Banks strengthened their foundations in 10 years but the economy did not benefit, says State Bank Governor

Governor State Bank of Pakistan Jamil Ahmed has said that Pakistan’s banking system has strengthened its foundations over the past decade, but this strengthening has not been beneficial to the broader economy at the pace that was expected.

Addressing a function, he said that the assets of banks have increased significantly in the last 10 years and the financial stability of the banking structure has improved during this period. According to him, strong balance sheets and better risk management have made the sector safe.

However, the governor clarified that the increasing profits of banks are not directly leading to economic growth or employment growth.  He said that most of the focus of financial institutions is still on meeting the government’s budget needs, due to which the provision of credit to the private sector remains limited.

According to experts, this statement indicates the need for banks to shift policy reforms towards those that can support investment and private business activities more.