Quantcast
Friday , December 15 2017
Breaking News
Home / Op-Ed / Editorial / Performance of banking sector
Performance of banking sector

Performance of banking sector

The State Bank of Pakistan has released its quarterly performance review of the banking sector for the last quarter of the financial year ended on June 30, hoping a robust growth in private sector. It labels key development in the quarter as broad based which is a prime reason behind 8.3 percent in the asset base growth. The review also observes an increase of 6.1 percent in gross advances which had recorded mere a 4 percent growth in the corresponding period of the last year. The demand for financing came from chemical, production and transmission of energy, agribusiness, food and allied products, construction, transport, storage etc, indicating rising growth perspective in various sectors of the economy. It also observes improvement in the asset quality of the banking sector as the ratio of gross non-performing loans has come down from 9.9 percent in the third quarter to 9.3 percent in the quarter ending June 2017.The deposit base has moved up by 6.5 percent, which is lesser than 6.8 percent recorded in second quarter of the last year, but deceleration in deposit growth is attributed to dip in deposits by financial institutions.

The banking sector of the country is growing day by day with growth of business and economy. The consumer financing has been increasing in many ways as growth in auto financing and other commodities are raising consumer financing up. A biggest hurdle in the growth of banking sector is its interest based system which is incompatible with our ideological considerations. The finance managers should have clear understanding of the Islamic banking and find a way out to deal with foreign banks. The 54 Islamic countries of the world have failed to set up a single institution on the patter of International Monetary Fund or the World Bank.

The country’s banking system also needs structural reforms and proactive approach, keeping in view drastic changes in the rules of business and finance. The world is coming closer and we should have to keep ourselves updated to facilitate fair business transactions with other countries. Pakistan needs online banks like PayPal to facilitate small and medium size organizations. Population wise, Pakistan is the fifth largest country of the world, but access to banks is still very low. The new trend of online shopping is increasing across the country and the central bank should devise a policy to facilitate both consumers and buyers.