Master of Business Administration Executive

Faculty / School

Faculty of Business Administration (FBA)

Year of Award


Project Type

MBA Executive Research Project

Access Type

Restricted Access

Executive Summary

Consumer Financing has become a very lucrative profit making avenue for the commercial banks in Pakistan. In the last 15 years this industry has witnessed major growth in terms of business quantum due to the continuous improvement in the infrastructure and prudential regulations given by the central bank after keeping a close eye on the behaviors of the portfolios of all the banks.

Globally Consumer Financing is done on almost very similar standards, but in Pakistan the dynamics of the market are completely different. It is because of the fact that our economy is mostly un-documented and evaluating an application for consumer financing with limited knowledge of financial strength & credit worthiness of a customer becomes a challenge.

Even then this industry has shown signs of tremendous improvement in last 2 decades. Under writing has matured and NPL’s (Non-performing loans) have gone down.

This is the reason why we can see a very stiff competition among the banks offering consumer financing products in market.

Since smaller size banks have limited avenues to lend therefore Consumer Financing for them naturally becomes a choice for making quick money as the business gives lightest spreads in terms of profits and requires individual customers assessments instead lengthy procedural requirements as in Corporate & SME.

Since, Islamic Banking a relatively a new phenomenon in Pakistan and being smaller in size these Islamic Banks have no choice then to start with Consumer Financing as this gives them opportunity to penetrate easily in the market with lesser cost and maximize the number of customers together with the depositors.

Credit for introducing consumer financing basically goes to Citi Bank who back in 90’s introduced facilities such as Credit Cards and Home Loans. Followed by other local and multinational banks Consumer Financing started gaining momentum in late 90’s and by 2004 & 05 this has become a choice of almost every person.

With systems, experience and policies already available the multinational banks have the advantage of launching the products in Pakistan by just copying their international practices with minor amendments (as per SBP PR’s) and get operational. But for local banks it was a challenge to first understand the mechanics get the systems prepared, testing it and then developing policies and procedures before finally launching any product.



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