Publication Date

1-25-2021

Description

It is a pleasure to launch the NBFI- Modarabas Report prepared in collaboration with IBA-CEIF. I must congratulate the authors for producing a high quality report. I hope that this exercise would be undertaken regularly to create awareness about NBFIs among public at large. 2. Pakistan’s savings and investment ratios are quite low compared to its neighbours. Bangladesh which like us had savings rate in the teens has now reached close to 30 percent of Gdp. This has reduced Bangladesh’s dependence on foreign savings and foreign aid and enabled the country to attain investment ratios around 30 percent. The country is therefore growing at an average rate of 6 to 7 percent per annum. Poverty rates have come down to 22 percent – almost one half of what it was down in the early 2000s. This example I present to you as an illustration of the power of domestic savings. Pakistan’s financial depth, financial inclusion and private sector credit to GDP ratios lag behind our neighbouring countries and other Emerging countries. There is thus a huge scope for expansion of the financial services sector in Pakistan, for raising our domestic resources and lending to private sector business for fixed investment. Currency in circulation ratio in Pakistan has risen to unacceptable level-almost one third of Broad Money and had reached over 6 trillion rupees at end June 2020. Islamic financing has become quite popular in Pakistan – 74% of those polled would like to switch to Islamic financing. A lot of small savers are not very much comfortable with banking services. There is a niche market i.e. the intersection of great interest in Islamic financing and small savers which in my view Modarabas and NBFIs can actually exploit to tap this pool of savings for productive purpose.

Notes

Chief Guest address delivered at the launch of NBFI- Modarabas Report at IBA Karachi on January 25, 2021.

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