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INTRODUCTION

Financial Sector
Financial Sector in Pakistan possesses a wide
spectrum of financial institutions
-C o m m e r c i a l b a n k s , s p e c i a l i z e d b a n k s , n a t i o n a l s a v i n g s
s c h e m e s , i n s u r a n c e companies, development finance institutions
, investment banks, stock exchanges,
corporate brokerage houses, leasing companies, discount houses, m
icro-finance institutions and Islamic banks. They offer a whole range
of products and services both on the assets and liabilities side. Financial
deepening has intensified during the l a s t s e v e r a l y e a r s b u t t h e
commercial banks are by far the predominant players
accounting for 90 percent of the total financial assets of the system
Among the commercial banks, 12 foreign and 20 domestic banks
together hold 80Percent of the banking system assets - a feat
that is unparalleled among developing countries. Foreign
banks enjoy the same facilities and same access as the
domestic banks and there is no preferential treatment for
domestic institutions.
Banks:
Banks are financial intermediaries. The role of a financial
intermediary is to sell its own obligations and to buy the
obligations of others. By endowing its obligations with attractive
features, an intermediary can sell its obligations at a higher
price than it has to pay for the obligations it buys. Or to say the
same thing in a different fashion, it can market its obligations
at a lower interest rate than it can command the obligations
it buys. The spread between the interest rate it pays on its own
obligations and the one
itr e c e i v e s o n t h e o b l i g a t i o n s o f o t h e r e x p e n s e s o f d

espec ially after the chal lenging capital adequacy benchmarks set by the State Bank of Pakistan to nourish a stable banking system. controls the fl ow of purcha sing power.o i n g b u s i n e s s m u s t t h e n b e deducted. These sector witnessed a phenomenal growth in 2001-03 where deposits rose by almost 1 0 0 % . whether in form of credit or currency and it acts as bankers to the state PAKISTAN BANKING OVERVIEW PAKISTAN BANKING FINANCIAL HUB SECTOR-PAKISTAN The Banking sector is an integral part of the country’s financial services industry. It holds the ultimate reserves of the nation. are greater than ever before. the banking sector experienced growth rates of 21% and 36% in its deposit and advances portfolio respectively. Central Bank: A central bank is responsible for the monetary policy of the country in which it operates. especially in consumer and retail banking. Opportunities for foreign banks. T h e r e a r e 3 9 s c h e d u l e d b a n k s ( i n c l u d i n g 1 1 f o r e i g n b a n k s ) o p e r a t i n g i n Pakistan. 'Central bank is an institutio n which is responsible for sa feguarding the financial stability of the country. Competit i on is relatively high. which in turn. Attracting foreign investment and winning profitable customers are the only options left to banks for survival. . In the financial year of 2004-05. The net profi t aft er these other deduct ions represents the return to the shareholders for their participation in the activity of a financial intermediary.

has increased the banks’ stability as compared to the preceding year. National Bank of Pakistan Zari Taraqiati Bank (ZTBL Specialized Banks Industrial Development Bank of Pakistan Punjab Provincial Cooperative Bank Ltd Private Scheduled Banks Askari Commercial Bank Limited Bank Al-Falah Limited Bolan Bank Limited Faysal Bank Limited Bank Al-Habib Limited Metropolitan Bank Limited KASB Commercial Bank Limited Prime Commercial Bank Limited PICIC Commercial Bank Limited Soneri Bank Limited Private Scheduled Banks Union Bank Limited Meezan Bank Limited Saudi-Pak Commercial Bank Limited Crescent Commercial Bank Limited Dawood Bank Limited NDLC-IFIC Bank Limited . Categorical Listing of Operating Banks Central Bank State Bank of Pakistan Nationalized Scheduled Banks First Woman Bank Ltd.

