MCB Islamic Baking
UBL Islamic Banking
HBL Islamic Banking
National Bank of Pakistan
Bank Al Habib Islamic Banking

37. Foreign Banks
Deutsche Bank AG
Industrial and Commercial
Bank of China Limited
Standard Chartered Pakistan

38. Microfinance Banks
Khushhali Bank Limited
NRSP Microfinance Bank
Apna Microfinance Bank Ltd. (formerly NMFB)
FINCA Microfinance Bank Limited
Mobilink Microfinance Bank Limited
Pak-Oman Microfinance Bank Ltd. (POMFB)
Tameer Microfinance Bank Limited(TMFB)
The First MicroFinanceBank Ltd. (FMFB)
The Punjab Provincial Cooperative Bank Ltd
U Microfinance Bank Limited
Waseela Microfinance Bank Limited (Now
become Mobilink Microfinance Bank Ltd)
Advans Pakistan Microfinance Bank Limited

39. Development Finance
Institutions
Asian Housing Finance

40. Thanks