Author Affiliation

Governor, State Bank of Pakistan

Document Type

Article

Source Publication

Journal of The Institute of Bankers Pakistan

Keywords

Banking Ethics, Corporate Governance, Financial Sector Reform

Disciplines

Business | Economics

Abstract

When I addressed you for the first time on March 25, 2000, we were in a despondent and gloomy mood. The economy was stagnant, external debt payment difficulties were pervasive and the financial soundness indicators of the banking system in Pakistan were quite worrisome. Public sector owned and managed banks dominated the system with its peculiar bureaucratic culture, indifferent service standards, laid back and lethargic business practices and narrow product range. The Government of Pakistan was underwriting the losses of these banks out of its scarce budgetary resources. Average lending rates hovered around 15 to 16 percent, credit growth to private sector was anemic, non-performing loans accounted for almost 25 percent of total loan portfolio and were threat to the capital base (as capital to total assets ratio was low), return on assets and return on equity were negative. Professional management and operational efficiency were by and large missing.

Note

Speech delivered at the 55th Annual General Meeting of the Institute of Bankers Pakistan on September 17, 2005. Published in the Journal of The Institute of Bankers Pakistan, Volume 72, Issue 4, October-December 2005. IH0167

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