VAlbaraka Islamic Bank BSC (EC)Americ Expresss Bank LimitedBank of Tokyo Mitsubishi LimitedCitibank N. Zurich Hongkong & Shanghai Banking Corp Limited Oman International Bank S.G.A.G Rupali Bank Limited Standard Chartered Bank Limited Investment Banks Crescent Investment Bank Limited First International Investment Bank Limited Atlas Investment Bank Limited Security Investment Bank Limited Fidelity Investment Bank Limited Investment Banks Prudential Investment Bank Limited Islamic Investment Bank Limited Asset Investment Bank Limited Al-Towfeek Investment Bank Limited Jahangir Siddiqui Investment Bank Limited .(NIB)Allied Bank of Pakistan Limited United Bank Limited Habib Bank Limited SME Banks ABN Amro Bank N.A Foreign Banks Deutsche Bank A.O.G.Habib Bank A.

Banking Companies Ordinance. t h i s autonomy was further strengthened by issuing three Amendment Ordinances (which were approved by the Parliament in May. State Bank of Pakistan Act. 1997) namely. forms the basis of its operations today. The scope of the Bank’s operations was consider by widened in the State Bank of Pakistan Act 1956. remained basically unchanged until 1st January 1974 when the Bank was nationalized. 1962 and Banks Nationalization Act. The State Bank of Pakistan Act 1956. the Bank was charged with the duty to "regula te the issue of Bank notes and keeping of rese rves with a view to securing monetary stability in Pakistan and generally to operate the currency and credit system of the country to its advantage".1956. as originally laid down in the State Bank of Pakistan Order 1948. O n 2 1 s t J a n u a r y . the State Bank of P a k i s t a n w a s g r a n t e d a u t o n o m y i n F e b r u a r y 1 9 9 4 . 1974. The amendments in Banks Nationalization Act abolished the Pakistan Banking Council (an institution established to look after the a ffa irs of NCBs) and institutionalized the process of appointment of the Chief Executives and Boards of the nationalized commercial banks(NCBs) and . with subsequent amendments. The changes in the State Bank Act gave full and exclusive authority to the State Bank to regulate the banking sector. 1 9 9 7 . While its constitution. the scope of its functions was conside rably enla rged. Under the State Bank of Pakistan Order 1948. to conduct an independent mone tary policy and to set limit on government borrowings from the State Bank of Pakistan. Under financial sector reforms. which required the Bank to "regulate the monetary and credit system of Pakistan and to foster its growth in the best nationali n t e r e s t w i t h a v i e w t o s e c u r i n g m o n e t a r y s t a b i l i t y a n d f u l l e r u t i l i z a t i o n o f t h e country’s productive resources".Franklin Investment Bank Limited Orix Investment Bank (Pak) Limite State Bank of Pakistan Core Functions of State Bank of Pakistan State Bank of Pakistan is the Central Bank of the country.

Accordingly. the State Bank of Pak istan. This role covers not only the development of important components of monetary and capital markets but also to assist the process of economic growth and promote the fuller utilization of a country’s resources. DEVELOPMENTAL ROLE OF STATE BANK The responsibility of a Central Bank in a developing country goes well beyond there nugatory duties of managing the monetary policy in order to achieve the macro . The explicit recognition of the promotional role of the Central Bank evidently stems from a desire to re-orientate all policies towards the goal of rapid economic growth. The amendments also increased the autonomy and accountability of the Chief Executives and the Boards of Directors of banks and DFIs. the orthodox central banking functions have been combined by the State Bank with a well -recognized . with the State Bank having a role in their appointment and removal. Ever since its establishment.development finance institutions (DFIs). Like a Central Bank in any developing country. h a s p l a y e d a n a c t i v e developmental role to promote the realization of macro-economic goals.economic goals. besides disc harging its t r a d i t i o n a l f u n c t i o n s o f r e g u l a t i n g m o n e y a n d c r e d i t . State Bank of Pakistan performs both the traditional and developmental functions to achieve macro-economic goals.

