Pakistan Banking sector grows more than before
The Pakistan banking sector might be experiencing a bit of pressure on its profits because of decreasing interest rates in 2016. However, it has grown by 16.1% during the year as the outlook came stable with increased clarity levels. Besides this non-performing loans and improved risk management systems also helped for the same.
This statement was issued on Monday by the performance review of the State Bank for the year. Private department credit doubled to be the most encouraging development. It was crucial to contribute towards the 4.7$ growth in real GDP. On the other hand, the agriculture area saw a major decline of 27% in cotton. The surge of the private sector credit was due to trust and confidence. This is being improved for the business community overall as the investment climate for Pakistan is changing.
Islamic banking also saw double digit growth by 16.8% and 14.1% in it assets and deposits respectively. June 2016’s end saw asset base increase to Rs 1,745 billion that made up for 11.4% of the assets. The deposits reached Rs 1,461 billion by 13.2% as the deposit base of the banking sector. The outreach for Islamic banking also increased through branch networks. It is now 2,146 branches in 98 districts across Pakistan. Hence it has well surpassed the 2,000 branches expectation according to the Strategic Plan 2014-18.
The deposit insurance scheme will be launched soon after the NA and Senate approve the Deposit Protection Corporation Act 2015. The introduction of low risk Asaan Account with simple due diligence requirements also brought 1.13 million more people into banking. Among this branchless banking is also a contributor for increasing financial inclusion. 1 million mobile wallets were also added this year to reach 14.6 million mobile wallets.
Other plans for Pakistan banking sector
Agriculture and rural finance are also important part for the financial inclusion strategy and has increased 2.4 million active borrowers. This is increased from previous 2.2 million active borrowers. The housing finance area also grew by 17% along with high time Rs 20.13 billion disbursements. This might be due to the low interest rate being implemented in the country.
This year the SBP has also gotten the Financial Institutions Recovery Ordinance 2001 amended. This will now provide legal cover for banks to take legal actions against defaulters of housing finance. The best concerns addressed now will definitely boost the housing finance market now.