KARACHI, PAKISTAN:
Jameel Ahmad, the Governor of the State Bank of Pakistan (SBP), has offered a critical assessment of the country’s banking sector during a recent address, analyzing its performance against its wider economic impact. While acknowledging that banks have increased their assets and strengthened their foundation over the last 10 years, he highlighted a significant contradiction in these profitable outcomes.
Governor Ahmad stated that “In 10 years, we have strengthened our foundation,” suggesting progress in terms of financial stability. However, he quickly identified a crucial failure: “Banks’ profit has increased, but it is not contributing to economic growth and job creation.”
This statement implies that the banking sector’s focus has largely been directed toward meeting the government’s budgetary needs rather than extending credit to productive sectors, private enterprises, and small businesses. This concentration of lending towards the government tends to slow down wider economic activity and hinder job creation.
The SBP Governor’s critique points to an urgent need for reforms within the country’s financial system. His position makes it clear that banks need to shift their focus away from predominantly risk-averse, profitable activities towards playing a direct role in fostering economic development and public welfare.
