The banking sector of the country has increased 16.1 percent in the financial year 2016 despite some negative effects on the profits due to a fall in interest rates and related.
But as per the FY16 performance review report by State Bank, the overall position has remained positive with high creditworthiness points, a solid capital base, initiating for improved risk management systems as well as containing the non-performing loans.
Not just this, the report mentions that the private sector’s credit increasing is the most recognized development that happened in the year which resulted in adding to 4.7pc growth in GDP (real).
This happened regardless of the hindrance in the agrarian sector which saw a decline of 27pc in cotton cash crop.
The review also depicted that the shrill gush in the private part is the outlook resulting from the trust that has been given by business community resulting in timely improvement in the country.
On the Islamic Banking side, the year saw considerable growth with the single digit shifting to double with 16.8 percent increase in assets and 14.1 percent increase in deposits.
Getting more into figures, the June’s end brought about an asset base totaling Rs. 1,745 billion which represents 11.4 percent of the assets of bank. In it, 13.2 percent of the deposit base of banking industry represented a figure of deposits at Rs. 1,461 billion.
Adding more to it, the physical presence catering to higher reach has also increased for shariah compliant banking with 2,146 branches in over 98 districts of Pakistan. This makes it considerably high as compared to target of 2000 branches put in the Islamic Banking’s Strategic Plan 2014-18.
The Deposit Protection Corporation Act, 2015 which was approved by the Senate and National Assembly in 2015 will see the launching of deposit insurance scheme.
Furthermore, the report mentioned that the introduction of – Asaan Account with little legal requirements has initiated 1.13 million increased people towards the banking industry, further pushed by branchless banking.
On the mobile banking side, too, the industry saw a boom, with a total of 14.6 million mobile wallets being listed in the country.
As per the financial presence strategy, the increase in rural and agricultural finance has been a crucial constituent as the agriculture financing increased to 16% – Rs. 599 billion.
The year also saw SBP to get the approval for Financial Institutions Recovery Ordinance, revised to help the banking sector to recover amount from defaulters of house finance as well as take action against the concerned – report.
Author: Muneel Ali
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