20 CURRENT CHANGE VOLUME 119. directing the use of credita c c o r d i n g t o s e l e c t e d d e v e l o p m e n t p r i o r i t i e s .20 0.900 6.T h e B a n k ’ s p a r t i c i p a t i o n i n t h e d e v e l o p m e n t p r ocess has been in the form of re h a b i l i t a t i o n o f b a n k i n g s y s t e m i n P a k i s t a n .21 -1.40 HIGH 121. The scope of Bank’s operations has been widened considerably by inc luding the economic growth objective in its statute under the State Bank of Pakistan Act 1956.00 6.57 6. d e v e l o p m e n t o f n e w fi n a n c i a l institutions and debt instruments in order t o p r o m o t e fi n a n c i a l i n t e r m e d i a t i o n . LDCP 120. establishment of Development Financial Institutions (DFIs).36 128.60 6.developmental role.40 LOW 118.20 OPEN 119.00 1. p r o v i d i n g s u b s i d i s e d c r e d i t .000 .80 6. a n d development of the capital market kse Market summary of commercial Banks Commercial Banks SYMBOL Allied Bank SPOT Apna Microfin.

50 214.50 278.10 22.01 954.01 414.25 9.500 68.96 2.14 0.00 24.38 0.800 81.00 281.07 3.04 9.96 0.04 106.00 1.06 184.65 5.52 1.49 9.500 1.75 0.03 49.50 192.78 47.14 28.80 Pakistan’s Banking Sector can be classified under the following broad categories .22 0.49 8.000 9.06 -0.20 7.000 196.94 9.11 7.Punjab Bank Al-Falah Bank AL-Habib Bank Of Khyber Bankislami Pak.51 15. NIB Bank Limited 22.05 29.000 35.01 280.44 59.90 29.14 11.60 3.61 15.500 60.75 5.79 8.01 35.O.55 1.95 18. MCB Bank Ltd SPOT Meezan Bank National Bank.79 49.500 8.00 24.500 3.644.90 218.000 49.53 -0.93 1.10 28.00 47.99 0.000 36.63 -0.96 1.Bank 24.50 280.578.09 -0.500 St.00 81.27 22.90 10.000 2.25 7.99 8.07 128.000 Samba Bank 7.80 10.25 192.000 47.99 36.22 7.14 22.19 0.900 United Bank 193.Chart.57 -0.500 4.00 9.000 17.25 0.909.04 1.07 -0.01 48.01 3.80 5.15 2.08 3.01 47.20 2.08 856.06 2.39 60.00 213.82 14. Faysal Bank Habib Bank SPOT Habib Metropol JS Bank Ltd KASB Bank Ltd.60 215.90 0.03 12.13 49.500 Summit Bank 3.Askari Bank B.56 0.00 23.59 1.95 17.80 5.77 35.14 2.66 8.02 0.55 35.39 189.75 17.901.80 197.75 23.76 8.83 9.09 -0.18 4.94 -0.66 29.82 0.14 5.500 214.000 Soneri Bank Ltd 14.81 60.00 17.13 3.067.12 1.10 60.00 49.60 14.06 20.42 192.59 1.56 243.96 281.00 22.03 SilkBank Limited 2.

Private Schedule Banks from depositors to Banks engage in channeling To lenders against the primary objective of acquiring profit i.They offer a host of unique policies.e .Categories Descriptions State Bank of Pakistan the Autonomous Central bank and And Governing body for all banking For all banking operations in operations in the country. banking spread.which includes loans. Nationalized Schedule Banks These deal primilary in industries of banking and capital market . credit cards saving and consumers banking. Foreign Banks international Trade These concentrate primary on . banking training service and product .

money Specialized Banks These banks are created with specific interest thus specializing and catering to a particular sector industry. Development/ Cooperative/ Investment Banks investment banks act as underwriter or agent serving intermediary between an issuer of securities and the investing public.Finance innovative credit Orientation and plastic . as .