Dr Ishrat urges
Pakistani banks to expand their lending to multiple sectors
Former central bank chief Dr Ishrat Husain has urged the Pakistani banks to expand their lending services to agriculture, small and medium enterprises, housing and personal finance sectors.
In his keynote address
at the fourth Digital Banking and Payments Summit organized in Karachi, Dr
Husain expressed dissatisfaction with the progress that the banking sector.
He said banks in
Pakistan are over-focused on the corporate sector, high net worth individuals,
trade financing and fee-based activities.
Referring to the
industry-wide advances-to-deposit ratio (ADR) of less than 50 per cent, he said
banks invest heavily in government securities as these are deemed safer
investments. He said this stifles growth
of private sector as it does not get required lending.
Dr Husain expressed hope
that the upcoming five digital banks will raise the share of e-banking to 80-90pc
in the next five years. He, however,
cautioned the digital banks to keep their transaction costs lower, provide
greater convenience to customers, reduce their fees and service charges and
focus on speed of transaction if they want to be successful.
Earlier, entrepreneur
associated with the upcoming digital bank Raqami Nadeem Hussain said people think
that bank deposits do not offset the impact of inflation and look for
alternative investments.
Irfan Lodhi, chief executive
of Mashreq Bank Pakistan, one of the upcoming digital banks, said new entrants
to the financial sector should focus on meeting the unfulfilled needs of the
market rather than trying to make profits in the immediate run.