History Of Commercial Banking In Pakistan

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Banking sector is the backbone of an economy that governs the money supply. The Commercial Banks give loans, which they get from surplus monetary units to the household and business sector which increases consumption and investment and in turn boosts up the economy. Commercial Banks are the financial intermediaries and acts as a financial institution where exchanging and transmission of money takes place. They provide banking services all over Pakistan to small and large businesses as well as individuals. As the time passes, the Commercial Banks have become more and more diverse and offer more facilities to their customers on the basis of their credit ratings. Some important Commercial Banks of Pakistan are as Askari Bank, Bank Al Falah, Bank…show more content…
The history indicates the journey of the development of Commercial Banks in Pakistan since the establishment of State Bank of Pakistan on 1st of July,1948. Initially, it experienced severe lack of resources and extremely uncertain political and socio-economic conditions. They offered poor services due to insufficient and inexperienced human resources. During 1950-60s, unhealthy competition and unlawful practices due to bribe and corruption were at its peak. In 1974, all the banks were nationalized in Pakistan which deteriorated the performance of banks on the whole. This in result, discouraged private and foreign investors. This led to the privatization of banking sector in the year 1992. The Commercial Banks faced a tough competition during 1979- 1992, when the Islamizing of the banking sector was initialized. The 21st century brought more and more competition regarding the quality of the services provide by the Commercial Banks in Pakistan for increased profits and extensive number of customers. Now, there are almost 38 commercial banks running in Pakistan which have almost up to 8400…show more content…
Risk based lending slightly increases but, government securities are still dominating the market. According to JIS.VIS sector update, which includes performances of 26 commercial banks across Pakistan (2015-2016),the compound annual growth rate (CAGR) of banking sector assets have grown up to 14.7% for the past 5 years (2010-2015).asset based stand at 15.4 tr at the end of June 2016.the asset base has simultaneously increased the deposits which have CAGR of 13.8% over last 5 years (2010-2015).it increased to rs.11.0 at the end of June 2016.4% super tax has been imposed on bank’s income in 2015 and 2016.flat tax of 35% has put pressure on profitability of commercial

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